Rob Fried: The new patents, which were awarded approximately a year ago, they’re actually, some of them are extensions of existing patents, are really exciting for us, because it’s a combination of processed patents as well as composition of matter patents. And in combination with those also other patents that we have and, of course, the grace patent. We don’t believe anybody can make nicotinamide riboside chloride without us. That Dartmouth patent in some sense did its job for 17 years. There’s really only three, three and a half years left on that patent. So, we properly anticipated that and we built up a very, very strong moat around nicotinamide riboside in the interim period. That’s not to say that we are necessarily going to go full blown in suing people who are infringing.
We’re going to take it one step at a time and see how it goes. But we are very, very protected. Outside of nicotinamide riboside chloride, however, there are a number of analogs, not just those intermediate analogs, but other analogs like NAR and NRH that we have been researching and working on that are also very protected from a patent standpoint at ChromaDex. And there are indications that some of these analogs could be even superior to nicotinamide riboside chloride.
Jeff Van Sinderen: Okay. And I’m sorry, as far as those new things like NARH, are those in test mode at this point? Or when can we think about those being productized? Kind of perhaps starting to generate some revenue?
Rob Fried: We hope that another analog will generate revenue at ChromaDex within a year.
Jeff Van Sinderen: Okay.
Rob Fried: The process is fairly complicated though, Jeff, because ChromaDex does not cut corners. As frustrating as that may be to some investors, we do it the right way, if needed, we will get an NDI. There is another company that infringed on the Dartmouth patent that’s releasing a version of nicotinamide riboside. This company applied for an NDI or was rejected by the FDA for the NDI. So they are selling an illegal product on the marketplace right now. To our knowledge, they haven’t disclosed that. I guess they’re assuming that the FDA may not enforce it. That’s not something ChromaDex would do. We get the proper regulatory approvals. We apply for the patents. We manufacture it in a very, very safe approved way. What we release in the market is first rate, first quality, and safe.
We advertise it in a way that’s consistent with the research that’s done. We know that that’s inconsistent in the dietary supplement space. We know that it’s more time, it takes more time and it takes more expense, but it’s the way we do it. There’s a real foundation here. So in the case of these other analogs, in the event that we decide to commercialize them as a food or a dietary supplement, remember there is always the chance that we would develop them as a pharmaceutical product, but in the event that we commercialize it as a food or a dietary supplement, we are going through the proper toxicology processes, the proper regulatory processes, the proper scalable manufacturing processes before we release it as a product. But it is my hope that we will see another analog in the market within a year.
Jeff Van Sinderen: Okay, good to hear. And then if we can switch gears a little bit, just wanted to I guess get your thoughts on what you’re anticipating with Nestlé, Sinopharm, Watson, sounds like Watson is starting to turn around for 2023. What’s baked into your guidance from those for revenues greater than 10% growth, and then maybe what catalyst could potentially drive revenue to exceed that 10% level or substantially exceed, I think is how you put it?
Rob Fried: The 10% guidance is extremely conservative. We bake into its zero revenue from Nestlé, zero additional revenue this year from Nestlé. We are extremely conservative with Sino, and the Watson’s projections are just what’s contractual. Indeed, all of the assumptions around 10% are based on existing partners, based on the contracts that we have in conservative projections on our DTC business. That’s why we think there’s a very realistic chance that we will exceed 10%.
Jeff Van Sinderen: Okay. And then just to follow-up on the e-com business, your direct DTC business, are you €“ at this point, does that business turn positive? Would you anticipate that to be positive in first quarter? Or how are you thinking about that one?
Rob Fried: What do you mean by positive?
Jeff Van Sinderen: I mean up year-over-year.
Rob Fried: Oh, revenue overall, yes.
Jeff Van Sinderen: Yes, revenue.
Rob Fried: Yes, of course, we expect the DTC business to be quite a bit positive in the first quarter. Just remember the DTC business has several components of it, one of which is Amazon, another, which is Shopify. There are other international components to it. The one where there’s a great opportunity is our €“ what we call Shopify. It’s basically our domestic website that may not grow quarter-to-quarter, but we expect it to grow in the coming quarters.
Jeff Van Sinderen: Okay. So I’m sorry, so just to clarify the €“ for your own website, I guess you’re calling the Shopify website that business you’re saying may, right, that business might not grow in the first quarter, but you anticipated that…
Rob Fried: No, its 100% will grow. 100% will grow, it might not grow in the first quarter though.
Jeff Van Sinderen: Okay. Okay, fair enough. All right, very good. Thanks for taking my questions. I’ll jump back in the queue.
Andrew Shao: Anytime.
Operator: Our next question comes from Ram Selvaraju from H.C. Wainwright. Please go ahead. Your line is open.
Ram Selvaraju: Can you hear me?
Andrew Shao: Yes. Hi Ram.
