BLIS raises funds for global probiotic roll-out

By Jess Halliday

- Last updated on GMT

Related tags New zealand Probiotic

New Zealand oral probiotics developer BLIS Technologies is to issue
new shares to fund an expansion of its business into new
international markets and to boost development efforts.

A meeting last week, shareholders approved a proposal for a renouncable rights issue of up to 44,801,079 new ordinary shares to existing holders, on the basis of two additional shares for every five held, and at a price of NZ$0.57 each. They also approved the allocation of up to 19.99 per cent of the ordinary shares to one or more strategic cornerstone shareholders, subject to provisions in the rules of the New Zealand Exchange, on which it is listed. The company has said it will use funds raised to obtain regulatory approval for the use of its probiotics in foods by the Food and Drug Administration - a step that will allow it to break out of supplements and into new product types. It will also look to increase its development capabilities, and commercialise "the next generation of BLIS probiotics".​ Probiotic bacteria make up a major area of interest for the nutraceutical food and supplements industry, and considerable research is taking place to explore their full potential for human health. BLIS' ingredients and finished products are aimed at the oral health market. But Dr barry Richardson, the company's CEO, said: "There is a growing body of international evidence suggesting a link between poor oral health and the increased risk of other diseases such as cardiovascular disease. "Since BLIS' technology platform is about the maintenance of oral health, throat and upper respiratory tract health, this is a reason why we could expect a reasonable proportion of revenue from research contracts in the coming year." ​ BLIS current has a two-pronged strategy for its probiotic portfolio - the sales of retail brand products (presently only in New Zealand) and a global branded ingredient strategy. Last year it carved out a research deal with Nestle to investigate the use of its probiotics in infant formula products. This commercial arrangement is said to be going well, and Richard said the company is "well advanced with at least two other leading global brand manufacturers in very distinct and unrelated industries".​ In an effort to smooth its way into the international fray, BLIS is in the throes of negotiating a marketing agreement with DSM that would target sales in 2008, initially in nutrition and food-based applications. This differs from the R&D contract that was originally on the table between the two companies, but BLIS has said "it is anticipated that DSM and BLIS Technologies will later undertake a research contract to expand into other product applications [beyond nutrition and food-based]".​ Richardson explained that the company did not feel it could pursue the same retail product strategy in the rest of the world as it has done in New Zealand since, while it could scale up production to meet demand, marketing and distribution costs would be beyond its reach. Moreover, the technical nature of its products would mean BLIS would need to provide its customers with significant support - something that would prove hard without going through the expensive process of setting up its own premises in target markets. Thus, it opted to partner with a company that already has a strong arm in the ingredients sector, and with specialist distribution and marketing to boot, that would facilitate access to top brands in its target sectors. BLIS said it already has the following products on the launch-pad in international markets:

  • A launch of products in the Irish market in 2008. BLIS has gained regulatory approvals in both Ireland and Germany, which it expects will ease its way towards roll-out across the EU.

  • Test marketing for BLIS K12 lozenges in China before the end of the fiscal year. This will take place at the sale time as regulatory approval is completed.

  • Early stage but optimistic discussions with a Korean pharmaceutical company. Business partnerships are also being sought in Japan and Taiwan. In the full year to March 31 2007 BLIS reported a loss of NZ$1.108m loss, compared to a loss of $1.336 m for the previous year. The loss reduction was attributed to a reduction in costs, as well as an increase in revenue of 12 per cent to $471,000. Research grant income also increased slightly, to $75,000. The company's priority stated in its 2006 report is to achieve profitability.

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