ChromaDex Corporation
Q3 2017 Earnings Call Transcript

Published: 11 Nov 2017

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the ChromaDex Corporation Third Quarter 2017 Earnings Conference Call. My name is Brian, and I will be the conference operator today. [Operator Instructions]. And as a reminder, this conference call is being recorded. This afternoon, ChromaDex issued a news release announcing the company's financial results for the third quarter 2017 and filed their form 10-Q. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at www.chromadex.com, and the form 10-Q is also available on the SEC's website. I would now like turn the conference over to Andrew Johnson, Director of Investor Relations. Please go ahead, sir.

[Andrew Johnson:]

Thank you, Brian. Good afternoon, and welcome to ChromaDex Corporations' Third Quarter 2017 Results Conference Call. With us today are ChromaDex's Founder and Chief Executive Officer, Frank Jaksch; Chief Strategy Officer, Rob Fried and Chief Financial Officer, Kevin Farr. Today's conference call may include forward-looking statements, including statements related to ChromaDex's research and development and clinical trial plans, and the timing and results of such clinical trials, the timing of future regulatory filings, the number of NIAGEN brands that ChromaDex will supply in the future, the expansion of the sale of TRU NIAGEN in new markets, plans to add to the management team, future financial results, business development opportunities, future cash needs, ChromaDex's operating performance in the future, future investor interest and analyst coverage of ChromaDex, the timing and certainty of the closing of the private placement of financing and, whether potential proceeds of the financing will drive international expansion, enhanced domestic initiatives and fuel clinical researched and support general corporate purposes that are subject to risks and uncertainties related to ChromaDex's future business prospects and opportunities as well as anticipated results of operations. Forward-looking statements represent only the company's estimates on the date of this conference call, and are not intended to give any assurances as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause ChromaDex's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These risk factors include those contained in ChromaDex's annual report on Form 10-K and form 10-Q, most recently filed with the SEC. Please note that the company assumes no obligation to update any forward-looking statements after the date of this conference call to conform with the forward-looking statements' actual results or changes in its expectations. In addition, certain of the financial information presented in this call references non-GAAP financial measures. The company's earnings release, which was issued this afternoon, and is available on the company's web site presents reconciliations to the appropriate GAAP measures, and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Finally, this conference call is being recorded via webcast. The web cast will be available at the Investor Relations section of our website at www.chromadex.com. With that, it is now my pleasure to turn the call over to Frank Jaksch.

[Frank Jaksch:]

Thank you, Andrew. Good afternoon, everyone. Thank you for joining our third quarter call. Over the past few months, we've made quite a few significant changes at ChromaDex, and we are now executing a strategic shift for the company. In a few minutes, Rob will discuss our strategic milestones, but before we get to that, I'd like to discuss the state of science for NIAGEN. The science supporting NIAGEN and its positive impact on the way our cells metabolize energy, and therefore how we age is significant in building. This is the value of our company, and we will be decisive and aggressive to ensure we capture the maximum value of our leadership in NAV and the antiaging science -- or the area of antiaging science. First, I'd like to review the top line results for our second human trial, which we announced in September. The study established an effective dose range and validated safety for NIAGEN. Initial results confirmed, and are significantly and sustainably raised to coenzyme NAD, or nicotinamide adenine dinucleotide, in 140 healthy human volunteers over an eight-week period. Levels of NAD remained elevated throughout the duration of the study and participants received 100, 300 or 1000 milligrams per day, and there was also a placebo arm. Results of the randomized double-blind placebo controlled parallel arm trial demonstrated that NR produced statistically significant increases in blood NAD compared to placebo that were related to the dose of NR consumed, demonstrating a dose response. Publication of this study in a peer review journal will be critically important for supporting future university and NIH-sponsored clinical trials. A manuscript of the top line results from this study will be submitted for publication in the peer review journal before the end of this year. We are performing additional analysis of samples as well as evaluating additional statistical data related to this study, which should highlight additional benefits of NIAGEN. These additional findings should also lead to future peer- reviewed publications as well. Moving to the pharmaceutical side. We are still on track to file our IND for Cockayne Syndrome by the end of 2017. ChromaDex continues to make significant progress in development of our first pharmaceutical opportunity for NIAGEN. ChromaDex completed its first pre-IND meeting with the U.S. FDA in November of 2016 for the development of NIAGEN as a drug for use in the treatment of Cockayne Syndrome, which is a rare pediatric orphan disease, that results in significantly shortened lifespan for the affected children. During that pre-IND meeting, we mapped out our plan with the agency to complete the final IND enabling work. Subsequently ChromaDex completed a pilot trial needed to execute the additional safety study required by the FDA. We communicated the findings from the study to the agency as well as our plan to utilize the results in the design of final IND-enabling preclinical study. We addressed several important points with the FDA relevant to our developmental plan, and we have now completed the final study necessary to support the safety of drug administration in the proposed clinical protocol for Cockayne Syndrome children. The draft of the final preclinical study needed for the IND submission is scheduled to be completed in November, and our goal is to submit the IND by the end of the year. We're excited to embark on this next clinical phase of pharmaceutical development path for NIAGEN. With that, I will pass the call to Rob, where he will give you an overview on our strategy.

[Rob Fried:]

Thank you, Frank. As most of you know, we've been executing a strategic shift in the company, and I'd like to provide you with an update on our progress. The Healthspan Research, LLC acquisition took place on March 12, 2017. This marks the date of our shift to a fully integrated nutraceutical company, devoted to extending human health span. Six months in, we're doing better than expected. First, we've been reducing the number of NIAGEN brands in the marketplace. In March, we had more than 20 resellers of NIAGEN. Today, we have terminated the supply agreements to all, but seven, and expect it to be less than five by year's end. Despite these customer cancellations, NIAGEN-related revenue year-to-date through September 30, 2017 has increased, when we exclude the one large second quarter 2016 sale to the customer that did not pay its bill. Most importantly, our TRU NIAGEN brand represented the majority of NIAGEN-related revenue. We still see many sellers of NIAGEN brands in the market but this is mainly due to residual inventory levels. Second, we began our international expansion of the TRU NIAGEN brand with the successful launch in Hong Kong and Macau with our partner Watsons. Watsons is the leading health and beauty retailer in Asia and Europe with over 6,000 stores in 11 Asian and European markets. We expect Watsons to expand to new markets in the coming months. We're seeing great interest in TRU NIAGEN from other countries as well. Another important milestone was that the company was -- has intensified our strategic focus by selling our analytical testing service business to LabCorp for $7.5 million, along with the $1 million earn out. Additionally, this week we announced the signing of a $23 million private placement led by high-profile venture capitalists and international strategic investors. In August, 2017, we also completed the third and final tranche of the $25 million strategic investment led by Mr. Li Ka-shing. Finally and most importantly, we welcome Kevin Farr to the company as Chief Financial Officer. Kevin has joined us from Mattel, where he spent the last 17 years as Executive Vice President and CFO. His leadership and experience with the Global S&P 500 consumer company have already been impactful. Expect more management additions to come. And finally, with that I would like to hand the call off to Kevin to give you an update on the company's financials.

[Kevin Farr:]

Thank you, Rob. I'm extremely pleased to join ChromaDex at this pivotal time with a tremendous foundation of science supporting NR and the launch of the TRU NIAGEN platform. I believe that my extensive experience can accelerate the global growth opportunities for TRU NIAGEN as an international consumer brand. Now let's look at our financial results for the third quarter of 2017. For the three months ended September 30, 2017, ChromaDex reported net sales of $6.1 million, which was up by 55% as compared to net sales of $3.9 million for the quarter ended October 1, 2016. For the third quarter of 2017, net sales of NIAGEN-related revenues was $4.5 million, which represented 73% of third quarter net sales. We also delivered improved gross profit for the third quarter of 2017 at 47.9% as compared to the third quarter at 47.3%. We experienced slightly better gross margins to the positive mix of NIAGEN-related sales, which we anticipate continuing. Our operating expenses for the quarter were up by $3.3 million to $6.1 million as compared to the third quarter of 2016 of $2.8 million, as we made incremental investments in sales and marketing, research and development and general and administrative expenses, to support growth in our business. Sales and marketing expenses increased to approximately $1.1 million from $0.3 million last year, as the company continued to invest in incremental marketing efforts across the business, particularly in our consumer products business. The company incurred $1 million in research and development expenses for the third quarter, an increase of $0.2 million compared to $0.8 million last year. These charges included human clinical trial fees and new ingredient development costs. As revenue and available financial resources continue to grow, the company plans to continued increase research and developmental efforts. General and administrative expenses were up by $2.2 million to $3.9 million as compared to $1.7 million in the third quarter of 2016. The increase was driven by incremental legal fees of $1.1 million and for general corporate purposes to support global growth opportunities. The net loss from continuing operations attributable to common shareholders for the third quarter was $3.2 million, which was up by $2.3 million as we also continued to make investments in the quarter to accelerate our future growth trajectory. Looking forward, we expect to continue to invest ahead of growth to capture the global opportunity for NIAGEN. Earnings per share from continuing operations for the third quarter of 2017 was a negative $0.07 per share as compared to a net loss of $0.9 million or $0.02 per share in the prior year. EBITDA adjusted for noncash charges associated with share-based compensation, which is a non-GAAP measure, was $2.9 million during the third quarter of 2017 compared to adjusted EBITDA of negative $0.6 million last year. Cash on hand at the end of the quarter was $24 million reflecting the third and final tranche of Li Ka-shing investment that was initially signed in April of 2017, and the proceeds from the sale of lab business, which was partially offset primarily from the year-to-date net loss from continuing operations of $7.7 million. As Rob stated, we also announced the $23 million private placement that, when it closes, will provide ChromaDex with additional resources to accelerate its plan to solve the problem of aging, emphasizing TRU NIAGEN. Also, the financing will drive international expansion, enhanced domestic initiatives and fuel clinical research and support general corporate purposes. With that, we'll now open the call for questions. Operator?

[Operator:]

[Operator Instructions]. And our first question will come from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed.

[Wangzhi Li:]

Hi everyone. This is Betsy Li on for Jeff. I was just curious if you could talk a little bit more about the private placement that you recently announced?

[Rob Fried:]

Sure, I'll start it off. The recent private placement was a mix of investors that ultimately were selected based on the strategic value that they're going to bring as we start to expand NIAGEN or TRU NIAGEN internationally. So that was one of the primary reasons for the financing and for the different mix of investors we had in that.

[Wangzhi Li:]

Okay. Great. I also just wanted to ask a little bit more about how you're transitioning from distributors to a more direct approach. I heard you say that you have about seven now and you should have five at year's end. I'm curious of those five. How much more inventory, residual inventory do they have? Approximately how many quarters?

[Rob Fried:]

We don't know exactly how much inventory they have. We don't know their exact consumer sales. We know how much we sold to them. We don't know how much that they are selling. But we expect a couple of quarters more, of residual inventory for those that we've cut off. But of the remaining customers that are purchasing, we have yet to decide, which, if any of those remaining customers we will cut off.

[Wangzhi Li:]

Okay. Great. And then the deal with Watsons, I know you said they have about 6,000 stores. Is your product currently in all of those stores? Or have you fixed specific stores for strategic purposes?

[Rob Fried:]

Could you ask that one more time?

[Wangzhi Li:]

Sure. For the Watsons deal, you said they have approximately 6,000 stores. Is your product in all 6,000 of those? Or have you picked specific areas or specific stores for strategic purposes?

[Rob Fried:]

They have approximately 100 stores in Hong Kong and we believe it's in all of those 100 stores in Hong Kong. But they are going territory-by-territory, country-by-country. They started with Hong Kong, then Macau and then their plan is to move into Singapore. We don't yet know if they intend to be in all of the stores in those countries. We expect that they will be because they are investing fairly effectively and aggressively in marketing. But we don't know the answer to that. But certainly, they're not going to be in all 6,000 stores in the imminent future.

[Wangzhi Li:]

Okay, great. I think that does it for me. Thank you for taking the question.

[Rob Fried:]

Thank you.

[Frank Jaksch:]

Thank you.

[Operator:]

Thank you. And our next question will come from the line of Ram Selvaraju with H.C. Wainwright. Please proceed.

[Raghuram Selvaraju:]

Thank you very much for taking my questions. Just three quick relatively general ones. Firstly, could you just give us a little bit more color on why you think it is better to have fewer resellers of the product as opposed to more of them? What's the principle driving purpose behind that? Secondly, pursuant to what you said about the investors in this most recent private placement. Would you anticipate that any of them would potentially bring to ChromaDex the same kind of portal capability as you have so far seen with Watsons? Would that be something that these strategic investors might potentially be able to bring? And then thirdly, I just had a regional question. Switzerland is a territory, which seem to me to be a potentially rich and fertile hunting ground for you guys given the receptivity of the local population to nutritional supplements, ingredients, naturally occurring substances and the like. And I was just wondering whether you had any thoughts on potential firm-strategic plans for commercialization in Switzerland specifically?

[Rob Fried:]

We do have interest in Switzerland. I'm going to let Frank address that specifically. I'll address the first two questions. Why is it better to have fewer resellers than many resellers? So the gross margins, when you have your own consumer brand, are significantly higher than if you're just selling the ingredient. And we have our own consumer brand called TRU NIAGEN, which is selling quite well and growing quite dramatically. It is our goal to continue to build that consumer brand TRU NIAGEN internationally. So we prefer not to have many competitors of our own brand TRU NIAGEN. On the other hand, the general population is not yet well informed about the importance of NAD and our general health specifically as we age. So we are interested in working with certain partners to help us communicate that message effectively, efficiently and truthfully. And that is the third and most important reason, which is, the messaging here, not only in the creation of the brand but in educating people on the importance of managing their NAD levels as they age is vital. And we found that the more resellers we had, the more difficult it was for us to control that message. Indeed some companies were misrepresenting the benefits of NIAGEN and its impact on NAD and other health conditions. And we don't -- we believe very strongly that unlike other supplement companies that have existed historically, we have something very, very important. We have science. We believe NIAGEN works and we don't believe it's important to overstate its power. We think it's just important to state the true bare facts. We want to be humble in our messaging because we think the science speaks for itself. And therefore, we want to make sure the message is very crisp, very clean and very real. When you have many resellers of the ingredient, it's more difficult to control that. The second question had to do with the new private placement and, whether the new investors would be as strategic as we have seen from the Watsons relationship. Well, of course, Watsons is a very unique wonderful company and they've been terrific partners. They're very easy to work with. They're very, very smart and very, very capable. And we had a very successful launch in Hong Kong and it continues to be successful. And we're excited about extending that relationship with them. Many of the new relationships have the potential to be comparably strategic and helpful. Although it is not quite as obvious as a company such as Watsons. But if -- when you part through these investors one at a time, it's easy to see that the potential is significant for it to lead to great growth. Although, it may not happen as quickly as did Watsons. The third question, which relates to Switzerland, I'm going to defer to Frank.

[Frank Jaksch:]

Yes. That's a good question on Switzerland. And Switzerland has two potential benefits. It is a strong market for dietary supplements. It has been a strong market for dietary supplements and there's quite a few companies there and it is a good -- represents a good opportunity for us to enter the European market without directly entering the European market through Switzerland. And I think for us to examine the Swiss market, I think the way to do it would be to look at it as an opportunity for TRU NIAGEN, not for an ingredient type of a deal. And I think that's what we're currently looking at as a strategy to expand the TRU NIAGEN brand in Switzerland and then try to look at the benefits of Switzerland, and what impact using Switzerland as a hub, to not only go after the Swiss market, which is the substantial market for these types of products, but also as a mechanism to potentially enter other European areas as well. And that's something that we're not prepared to go into a lot of detail on yet. But it is something that we're looking at. And I want to layer in -- layer one more piece to Rob's first answer is that on the science side, is the science side of nicotinamide riboside, has just been unbelievable in terms of the way it has developed over the past three or four years since we launched it in 2013. And Rob made the point that this is something special. We have something incredibly special with nicotinamide riboside. And the science has gone way beyond what I think we even expected it would be. And we sit here now with 130, over 130 collaborative agreements in place with various universities and that's an unbelievable number of collaborative agreements that we have in place, basically fueling that research. And that research is not only leading to additional peer-reviewed publications, which continue to come out, but on top of that those are now the preclinical studies that are publishing, are also leading to additional clinical studies as well. And we expect that -- it looks like that it is going to continue. The number of collaborative studies should continue to grow and that should lead to additional clinical research as well.

[Kevin Farr:]

I guess, I just wanted to step back too and talk about Switzerland and with regard to the opportunity. I think the opportunity is a global opportunity and this is Kevin Farr by the way. And we not only have our sights set on Asia, which we think we're making good progress on, but there is Europe and then we're looking at less -- the rest of the world because we think the TRU NIAGEN and NIAGEN in itself is a global opportunity.

[Raghuram Selvaraju:]

Just one other thing if I may. Could you confirm the timeline for the initiation of the clinical program in Cockayne Syndromes? And in particular, how that relates to the progress you've been making on the IND?

[Rob Fried:]

I don't have an exact timeline for you yet on the -- for the clinical program on Cockayne. I mean, right now, we're pretty heavily focused on finalizing what we need to go for the IND. And now that we have finalized the last IND-enabling study, the IND-enabling study was designed around what we expect at least from a study-design standpoint. Some of the core pieces of what that Phase I study is going to look like, and we're now actually in the process of going through the final design of what would be that Phase I study, the timeline of that Phase I study. So I don't have a specific update for you, but that's the most I can give you at least at this point.

[Raghuram Selvaraju:]

Thank you.

[Operator:]

[Operator Instructions]. Our next question will come from the line of Bill Dezellem with Tieton Capital. Please proceed.

[Bill Dezellem:]

Thank you. I have a group of questions. The first one just a numbers question. SG&A went up rather dramatically versus the Q3 a year ago and, Kevin, I believe you mentioned that $1.1 million of that $2.1 million increase was legal? Did I hear that correct? And if so, would you dissect out what the remaining increase was?

[Kevin Farr:]

Yes. The $1.1 million is accurate. I think the remaining is basically building out the DTC, direct-to-consumer business in the U.S. as well as corporate functions. So those are the main areas where we've increased as well as equity stock expense.

[Bill Dezellem:]

And that increase versus the second quarter of $1.2 million. Was that primarily the legal?

[Kevin Farr:]

Yes.

[Bill Dezellem:]

And I guess while we're on the legal front, what is the Elysium update?

[Rob Fried:]

The update is -- it's obviously an ongoing litigation with these -- with this entity. I think that the -- all of the documents are public and you can read them. I think that they do a good job of stating the facts. We feel very, very comfortable with the facts. But it's an ongoing litigation and as you can imagine, we have been advised not to discuss it in public.

[Bill Dezellem:]

Shifting gears entirely then, relative to the movement to direct-to-consumer here in the U.S. being primarily TRU NIAGEN as opposed to you all using others. What has happened with the sales of TRU NIAGEN over the course of the last six months in the U.S? Kind of your direct sales as you have reduced the number of competitors. Has there been any indication of your sales increasing yet? Or is that too early?

[Rob Fried:]

Of course we started with a very low base, but we have consistently grown 30% to 40% per month. So it's starting, it's adding up. But you have to remember also that there's still a lot of companies out there that are charging at retail, almost 50% less per bottle than TRU NIAGEN, although those entities are disappearing quickly and they don't have much of an inventory remaining. So -- but notwithstanding that, we still are growing fairly dramatically but we expect to really see -- even far more significant growth in the coming months as those inventory levels disappear and that there's a little bit more pricing parity in the marketplace.

[Bill Dezellem:]

And just for clarity, that 30% to 40% per month, are you talking sequentially? So October up 30% to 40% from September?

[Rob Fried:]

Yes, October was up over 30% from September.

[Bill Dezellem:]

Great. And then finally, as you all think about the next year and what you are trying to accomplish, what is the most important new strategic initiative that you will be focused on? And So I'm trying to remove the solid execution with Watsons and some of the things that are already underway on that front.

[Rob Fried:]

Well, of course the company is focusing its energies quite directly on building an international brand called TRU NIAGEN. And we're focusing our energies on NIAGEN and NAD precursors in general. So there are excellent ingredients that we're also selling. There are other businesses that are related that we manage but our main focus in 2018 is to grow TRU NIAGEN around the world.

[Bill Dezellem:]

And Rob, that was going to be my last question, but you prompted one more, which is the comment of that inferred that there might be additional NAD precursors that you all are working on. Would you'll discuss that? And how we as investors ought to be thinking about it?

[Rob Fried:]

I'm going to give a preliminary answer and then I'm going to defer to Frank who is one of the world's authorities in this space. We're going to invest in NAD-related technologies, part of that is going to be NAD precursors and the science around that. But there are other technologies around this idea of managing NAD as a way to manage our health as you age. For example, diagnostics and devices and reporting mechanisms and other software and app technologies. All of this is very important priority for us. There are other related- NAD opportunities that we've been looking at. It's early in the space but we've been looking at it. We recognize that people need to know about nicotinamide -- they need to know their NAD levels and they need to understand how NIAGEN and particularly TRU NIAGEN can help them manage that. We understand that the more people know, the healthier they're going to be. But Frank, you can perhaps answer some of the questions about specifically NAD.

[Frank Jaksch:]

Yes. So nicotinamide riboside is one NAD precursor that we have in this, right now the most important one that we have for all the reasons we've been discussing today. But over the past few years, we've also been developing a pipeline of other NAD precursors, and we've been working on chemistry development on a lot of -- I'm not going to give a specific number but quite a few other NAD precursors that we've been working on. Several of those are now moving out of, what I call, chemistry development into biology. And we're starting to look at specifically how those other NAD precursors work differently from each other. What advantages one may have over the other? And we're going to continue to develop those but it's going to take a little time to get through not only that chemistry but also now into the biology and from the biology into animals. And that should give us a robust pipeline to keep us really moving just as a developmental program, beyond just a single NAD precursor and ours is going to still continue to be the most important one we have, because we understand mechanistically how that works and the publications continue to support that story and we expect other precursors now to start showing up in peer-review published research. Some of them have started showing up, but you'll see more about that later. We're not going into, say, a high degree of granularity on the specifics associated with the other precursors, but it is a priority item for us right now.

[Bill Dezellem:]

Thank you all for the time.

[Operator:]

Thank you. Our next question will come from the line of Jeff Bernke [ph] with Cowen.

[Unidentified Analyst:]

Just a quick question on the FASEB Conference that you guys sponsored. I think there was a paper given there with some efficacy data, and I guess we're waiting for that to come out in a publication. Can you just give an update on that?

[Frank Jaksch:]

Sure. So the FASEB Conference was an NAD biology conference. It was a closed conference, so the presentations were subject to confidentiality, which is why the researcher from the University of Colorado, Boulder who presented some of the clinical data regarding the -- that study. That data was presented at that conference, but the data is now in sort of the manuscript, which has been submitted to a peer review publication. And it is in, what I call, the final stages of going through the process to get published. So we're not going to really go public with more or specifics about the results of that study until after the peer review publication comes out on that.

[Unidentified Analyst:]

And do we have any idea when that's going to come out now?

[Frank Jaksch:]

Well, I've given up trying to predict exactly when it's going to come out, but I think we're optimistic at this point that it's in the reasonable near term here that it's going to be published, but it's not published until it's published.

[Unidentified Analyst:]

Looking forward to it. And then just a quick question for Kevin. Is there a necessity to do a major investment in systems? ERP or anything to sort of support this global rollout? Or what's your view on the infrastructure of the company?

[Kevin Farr:]

Yes. Again, it's early. I've only been here for a month. So it's on my list of things to look at. But I think near term, we're in pretty good shape, but I do think we'll be stepping back and looking as we scale. We're going to make sure that we have the right platform to scale off of, and we'll make the appropriate investment at that particular time.

[Unidentified Analyst:]

Great. Thank you.

[Andrew Johnson:]

And we have time for one more question.

[Operator:]

Thank you. Our last question will come from the line of Barry Kitt with Pinnacle Fund. Please proceed.

[Barry Kitt:]

Well I have five questions, they've all been answered. So since I have the opportunity, Kevin, you left Mattel when you were CFO for 17 years, 32,000 employees and $7.5 billion enterprise value, to come to a company with 100-something and the $220 million enterprise value. Why did you do that?

[Kevin Farr:]

Because I'm a believer in NR and TRU NIAGEN, and I think there's a huge global opportunity. And look, I've been in the business for quite a while, and I've done big large-cap companies. So I was quite excited to join the team with Frank and Rob. And I think the team is more entrepreneurial, and I think it's a great opportunity for us to grow a global brand and create a large company and be very successful.

[Barry Kitt:]

Well, we are sure happy to have you. Thank you very much. Appreciate your answer.

[Kevin Farr:]

Thanks Barry.

[Operator:]

Thank you. Ladies and gentlemen, this concludes our question-and-answer session for today. So it's now pleasure to hand the conference back over to Sir Frank Jaksch, Founder and Chief Executive Officer, for some closing comments or remarks, Sir?

[Frank Jaksch:]

Thanks. And thank you all for bearing through my pretty bad cold here. If you didn't notice, but I just wanted to say thanks for everybody who took the time to participate in our call, and we look forward to hosting additional calls in the future. Thanks, everyone.

[Operator:]

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program, and we may all disconnect. Everybody, have a wonderful day.