Forbes Medi-Tech completes sale of Phyto-Source share
Phyto-Source, its sterol manufacturing joint venture with Chusei
(USA) to Chusei Oil Co for US$25 million, and plans to use the
proceeds to develop more nutraceutical and pharmaceutical
ingredients.
The Canadian company formed the joint venture with the US subsidiary of Japanese Chusei Oil Co in 2001, at a time when it needed a source of sterols for its cholesterol-lowering ingredient Reducol.
Five years on, however, president and CEO Charles Butt said: "We believe that owning an interest in a sterol manufacturing facility is no longer critical to Forbes' business strategy of developing and marketing a continuum of products for the prevention and treatment of cardiovascular disease."
The impending sale was first announced in mid-February. Although there are now alternative sources of sterols available, Forbes has agreed to buy all of its sterols exclusively from Phyto-Source for the next year.
Investor relations manager Darren Seed told NutraIngredients-USA.com that global supply of phytosterols has increased over the last five years. He said that the company may look at whether there are other sources available to suit its needs once the year is up.
Forbes has also agreed not to compete with Phyto-Source in the manufacture of wood sterols from any tall oil material containing phytosterols for the next five years. However this would be an unlikely move for the company anyway, since Seed stressed that Forbes has never been a manufacturer per se.
Forbes' contribution to the establishment of the facility was $8.1 million.
But Butt said in a statement today: "The completion of this transaction represents a significant step in strengthening our balance sheet and solidifying our position as a life sciences company dedicated to the prevention and treatment of cardiovascular disease.
"Moving forward, we will continue to build revenue from our value-added ingredient business with cholesterol-lowering Reducol at the forefront."
For the first nine months of fiscal 2005 Forbes Medi-Tech reported phytosterol sales of C$17.13m. Losses for the period were $7m. Results for full year 2005 are expected before the end of March, as is revenue guidance in which the sale will be reflected.
Seed said that the majority of sales recorded in the past has been through its non-branded phytosterols - that is, Phyto-Source.
"The revenue going forward will be from Reducol and other value-added [branded] ingredients," he said.
Seed was not able to reveal details of forthcoming nutraceutical ingredients, but the cholesterol-lowering drug code-named FMVP4 is currently in phase II trials, which are expected to complete in Q3.
