The Canadian maker of Reducol, a phytosterol ingredient, said the sale to Transition Therapeutics will include an upfront payment of US$1m in cash, paid at closing.
There will also be future potential payments of up to $6m in cash or Transition shares, based upon Transition reaching certain developmental and regulatory milestones, said Forbes.
The move comes as part of a restructuring plan announced in May, allowing the company to put all its weight behind its functional foods and dietary supplements businesses, which the firm said are its "revenue-generating" operations.
“This initiative will reduce the company's burn rate while allowing Forbes to clearly focus on further developing its nutraceutical business - through both organic growth and M&A initiatives within the functional food and dietary supplement markets," said Charles Butt, the firm’s president and CEO.
As part of its restructuring, Forbes had also said it would reduce personnel, as well as reducing research and development expenses by around $2.7m. Last year, the company spent some CA$3.5m (US$3.49m) on R&D.
In its latest annual report, Forbes reported net loss for the year ended December 31 2007 of $11.7m, more than last year's loss of $10.8m.
Back in May, the company had said that its strategic focus on the nutraceutical sector "represents a truly pivotal point in Forbes' development".
"The estimated global market for functional foods has reached more than US$30 billion, and consumer trends point to an increasingly active population that values the pursuit of healthier lifestyles. Building on these positive dynamics, Forbes will continue to target exciting commercial opportunities in the functional foods and dietary supplement markets in the US, Europe, and the rest of the world," said Butt.
The sale of the pharmaceutical assets announced yesterday mean that Forbes will close its drug development facility in San Diego, California.
The firm said it is currently considering selling its pharmaceutical business unit. It has a drug development unit in San Diego, California.
Forbes now expects to focus more on growing its sales of Reducol, its flagship cholesterol-lowering ingredient, as well as its phytosterol product portfolio. Adjacently, it plans to improve profitability and further reduce costs.
The company will also aim to target key mergers and acquisitions in order to further build its nutraceutical business base.
Last week, Forbes reported a 27 per cent increase in sales of its phytosterols in the first six months of 2008. Revenues from phytosterols increased to C$2.69m in the first six months of 2008, from $2.11m in the same period of last year.
Net loss per share was reduced from $0.71 to $0.63.
The global market for phytosterols was recently estimated by Leatherhead Food International to be worth some US$555m to $585m. It is seen as one of the most compelling areas of the functional food market; the first carrier products were fats and margarines, but now sterol-containing juices, milks and yoghurts are coming on the market.
Forbes’s Reducol sterols are derived from wood pulp. According to Leatherhead, there are around 20 countries active in the global phytosterols/stanols market; the market leaders are ADM, Cognis and Raisio.