A 50 per cent rise in monthly sales of phytosterols helped Canadian firm Forbes-Medi-Tech register a strong end to its financial year. But the coming year looks set to be difficult, with delays in the approval procedure meaning that phytosterol sales are likely to be lower than expected in 2002.
The company has changed its year-end from July to December, and so is reporting results from the last five months of 2001. During that period, revenues from phytosterols reached C$3.7 million (€2.6m) or C$0.73 million per month, compared to C$5.8 million or C$0.48 million per month for the year ended 31 July 2001.
Excluding revenues from licensing fees, sales of phytosterols increased from an average of C$0.31 million per month for the year ended 31 July to C$0.55 million per month for the five months to December, a 78 per cent increase. This increase was primarily the result of increased sales of non-food grade phytosterols from the company's share of the Phyto-Source joint venture.
Sales of Forbes Phytrol product (under the trade name Reducol) commenced in dietary supplements in the United States through Twin Laboratories (the Cholesterol Success brand) and Pharmavite (Nature Made Cholest-Off) in October 2001 and November 2001 respectively.
Total revenues, including interest income, for the five months reached C$3.9 million compared with C$7.9 million for the year to July. On a monthly average basis, total revenues increased from C$0.65 million to C$0.78 million per month. Lower interest income was recorded because of lower cash balances.
"Forbes continues to make good progress on the commercialisation of its phytosterol business," said Charles Butt, president and CEO of Forbes Medi-Tech. "Sales through Pharmavite and Twinlab continue to grow and both companies are pleased with the performance of their respective brands in the retail market. With the completion of the manufacturing joint venture with Chusei USA, Forbes anticipates securing additional contracts for both food and non-food grade sterols which will help fund the company's pharmaceutical development programme."
The company ended the five-month period with a net loss of C$6.5 million, due to a write-down of C$1.3 million. Losses for the year to July were C$19.7 million. The company said that while the losses were clearly lower because of the shorter reporting period, they had also been reduced significantly by reductions in almost all areas of expenditures of the company.
Despite the reductions in expenditure, the company recognised that it was still in a difficult position, and that it expected to have to seek additional funding for future expenditure, in particular that relating to clinical trials and sales and marketing expenditure for worldwide sales and marketing for phytosterols.
The company's share price remains depressed and since an equity finance deal would further dilute the price, Forbes said it was looking for licensing, partnering and major long-term sterol contracts to use the phytosterol production capacity of the Phyto-Source plant. If successful, such an arrangement would reduce the company's requirement to raise capital through the equity markets.
Forbes is in discussions with several parties regarding possible major sterol contracts or alliances and with regard to possible merger or acquisition transactions. The company said it would make further announcements about any possible deals in the near future.
The company is also in discussions with the drug group Novartis over the rights to its Reducol trademark and distribution rights. Novartis has ended its functional food joint venture with Quaker Oats which included the Reducol products as a result of disappointing sales.
Furthermore, a delay in the approval of Phytrol in a number of countires, and the delay of the US Food and Drug Administration to issue its ruling which would allow label claims for Phytrol in food, the company said that expected phytosterol sales would be below those previously anticipated, with the result that sales are unlikely to meet full year targets in 2002.