Chromadex Corp

NASDAQ:CDXC

Ladies and gentlemen, thank you for standing by, and welcome to ChromaDex Corporation's Fourth Quarter 2023 Earnings Conference Call. My name is [ Mandeep ], 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 fourth quarter of 2023. If you have not reviewed this information, both are available within the Investor Relations section of ChromaDex's website at www.chromadex.com.I would now like to turn the conference call over to Kendall Knysch, Head of Public Relations and Partnerships. Please go ahead, Ms. Knysch.

Thank you. Good afternoon, and welcome to ChromaDex Corporation's Fourth Quarter 2023 Results Investor Call. With us today are ChromaDex's Chief Executive Officer, Rob Fried; Chief Financial Officer, Brianna Gerber; and Senior Vice President of Scientific and Regulatory Affairs, Dr. Andrew Shao, who will join the call for Q&A.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 trials, the timing of future regulatory filings, the expansion of the sale of TRU NIAGEN in new markets, business development opportunities, future financial results, cash needs, operating performance, investor interest and 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 assurance 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 most recently filed with the SEC, including results of operations, financial condition, cash flows as well as global market and economic conditions on our business.Please note that ChromaDex 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 to changes in its expectations.In addition, [ certain ] of the financial information presented in this call references non-GAAP financial measures, the company's earnings presentation and earnings press release, which were issued this afternoon and are available on the company's website, present reconciliations to appropriate GAAP measures.Finally, this conference call is being recorded via webcast. The webcast 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 our Chief Executive Officer, Rob Fried.

Good afternoon, everyone, and thank you for joining us on today's investor call. I'm proud to announce that we delivered a strong fourth quarter with solid revenues and excellent bottom line improvement. We delivered $21.2 million in revenue and positive adjusted EBITDA of $1.2 million. Additionally, the fourth quarter marked an important milestone with the company achieving positive net income of $0.1 million. Further, we generated net positive operating cash flows of $650,000, ending the year with $27.3 million in cash and no debt.In 2023, we had full year net revenues of $83.6 million, a 16% increase year-over-year and full year positive adjusted EBITDA of $1.9 million. Brianna will soon provide detailed financials and the outlook for 2024. But as I look at the progress the business has made to date and look at the landscape of market opportunities, I'm very encouraged and optimistic about our prospects.I see 2024 with continued growth from existing channels and partnerships and through some new ones as well. We expect to surpass last year's 16% growth rate, while remaining financially disciplined in our investments and in our spending.Our largest and most reliable revenue stream continues to be our e-commerce platform. E-commerce sales for the fourth quarter were up 20% year-over-year as our marketing team continues to execute on initiatives and campaigns that drive direct and efficient returns and growth.While not a major contributor to the growth in the fourth quarter, Watson's continues to be a valuable strategic partner for ChromaDex. We're very happy with their sell-through trends, and we are working closely with them to develop new ways to expand the business.In November, we made the clinical strength dose product, the TRU NIAGEN PRO 1000 milligrams, available on Amazon and on our website, truniagen.com. This addition to the TRU NIAGEN product portfolio offers consumers a safe, more efficient and more efficacious way to improve NAD levels and Cellular Health.Since the launch of the TRU NIAGEN PRO 1000 milligram product, we have seen high consumer demand. The product has sold out twice, but is now back in stock on both Amazon and our website as we increased our purchase orders to reflect higher demand.We also announced last quarter that our partner, Zesty Paws, had launched the healthy aging NAD+ precursor to benefit the healthy aging for dogs. We're pleased thus far with the launch. We're seeing solid demand for the product based on their reorders of NIAGEN, and we are excited to continue to work with Zesty Paws to develop future innovations in the pipeline to bring healthy aging to the pet supplement space.We also announced that Nestle Health Science launched its Solgar Cellular Nutrition line of supplements, which features a multi-ingredient product that incorporates NIAGEN to support cell energy, repair and vitality. The cellular energy product launch is still in the early launch phase, but we are encouraged by the trends early on.We look forward to future product launches with other brands under the Nestle Health Sciences portfolio, one of which is planned for later this year. And I would like to mention our new partnership with Neurohacker Collective, who launched Qualia NAD+ last December. Qualia NAD+ is a multi-ingredient supplement that combines 3 NAD precursors, notably NIAGEN, with 11 other ingredients to support additional aspects of NAD+ production. So far, so good, and we are hopeful that they will be another successful and responsible addition to our partner base.I'm very proud that our team partnerships with companies like H&H and Zesty Paws and Nestle Health Science and Neurohacker, and Life Extension, Ro and a few others, all of whom share a deep passion to promote expanded health span and that do so in a responsible manner. I look forward to announcing future product launches and perhaps some new trusted partners as well.We continue to cement our scientific foundation as the world's leading NAD company by furthering research on how NIAGEN can benefit longevity and healthy aging. Since the last quarter, there were a few key clinical studies completed.The first study was one that I referenced in the last earnings call, the NR-SAFE study, which was published in November and examined the safety of high-dose NR supplementation at 3000 milligrams per day and the impact of NAD and clinical severity in patients with Parkinson's disease. The study concluded that high-dose NR supplementation is indeed safe and well tolerated with no related adverse events.Additionally, NR was found to improve clinical symptoms of PV patients, as measured by the Movement Disorder Society Unified Parkinson's Disease Rating Scale, suggesting that improving NAD levels may have a symptomatic anti-Parkinson's effect.A second completed study investigated the effects of NR supplementation with and without resveratrol in individuals with peripheral artery disease, PAD. The study concluded that NR supplementation and beneficial effects on the [ walking ] performance of patients with PAD and suggested that the addition of resveratrol did not provide for further improvements in the effects of NR.Another notable study that was recently completed examined the effects of NR supplementation and metabolic dysfunction in Werner syndrome, a rare genetic disorder that causes premature aging, characterized by metabolic abnormalities. This Phase I study is the first clinical study involving NR supplementation in Werner syndrome patients, and we eagerly await publication of the results, which are anticipated later this year.While the preliminary findings from the PAD clinical study and the pending publication of the Werner syndrome clinical study will warrant further investigation in larger clinical trials, we're very excited about the potential of NIAGEN to offer therapeutic benefits for individuals with different elements and [ orphan ] diseases.At ChromaDex, we believe TRU NIAGEN continues to be the best NAD boosting product in the market, and we pride ourselves as a leader in an industry aiming to improve the lives of others. With over 30 peer-reviewed published human studies and over 100 published scientific studies for its numerous health benefits, we believe NIAGEN has boundless potential to improve the health of all individuals.At ChromaDex, we are all deeply passionate about bringing NIAGEN to consumers in innovative ways to benefit their lives. As we have alluded to in the past, there are innovations that will result in new NR verticals that are close to launching. Over the last 2 years, we have invested heavily in these innovations, including proper safety and efficacy studies, proper compliance with regulatory bodies and planned appropriately for commercial launch.While we know that doing things by the book takes more time, I am confident that these innovations will yield great long-term value to our shareholders. We look forward to sharing more details on these updates in the very near future.Our position as the global leader in NAD science is built on a foundation of trust and integrity. However, as I discussed in my recent op-ed published in Natural Products Insider, not all companies in the dietary supplement industry hold themselves to the same standard.Due to insufficient enforcement resources and lower barriers to entry with the explosion of the commercial internet, there's a proliferation of companies selling supplements with false self-claims, mislabeled products, using illegal ingredients and not conducting clinical studies necessary to properly validate safety and efficacy.Furthermore, there are limitations of the well-intended DSHEA law that restrict communication of research due to concerns of our implied disease state claims. This provides a disincentive to develop novel ingredients and perform studies proving safety and efficacy, as we have done with our over 30 published clinical studies on NIAGEN to date.As most of you may know since FDA's announcement that NMN may not be sold as a supplement. NMN is still prevalent in the marketplace and companies that continue to sell NMN are being disingenuous to consumers. NMN continues to have a presence despite numerous studies validating NR being superior as an NAD precursor.We have seen some businesses start discontinuing NMN products on their websites and platforms, such as I heard most recently, and other online businesses beginning to cease promotions on NMN products. But yet NMN companies prevail. Indeed, some new ones are emerging.The call to action is to form a consortium to self-regulate the industry to foster trust and true innovation for the betterment of human health through supplementation.Finally, with regard to litigation, last earnings call I had mentioned that the U.S. District Court of Appeals in New York affirmed that our settlement with Elysium was enforceable. We look forward to collecting on what is rightfully owed to the company.Additionally, our exclusive supplier, W.R. Grace, won a jury verdict on patent infringement against Elysium and now await the judge's decision on follow-up matters, including damages.ChromaDex continues to be the leader in NAD science and as a trusted partner to researchers, regulatory authorities and world-class business partners to drive innovation to improve as many lives as possible. The true believer mentality extends from everyone at ChromaDex to our network of business partners, our investors and to our valuable consumer base. We are grateful to all of you to assist us in responsibly spreading the word.I would now like to turn the call over to Brianna to discuss the quarter's results in greater detail. And then on to Q&A, and then closing remarks. Brianna?

Thank you, Rob. It is a pleasure to speak to our investors, partners and employees who have joined us today. ChromaDex delivered on our full year 2023 financial outlook to investors across all metrics and exceeded our targets for gross margin and G&A expense.For the full year, we delivered total net sales of $83.6 million, a 16% year-over-year increase. Gross margins of 60.8%, selling and marketing expense down approximately 770 basis points as a percentage of net sales, a modest increase in R&D investments of $0.1 million and a decrease in general and administrative expense of $3.3 million year-over-year, better than our outlook of flat to down $1 million. We also delivered positive operating cash flow of $7.1 million.Our underlying business, as measured by adjusted EBITDA, a non-GAAP metric, delivered approximately breakeven or positive adjusted EBITDA in each quarter throughout 2023, ending the full year with a positive $1.9 million, an improvement of $11.9 million compared to the prior year.We have provided a reconciliation to the appropriate GAAP measure in our earnings release material. We achieved these strong financial results while investing in important strategic initiatives that will extend our business beyond dietary supplements. We expect to launch at least one of these initiatives soon and believe they will yield a larger lasting impact in 2025 and beyond.The financial and strategic achievements in 2023 underscores our commitment to balanced growth and profitability. It also speaks volumes about the dedication of our amazing ChromaDex team, who continuously drive improvement and approach the business with innovation and adaptability.With that, let's turn to the fourth quarter of 2023 financials. Highlighting the key metrics of our fourth quarter performance. ChromaDex delivered total net sales of $21.2 million, a strong gross margin of 61%, slightly positive net income of $0.1 million and maintain positive operating cash flow for a fourth consecutive quarter, driven by improvements in working capital.The underlying business, as measured by adjusted EBITDA and non-GAAP metric was a positive $1.2 million in the fourth quarter, an improvement of $0.9 million from the prior year quarter.Moving to the P&L details. As I said, total net sales were $21.2 million, up 1% year-over-year compared to the fourth quarter of 2022, a 9% increase in TRU NIAGEN, driven by 20% growth in e-commerce, partially offset by a 14% decrease in combined Watson's and other B2B sales.Watson's sales were lower due to a challenging comparison in the prior year, which benefited from a catch-up in shipments from earlier quarters as the business gradually recovered post-COVID. Other B2B sales were also down modestly due to the timing of partner sales, which are less predictable.As expected, NIAGEN ingredient net sales were down 30% year-over-year, largely due to the absence of the upfront minimum purchase of $2 million from Nestle Health Science in the prior year. Excluding this onetime Nestle driver from the prior year quarter, NIAGEN ingredient sales were up 42%, largely aligned with growth for the full year.Gross margins improved by 380 basis points to 61% compared to 57.2% in the fourth quarter of 2022, largely attributable to a shift in business and customer mix as well as benefits from economies of scale.Selling and marketing expense as a percentage of net sales increased 130 basis points to 30.8% compared to 29.5% in the fourth quarter of 2022 as we began to scale our spend from the low levels last year and had a higher mix of TRU NIAGEN sales, which requires more marketing investment than NIAGEN partner sales.As reported, general and administrative expense decreased by $0.6 million, driven by lower legal and royalty expense. Finally, our operating loss improved by $1.3 million year-over-year as higher sales and initiatives to optimize our spending across the organization were slightly offset by higher marketing investments.Moving to the balance sheet and cash flow. Our balance sheet remains strong. We ended the quarter with $27.3 million in cash and no debt. For full year 2023, our net cash provided by operations was $7.1 million versus a use of cash of $15.1 million in the prior year.The difference this year was driven by improvements in our net loss and positive impacts from changes in working capital. The changes in working capital were driven by reductions in trade receivables, inventories and prepaid and other assets, paired with increases in accrued expenses and accounts payable. While we continue to optimize the key drivers of working capital such as inventory, we do not anticipate a similar benefit in 2024 as we invest to scale the business.Lastly, we have provided details on key P&L metrics for our 2024 full year outlook in our earnings press release, along with the slide presentation. As it relates to our full year 2024 net sales, we expect a higher rate of revenue growth compared to the 16% growth seen in 2023.This outlook assumes continued growth through our e-commerce business and established partnerships. It also assumes upside through opportunities with new partners, new channels and new product launches.Over the last year, the company has invested in R&D initiatives that are close to commercialization. As such, we are including estimated revenue from new launches in our outlook. There is still some uncertainty around launch timing and ramp up, but we are confident in the long-term revenue potential as we enter new market verticals.We anticipate that our gross margin will improve slightly year-over-year as we build on supply chain optimization efforts and cost savings that were put in place during 2023 and benefit from overall scale. Further, we expect that selling and marketing expense will increase year-over-year in absolute dollars, but will remain stable as a percentage of net sales.We continue to pursue focused customer acquisition strategies and further optimize our digital marketing investments. At the same time, we plan to invest in resources to execute on our e-commerce growth plans and in market launches, including investing more in influencer marketing and building our internal team.We expect that R&D will be up year-over-year as we continue to invest in new innovations that are close to launch, along with new NAD precursor development, which we believe hold the potential for applications in new market categories and other future uses. We expect that this increase will be more meaningful than in recent years.Finally, we expect reported G&A to be up $1.5 million to $2.5 million year-over-year, driven by investments in infrastructure to support our current growth trajectory and anticipated new market launches. As always, we will remain disciplined in our approach while we ramp investments in these areas.We are confident in our full year 2024 financial outlook for a stronger top and bottom line. Since the third quarter of 2022, we have consistently been managing the business to approximately cash flow breakeven, and we expect to continue to operate with this discipline while scaling our revenue.We do anticipate that the first half of the year will include heavier investments, particularly in R&D to prepare for new launches. Accordingly, revenues will ramp in the second half. At the same time, R&D investments will moderate.Furthermore, we recorded our highest quarterly revenue in the first quarter of 2023 and do not expect the first quarter of 2024 to be the highest of this year. While we are actively cultivating new partnerships and have recently secured promising deals, the full impact of these endeavors will take time to scale.In summary, as I reflect on the past 18 months as CFO, I'm incredibly proud of the significant strides we have made in reshaping our company into a leaner, more efficient and focused organization while also driving accelerated revenue growth. We successfully delivered on our immediate business and financial objectives, positioning ourselves for a promising 2024.[ Though ] certain new launches experienced delays, we are increasingly optimistic about our ongoing initiatives and partnerships. I'm consistently impressed by the unwavering passion and dedication shown by the ChromaDex team. Looking ahead, we are excited for investors to see meaningful new innovation from ChromaDex, further solidifying our position as the gold standard NAD company this year.Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

So I guess, firstly for us, can you dig into TRU NIAGEN PRO a little bit and perhaps walk us through the margin profile and what you're seeing from customers out there, new customers and existing customers and conversions from existing customers and new customers, give us a little flavor for the landscape, please?

Well, as you know, most of the studies that have been conducted have been at a 1,000 gram dosage -- 1,000 milligram dosage. So we had many requests over the years from consumers who wanted us to sell at that comparable dose level. So we decided to create this formulation, and we put it out in the marketplace, I believe, in November, and it sold out in 2 weeks' time.Now what took us by surprise is that many of those customers were actually new to brand customers. We expected it to be an upgrade from existing customers getting to the dosage that was comparable to the studies. We race to getting new supply in. We got that out, I think, in January, was it, or December?

A couple of weeks ago, yes.

That was the third one, right? We had the first one in November, then we had a second one, I think, in December or January. That sold out also in 3 weeks. And now 2 weeks ago, we came out with our third -- we see it right now -- in the last couple of weeks, it's been our #1 SKU. So it appears that our consumers are seeing the benefits of the higher dose, which, as you know, we've shown to be not only more efficacious, but also safe. I'll defer to Brianna on the margin question.

Sure. Gross margins are similar. The idea behind -- it is a slightly lower price per on a dosage equivalent basis, but the idea is to upgrade consumers to take more NIAGEN. So it's still a good profit profile for us, and I'd say very similar, maybe slightly lower gross margin as we encourage trade-ups.

And then as a follow-up with regard to a couple of your partners. Any comments on Watson's and perhaps talk about some of the sell-through trends that you're seeing, and also on Nestle? Perhaps talk about some of their areas of interest?

Sure. As you know, Watson's has been an excellent partner for us for many years now. It continues to be one of the most, if not the most important single SKUs in the Watson's chain in Hong Kong. It's also in Macau and Singapore. And they are extremely interested in expanding the relationship. We have added a couple of other SKUs. There's a TRU NIAGEN Beauty product, and they're beginning to sell our TRU NIAGEN immune product.But also of late, we've been having meetings with Watson's about expanding into other verticals with them. So it's been a steady and consistent partner, an important partner, really truly a [ tent pole ] in the business of ChromaDex, but we have expectations that in the -- even within 2024, certainly by 2025, we'll have some interesting expansion opportunities with Watson's as a partner.

Our next question comes from the line of Mitch Pinheiro with Sturdivant & Company.

I guess just my first question is around guidance and sales guidance. So in the greater than 16% guidance, you said you've assumed some new products or maybe new partners. And I guess when you included in the guidance, obviously, you have decent visibility to be able to say that. I'm curious, are we -- should we expect this to be mostly in your own products, like new precursors, that type of thing? Or are these partners going to be in either other B2B or ingredient -- new ingredients?

Well, thank you, Mitch. ChromaDex is in really an interesting position, as you know, because we've developed our own consumer brand and our own -- and a good, robust international distribution platform for that consumer brand. But at the same time, we have a well-developed B2B wholesale business where we supply our ingredient to other brands and other partners.And in addition, as you mentioned, to nicotinamide riboside chloride, we have a significant portfolio of other precursors, which have different attributes to nicotinamide riboside, but all are precursors to NAD. And it is a deep and vast portfolio.As you also probably know, we've endeavored to get into certain verticals with nicotinamide riboside, but have experienced some difficulties because of its stability when exposed to liquid. What we know about nicotinamide riboside is when it's exposed to water or any aqueous solution for a long period of time, the nicotinamide and the ribose tends to separate. It's not harmful in any way, but it's less efficacious. Certain of our other precursors have less sensitivity to water, and therefore, might be more conducive to some of those other verticals.But if we were to pursue a different vertical, some of them require testing -- safety testing, efficacy testing, claims, but also regulatory approvals, not just in the U.S. but other countries as well. And this is ChromaDex's area of expertise. Now I understand that it takes a long time to do things right. Well, that's the way it is in the healthcare business. We recognize that there are a lot of companies in the dietary supplement space that just race products to market with no testing and no regulatory approvals, indeed, even mislabel or make false claims. ChromaDex doesn't do any of that.So if we are going to get into a new vertical, it's going to take time, and it does take time. And we've worked on several over the past few years. But the reason why Brianna and I have alluded to one in particular of late is because we believe it's very close. We believe it's very close, but there are obviously some details that still need to be taken care of. Some of those details are not within our control. We have partners or regulatory agencies that we need to hear from and interact with. We believe it's close, close enough for us to talk about, but it's not quite yet there.Yes, we did bake it into the cake of our projections for this year. We were conservative in those projections, yes, but they're still in there. And if something would happen that would delay this launch even further, that would impact the projections that we're making. I don't really want to get into further detail about what it is, though, if that's okay.

And then sort of a follow-up to that. So would the margins on the business -- this new business be similar? Would you be spending more in sales and marketing to support a launch that could impact margins negatively? And then related to e-commerce sort of an [ aside ], but your e-commerce marketing efficiency continues to improve. Is that something that we should expect in model for 2024?

I do expect that in the first quarter of 2024 you're going to see an increase in some R&D expenses and marketing expenses as we prepare for this launch. But overall, for the year, I do not expect it to have a meaningful impact on margins or even bottom line for the entire company, including marketing efficiency.

So you're comfortable -- we should expect marketing efficiency to continue at the current rate or better in the coming year, is what...

But not necessarily for the first quarter.

Yes, we've seen fairly consistent marketing efficiency on the e-commerce business since we dramatically reduced in the third quarter of 2022. So we've seen that play out fairly consistently since then, aside from the Amazon homepage takeover last year in the first quarter. And then the overall business, to Rob's point, there are some investments. But for the full year, our outlook is that as a percentage of sales, selling and marketing overall, including e-commerce and these other investments, will be stable.

Our next question comes from the line of Sean McGowan with ROTH MKM.

It looks like based on my expectations anyway, the revenue and gross margin upside in the quarter seems to be more in ingredients than in consumer. Am I correct in deducing that? And what can we draw from that 2 for expectations going forward?

Sean, what I'd say is quarter-to-quarter, there's always some lumpiness in that. But if you step back on a full year basis, the consumer products is in the mid-60s. The ingredient is in the mid-50s. And so we blend to a little better than 60% gross margin as a business which we think, as we said in our outlook, we'll see slight improvement on a full year basis this year. The mix will sometimes skew it a bit.We do get some nice leverage on the business for NIAGEN ingredient if you think about leveraging our fixed supply chain costs, including the teams that are here. Whereas e-commerce, there's a little bit more investment in shipping and some other things that are variable. So I think your take is right on the quarter, but I think about it on a full year, more of the same continuation.

So we're not -- like I look at the fourth quarter, and it looked like gross profit in ingredients is almost 61%. Is that an anomaly, like we shouldn't expect a sort of a permanent step up in that -- in the gross margin in that segment?

I'd look at -- yes, because the timing of ingredient sales -- NIAGEN ingredient sales are to partners, that can be lumpy quarter-to-quarter. So I think about it on a full year basis and look at it that way.

And then to the extent that you want to talk about this at all, there's a wide range of possible outcomes when you say above 16%. I mean, are we talking about potentially meaningfully closer to 20%? Or like what -- or is it just -- should that be the starting point and maybe it'll be a little bit better? I'm just trying to bracket that a bit.

So part of that has to do with this new product launch that we're talking about. Obviously, it's very difficult to make projections on something that's not in the market yet. But we think we've been conservative in our projections. So we don't yet know. We know that if it does very poorly, we still think that we will beat 2023.

Do you mean beat it in total sales or beat it in growth rate?

Beat it in growth rate.

Our next question comes from the line of Matt Dhane with Tieton Capital Management.

I did want to ask about the truniagen.com website. I know you folks have been going through an optimization process there. You said it has been underperforming over the last year. So just curious where you're at in that journey of optimizing and improving the website and what you're starting to see from it?

We have improved the return on ad spend, but it's still below what we'd like it to be. Retention is always pretty strong with the TRU NIAGEN, particularly after the first reorder cycle. So the long-term value is still very good for our website orders. But we still have some work to do to improve the new-to-brand return on advertising dollars.

Is that something you expect to have dialed in here in the next quarter or 2, Rob? Or is it going to take longer than that?

It's an iterative process. It is improving and it's improving each quarter. We're seeing a better return on our advertising spend in the optimization process. By the way, we're not alone in this process. This is a process that's pervasive throughout e-commerce companies, particularly since iOS made its algorithmic changes and made it more difficult for social media companies to retarget companies or target individuals based on their personal preferences. So it's been more challenging for many companies over the last couple of years to efficiently spend their digital marketing dollars to convert upfront. But still, our marketing spend is -- relative to new-to-brand customers is still too high. Each quarter it's getting better, and I think next quarter will be better and will continue to get better. But it's still not good enough.

I did also want to ask one additional question around the new product launch that you've referenced several times during this call. As you sit here today, I know you referenced that you're going to be ramping up spending on R&D and marketing around that here in Q1. Is your expectation that this new product is going to be launched here in the first half of '24? Is that a fair expectation at this point in time? Or is it still really up in the air?

I would say it's possible.

There are no further questions at this time. I would now like to turn the call over to Brianna Gerber for closing remarks.

Thank you, [ Mandeep ]. There will be a replay of this call beginning at 7:30 p.m. Eastern Time today. The replay number is 1-800-770-2030, and the replay ID is 8584242. Thank you, everyone, for joining us today and for your continued support of ChromaDex.

This concludes today's call. You may now disconnect.