Forbes Medi-Tech, Pan Pharmaceuticals Sign International Supply Agreement

VANCOUVER, British Columbia--Forbes Medi-Tech Inc. (TSE:FMI and NASDAQ:FMTI) announced an international supply agreement with Sydney-based Pan Pharmaceuticals Ltd. (ASX:PPH) for Reducol(TM), a cholesterol-lowering phytosterol-based ingredient, to be used in dietary supplements. The initial supply agreement is for a minimum of three years and secures Pan Pharmaceuticals' exclusive rights to supply Reducol in the form of a dietary supplement to the Australian market, as well as selected countries in Asia, the Middle East, Africa and Europe.

"We will be supplying base product--base materials--to Pan Pharma, and they will be acting in most cases as a distributor of sorts in these foreign entities," said Darren Seed, manager of investor relations at Forbes Medi-Tech. "They will also maintain the marketing rights to Reducol in those foreign entities."

Forbes, which developed and manufactured Reducol (originally called Phytrol(TM)), initially licensed the ingredient to Novartis in 1999. However, on June 18, Forbes regained the licensing and distribution rights to Reducol, after having sent a notice of termination of the master license agreement in February. Forbes is currently making royalty payments to Novartis, which will continue for approximately the next 18 months, according to Seed. "By that, we gain full access to all revenue, contracts and new clients directly," he said. "Therefore we do not have to involve Novartis in any new contract negotiation."

As Novartis had previously been responsible for international distribution, Pan Pharmaceuticals was a good match for Forbes due to its international ties. "One downside to settling the Novartis agreement is that Novartis was maintaining most of our global regulatory authorities in those foreign counties in which Novartis had a presence," Seed said. "With the settlement agreement, Novartis then was no longer responsible for maintaining--or obtaining, I should say--regulatory approval for Reducol in foreign countries. Now, Pan Pharma has sort of picked up that ball, if you will."

Reducol is currently approved for sale in Australia, according to Seed, and additional international regulatory approvals are expected in the near future. "I can see a lot of very steady, consistent growth both on the dietary supplement and the food ingredient side," Seed said. "This specific agreement today was more relative to the dietary supplement market. As for Forbes in general, I'd like to say I can see some very consistent growth over the next few months. That's a big push for us right now."