HBC eyes 2022 launch for consumer health brand as R&D projects take off

08 Nov 2021 --- Hofseth BioCare (HBC) has seen “continued steady progress” with its commercial execution during Q3 2021. Notably, its work to develop a new consumer health brand continued to gather momentum in the quarter, and it is set to move into the launch phase in 2022.

“Initially, we will sell through a direct-to-consumer e-commerce model, followed by a roll-out to retailers in the US and selected other global markets,” says CEO Roger Hofseth.

The financial results also highlight “groundbreaking” findings from HBC’s R&D program, which include salmon protein hydrolysate (SPH)’s gastrointestinal (GI) protective properties and new information on acne and allergy applications. 

“The R&D update is particularly exciting as new pre-clinical and clinical evidence built in our focus areas during the third quarter,” says Hofseth. 

In addition to having nearly 20 distinct scientific leads related to discrete nutritional and health benefits, the Norway-based company is now closing its first drug lead in the form of a new analog (MA-022). It is created by modifying a compound found in OmeGo salmon oil.

“We can now categorically prove this is significantly more bioactive than the original component in the oil itself, both in terms of its anti-inflammatory and anti-allergic effects in eosinophilic inflammation,” says Hofseth.Q3’s sales revenue and EBITDA are both down from previous quarters. 

Targeting numerous research areas
A large mouse trial confirmed SPH can reduce intestinal injuries in the classical TNBS/DDS-induced inflammatory bowel disease model. The R&D team also worked toward the identification of the peptides driving GI health benefits.

Another project was isolating peptides in SPH that help fight anemia by upregulating the FTH1 gene. They found that these eight peptides promote the production of the heavy chain of ferritin protein, which increases the body’s storage capacity for iron. The team is now examining manufacturing SPH with an increased concentration of the FTH1 upregulating peptides.

In the personal care arena, the team found potential for polar bioactive peptides in SPH to modulate acne development via both anti-inflammatory and antimicrobial modes of action. Follow-up animal model assays are planned for in 2022.

HBC’s products were also examined for potential in asthma, allergic inflammation and calcium supplementation. 

Halted calcium production takes a toll
Overall, HBC had net sales revenues of NOK 13.7 million (US$1.6 million) in the third quarter and total operational revenues of NOK 61.5 million (US$7.2 million) for the first nine months of 2021. 

Operational profit (EBITDA) for Q3 was NOK -36.8 million (US$-4.3 million) and NOK -84.6 million (US$-9.9 million) for the first nine months of 2021. 

Gross margin was flat in the third quarter, down from 45% in Q3 2020, due to a significant pick up in sales volumes to feed and pet food customers that are clearing existing inventory. There are also higher sales to human nutrition customers compared to the same period last year as well. 

HBC had a temporary halt in calcium production in early September. Adjusted for this, the adjusted gross margin was 18% in Q3. As of now, the production is still not back, and the company expects a similar effect in the gross margin for Q4.

However, HBC also anticipates an insurance settlement by the end of Q4 or early 2022 to offset any possible losses from this temporary cessation in production.HBC has nearly 20 distinct scientific leads related to discrete nutritional and health benefits.

Delivery formats diversify
Hofseth emphasizes that the company has continued to strengthen and execute its commercial strategy, including establishing a Swiss subsidiary. 

“Additionally, our existing distribution agreement with IMCD has now expanded to include most of Europe,” he states. 

IMCD’s laboratories have formulated multiple new formats and products to offer to its clients. For example, there is an OmeGo gummy concept containing 500 mg of oil per gummy and a chewable mint CalGo tablet that boasts “excellent flavor and texture.”

“We anticipate that the very high growth gummy segment will be very lucrative for the OmeGo franchise,” notes HBC. 

In other delivery format experimentations, Catalent previously created a delayed-release capsule of OmeGo. 

An “encouraging” outlook
Meanwhile, in Asia, DKSH’s marketing work is starting to translate into demand for products, with orders for CalGo coming from Korea and Japan. HBC also sees success in targeting the medical nutrition sector and health supplement producers. 

“We strongly believe that we will see sustained and growing sales within our ingredients business and have secured up-front demand for Q4 along with demand schedules for 2022. The outlook is very encouraging,” states HBC. 

Last week, HBC announced that Aqua Spark had acquired 12.1 million of its shares. 

By Katherine Durrell