An Auckland biotech start-up, Photonz Corp Ltd, says it has signed a deal with French company Separex to extract an omega-3 fatty acid from fermented algae.
The company has a patented technology to produce EPA, or eicosapentaenoic acid, from algae and since 2002, it has raised $6.2 million in start up capital.
Currently EPA for pharmaceuticals can only be sourced from fish oil.
Photonz recently announced it is seeking at least an additional $5 million for continued development, including deals with Italian and French contract manufacturers to carry out scaled-up production.
French company Separex will then extract EPA, a long-chain omega-3 fatty acid claimed to lower blood cholesterol levels when used with statin drugs, the company said in a statement.
Photonz said it expects to produce high-quality, high-value EPA from marine microalgae for sale in the $US60 billion cardiovascular disease market, competing with natural fisheries as a source.
The company's prototype industrial fermentation plant harvested the first batch of algae in April last year and last month was given a $2.9 million handout of taxpayer money -- its third -- as a TechNZ research and development grant. The latest grant will enable it to complete its process development programme, proving the full manufacturing process at prototype industrial scale.
The money will also fund the technology transfer package to enable the full-scale manufacture in Italy or France.
"EPA demand is going to outstrip supply," said chief financial officer Richard Justice. "The fisheries supply that exists today is under threat."
Fish concentrate the EPA in their own bodies from eating the sea-borne microalgae. Photonz has said that it can ferment the same algae and extract EPA direct -- theoretically with the same perceive health benefits.
Photonz already has a US partner to distribute EPA, and once the company is making profits, it will look to set up other production and concentrating facilities in New Zealand, Mr Justice said.
"We're still at an early stage of product development," he said. "What we've done with the algae fermentation is something no one else has achieved, though there's been plenty who have been trying. We've flown under the radar of most people".
Chief executive Gregory Moss-Smith - who has said the company may need as much as $8 million to produce and purify EPA on an industrial scale overseas, said the research and development work would remain in New Zealand.
"Given the sheer size of the potential market and the scalability of the business opportunity, we're better to go with overseas contract manufacturers," Mr Moss-Smith said.
Separex will use liquid carbon dioxide as a solvent to extract the EPA lipid and deliver a pharmaceutical-grade product that Photonz said was identical to the fish-derived product.
Since its formation in April 2002, Photonz has issued 9,594,885 shares and has raised over $6.2 million in capital to fund the company's progress.
Over a third of the shares are held by Warehouse founder Stephen Tindall's K One W One company, and nearly two million by Public Health NutritionLtd director Karl Thomas Geiringer. Another 30 shares are held by smaller investors such as British MP Austin Mitchell, former NZ MP Hugh Templeton and Auckland financial consultant Murray Weatherston.
