Neptune's surprise investment to spur new product pipeline

By Jess Halliday

- Last updated on GMT

Related tags Neptune krill oil Krill oil

Neptune Technologies and Bioressources is planning a private
placement of common shares that will raise between C$3m and $4.5m
to help accelerate its business strategy and boost R&D efforts.

The Canadian company, whose flagship product is Neptune Krill Oil (NKO), said today that the placement follows unsolicited interest from the investment community - a clear endorsement of its future potential in the ingredients sector.

"The timing of the financing is ideal,"​ said president and CEO Henri Hartland. "It enhances our balance sheet, which strengthens our negotiating stance with multinational food corporations and pharmaceutical companies for the utilization of NKO."

Neptune is currently discussing assigning patented commercialisation rights with companies for the use of NKO in certain product categories.

Until now it has maintained close control of distribution, but Dr Tina Sampalis, VP R&D and business development, told at the HIE trade show in Frankfurt, Germany, last week, that the model will free up internal resources to concentrate on the development of ne w marine-derived ingredients.

It is hoped that the alliances will be finalised by the middle of next calendar year, with the introduction of the new pipeline by the end of 2007.

The new investment will also help drive the company towards the new product launch, since it says part of the investment will be devoted to its patented extraction platform and technology, for the processing of other marine biomasses it has identified and analyzed. These, it said, will "enrich its product pipeline with promising new marine health ingredients"​.

As for NKO, Sampalis said that the financing will enable further validation of its anti-inflammatory and cognitive amelioration benefits, and strengthen the company's IP portfolio - "both valuable assets for the company"."NKO has been an extremely exciting roller coaster going up - and it's not coming down,"​ said Sampalis. She added that the company aims to "do the same thing all over again"​, with benefit of experience it gained the first time around.

One key to NKO's success, according to Sampalis, is its close control of the brand. She said that the future licensees will be required to use the NKO brand on their products.

There are other krill oils out there, but Neptune maintains that NKO has superior phospholipids and omega-3 levels, described as the "driving engine"​ behind its efficacy.

"It's the difference between buying a Ferrari or a Toyota Datsun - they are both cars,"​ she said - but clearly one is a superior design. "We are the Ferrari."

She added that companies are now specifically requesting to use the NKO brand, since they feel it bestows an advantage on the finished product.

"That's the greatest indication that we did something right."

The investment is being arranged through Calgary-based agent JF Mackie & Company, to which Neptune has agreed to pay an amount equal to six per cent of the aggregate gross proceeds plus broker warrants equal to six per cent of common shares sold on completion.

Completion is expected to take place before the annual general and special meeting this Thursday, November 24.

In its full year 2005 results published in October, Neptune reported a 45 per cent increase in sales to C$7.29m and a 50 percent reduction in operating losses to -$0.89m (from -$1.77m) compared to the previous twelve months.

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