The Canadian company has announced revenue increase for the three month period ending June 30, 2007 of C$2.2m, up from the previous year, which reached $1.3m. Net loss decreased, to $3.4m compared to a loss of $5.9m for the same period in 2006.
Revenues of phytosterols, the earning's driver, showed a 62 per cent increase from $1.3m in 2006, to $2.1m for the current period. The announcement of a contract renewal and product line expansion for Naturemade supplements with Reducol was a highlight of the quarter.
However the company has said it was hit with unexpected expenses as the cost of a component in one of its core nutraceutical products increased. The result, the company said, is unexpected inventory costs and capital resources that will fund the operations only through to the beginning of Q2 2008.
Forbes Medi-Tech had previously said it expected to have sufficient funding available to the end of Q2 2008. The component in question has not been identified, not has the level of addition expense been broken out.
"The company is diligently working to obtain additional funding, as well as to enhance its portfolio of products through potential strategic partnerships and M&A activities," it said.
Since Forbes Medi-Tech is presently investing in R&D on its FM-TP pharmaceutical compounds, it expects to continue reporting operating losses from continuing operations. R&D spend for the quarter was $898,000.
Reducol, the company's branded phytosterol ingredient, has featured in rye bread through Kesko of Finland in the second quarter, a move which contributed to the healthy revenue growth. Additional launches are planned for the remainder of 2007 and a continued focus on finding new business in the US and international markets for the ingredient.
"Our revenue and customer list continue to grow with the global expansion of Reducol" said Charles Butt, president and CEO.
"While Reducol product launches may help build the company's revenue, the gross margins of our nutritional business remain to be a key focus. Although inventory write-downs have affected our overall gross margin during the first half of the year, the margins on individual product lines are meeting our expectations," he continued.
In 2006 Reducal was launched as a product ingredient through retailers including Tesco and Wal-Mart/ASDA in the United Kingdom, Albert Heijn in the Netherlands, Kesko in Finland, Modelo Continente and Jeronimo Martins in Portugal as well as Carrefour in France.
The company has placed significant emphasis on the ingredient playing a large part in its marketing and sales outlook for 2007, which predicts a continued revenue guidance of $7.5 - $8.0m.
The anticipated revenue is based on contracted and forecasted amounts of Reducal and other sterol products in the functional foods and dietary supplements markets reaching the expected sales heights the company is anticipating.
