Biopharmaceutical company Cardax Inc. said its revenue for 2020 dropped more than 24% primarily due to its largest customer filing bankruptcy and the COVID- 19 pandemic affecting store sales.
The Honolulu-based company said Thursday that General Nutrition Corp., which filed for Chapter 11 reorganization in June, reduced sales orders as it closed at least 800 stores — including six on Oahu — and consequently sold fewer bottles of Cardax’s anti-inflammatory dietary supplement ZanthoSyn. The pandemic also curtailed GNC’s store sales, Cardax said.
However, GNC emerged from bankruptcy in October and has resumed orders of ZanthoSyn, Cardax said.
Cardax continues to raise money to fund its operations and said it brought in $2.5 million last year primarily through notes and convertible notes, compared with $3.4 million in 2019. The company said it repaid outstanding notes totaling $579,228 in 2020 and is using the remainder of the proceeds for general corporate purposes.
The company, which has never made a profit, has lost $72 million since its inception in March 2006, and its auditor has cautioned in Cardax’s regulatory filings that Cardax management has determined there is “substantial doubt” about the company’s ability to continue as “a going concern.” Cardax’s ability to continue depends on its ability to raise additional capital and implement its business plan, the filings said.
Cardax has 10 full-time employees and two-part-time workers and is headed by CEO David G. Watumull.
The company slightly narrowed its loss last year to $5.06 million from $5.09 million as it slashed its operating expenses 23% to $3.4 million. The reductions were primarily tied to professional fees; research and development; salaries and wages; and selling, general and administrative expenses.
Cardax said it is seeking financing for development of CDX-101, its lead pharmaceutical candidate that it hopes can become widely used for the prevention and treatment of chronic diseases driven by inflammation. The company is targeting severe hypertriglyceridemia, which is associated with chronic inflammation. Patients with the disorder have increased cardiovascular disease risk and incidence of pancreatitis.
The company also said it is seeking additional ways to sell ZanthoSyn. Cardax said its operations, including revenue and any public or private offerings, will continue to be affected by the pandemic, although the extent of the impact is uncertain at this time.
“The financing environment for biopharma companies appears favorable and we are in active discussions with multiple funding sources to advance our business strategy,” Watumull said. “GNC’s emergence from bankruptcy and the resumption of ZanthoSyn orders are also important developments.”
Cardax’s stock closed unchanged at $2 Thursday on the over-the-counter market.
2020 LOSS
$5.06 million
2019 LOSS
$5.09 million
