Vancouver, BC - Forbes Medi-Tech Inc. ("Forbes" or "Company") today announced a plan to focus exclusively on its revenue-generating nutraceutical business, which includes functional foods and dietary supplements, and cease all in-house drug development activities. The restructuring plan involves staff reductions across various departments within the Company's current active workforce. The Company is retaining key personnel required in order to achieve immediate and longer term goals.
"We realize the need to realign our business to focus on areas that are generating immediate revenue. The head count and expense reductions that we're announcing today, while difficult, allow us to focus on further developing our nutraceutical business," said Charles Butt, President and CEO of Forbes Medi-Tech Inc.
It is anticipated that the Company will reduce its 2008 operating and research and development expenses by approximately $2.7 million. The Company forecasts an extension of its working capital into the fourth quarter of 2009 based on a number of factors including: the successful implementation of these cost reductions; a projected 20% increase in 2009 revenues; anticipated sales of excess inventories; and the receipt of the recently-announced $3 million in non-dilutive capital funding and the additional $800,000 funding within the next year.
"Moving forward, this 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 U.S., Europe, and the rest of the world," said Mr. Butt.
Key components of the business restructuring plan:
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Forbes will focus on the revenue-generating nutraceutical business area, with a mandate to grow Reducol(tm) and the phytosterol product portfolio while improving profitability and further reducing costs.
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To build the strong nutraceutical business base, the Company will retain core team members and endeavor to target key merger and/or acquisition opportunities.
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The Company has decided that all pharmaceutical development activities will cease based on the early stage of these technologies and the associated development times leading up to drug approvals.
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The Company plans to close its drug development facility in San Diego, California and reduce its current total workforce by approximately one-third, affecting employees in the U.S. and Canada.
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Forbes will continue to seek favourable business development opportunities for its pharmaceutical business unit, including out-sourcing and licensing agreements. The Company retains the ownership and rights to drug compounds and technologies within its intellectual property portfolio.
The Company's financial outlook for 2008 revenues continues to project sales of $9.75 million to $10.5 million, an increase of up to 18% compared to its reported revenues in 2007. For further discussion of our 2008 revenue guidance, please refer to the Company's press release issued on February 7, 2008.
About Nutraceuticals
An increasingly active population, the pursuit of healthier lifestyles and the desire to live longer has given rise to a category of products known as nutraceuticals. This category includes functional foods, which are conventional foods containing ingredients that provide additional health or nutritional benefits leading to possible risk reduction of contracting chronic diseases. The estimated global market for functional foods has reached more than US$30 billion. The US market alone contributes $15 billion annually to this, and the Nutrition Business Journal estimates it will grow to $34 billion by 2010. The nutraceuticals category also includes dietary supplements, which are healthful products derived from natural and synthetic food sources and delivered in a medicinal form. Dietary supplements accounted for approximately 34% of the $47.6 billion US nutrition market, according to a Health Business Partners study that was published in 2000.