Fermentalg announces signing of distribution agreement for DHA-rich oils and Q3 2017 successes
21 Nov 2017 --- French microalgae specialist Fermentalg has signed a first distribution agreement for algal oils with specialty chemicals and food ingredients company IMCD Group. The news comes as Fermentalg publishes its business review for the third quarter of 2017, with highlights including its strategic partnership with DIC Corporation in pigments and successfully raising €12.6 million (US$14.8 million) in funds as part of a capital increase.
Signing of first distribution agreement for algal oils
The third quarter of 2017 for Fermentalg was marked by the signing of a Europe-wide distribution agreement with IMCD Group, a company that works in the sales, marketing and distribution of specialty chemicals and food ingredients. The agreement includes DHA350, an omega 3-rich algal oil unveiled at Vitafoods Europe, and DHA550, an oil offering a high concentration of omega 3 that is scheduled for launch in the first half of 2018.
Fermentalg notes that its model involves selling its products indirectly through business partners with in-depth knowledge of their markets and considerable sales resources. Several business partnerships are currently being negotiated, the company adds.
Strategic partnership with DIC Corporation in pigments
Fermentalg reports that third-quarter 2017 was also marked by the September 11, 2017 signature of a two-component strategic partnership agreement with Japanese global chemicals company DIC Corporation.
“This alliance will enable us to accelerate our expansion into microalgae-derived natural pigments, our company's second major development focus alongside omega 3 rich oils,” Philippe Lavielle, Chairman and CEO of Fermentalg, said at the time. “This agreement is proof of the effectiveness of Fermentalg's biotechnology platform and of our ability to win over global industry leaders.”
Designed to allow Fermentalg to step up its presence in the health and nutrition market, the partnership includes:
- A three-year joint development program for two microalgae-derived natural pigments, one of which is phycocyanin (natural blue pigment).
- A €5 million investment by DIC Corporation in Fermentalg in the form of bonds convertible at €5.00 per share.
The convertible bond issue, which was carried out on October 24, 2017, is primarily intended to finance Fermentalg's R&D activities and its industrial investments, which include the implementation of the joint development agreement.
Stronger financial resources
Also during the period, Fermentalg successfully raised €12.6 million in funds as part of a capital increase with preferential subscription rights maintained, which was 1.6 times oversubscribed.
The increase gives the company the additional means to finance its development, notably through the partnership signed with DIC Corporation, in natural food colorings, nutrition and health.
On September 30, 2017, Fermentalg's gross cash position amounted to €7.5 million (versus €10.2 million at end-June 2017), not including the proceeds from the capital increase or the DIC Corporation convertible bond issue. With these two transactions, the company has secured financing until the first half of 2019.
