Source: LOHAS Weekly Newsletter
Published: Saturday, December 01, 2001

December 20, 2001

Amgen to Purchase Immunex

Amgen Inc. (AMGN) announced it would purchase Immunex Corp. (IMNX) for approximately $16 billion in cash and stock. The deal would create a $72 billion biotechnology company if it closes as expected in the second half of 2002. Rumblings about the purchase price spread through the industry because as proposed, AMGN would pay $30/share for IMNX, 17 percent more than last Friday's closing price of $24.97, and 23 percent higher than its price on Dec. 13, a day prior to the deal being leaked to the press. The merger would give AMGN the rheumatoid arthritis drug Enbrel. However, Roth Capital Partners' Fariba Ghodsian told Reuters, ""Enbrel is a great drug, but I question whether it is worth [$16 billion]."" IMNX closed at $28.56 on Dec. 19.

OATS Hires New CFO

Wild Oats Markets Inc. (OATS) announced it has hired former VP and finance director for Gap Inc., Edward Dunlap, as CFO. He succeeds Frances Rathke, who was serving as interim CFO following the resignation of former CFO Mary Beth Lewis in July. Dunlap also worked in a variety of financial positions for companies such as R.J. Reynolds Tobacco Worldwide Inc. (RJR), Pepsi Co. (PBG) and B.F. Goodrich Co. (GR).

Boomers Drive Functional Foods Sales; U.S. Vitamin Sales Expected to Slow Down

U.K.-based consumer research company, Datamonitor, released a report saying that baby boomers are creating a surge in demand for functional foods that fight illness and aging. Datamonitor said it has identified 204 new nutraceutical launches in major markets in the past 18 months. The report suggests that the largest category in nutraceutical-type products in the world's markets was probiotic products that aim to restore healthy bacteria levels. Datamonitor noted, ""Baby boomers are also likely to have relatively higher levels of disposable income, making them better able to afford the price premium present in nutraceuticals brands than younger consumers.""

In a separate report, Datamonitor forecasts that U.S. sales growth of simple vitamins will slow slightly to 6.9 percent during the next five years, down from 7.4 percent between 1995 and 2000, as technology allows food companies to incorporate supplements into their products. Sales of multivitamins are expected to continue to grow steadily, according to the company. For more information contact Datamonitor at: www.datamonitor.com.

Pesticide Residues in Foods Could Be Harmful to Human Hormones

Data released by the British government showed that foods such as grapes, kiwi fruit, lemons and milk from major supermarkets in the country contained residues of pesticides that have been listed by the European Commission as having strong evidence of hormone-disrupting effects. The tests, which were conducted between April and June of this year, showed pesticide residues in 61 percent of grapes, 63 percent of kiwi fruit, all lemons, 8 percent of milk, 25 percent of canned salmon, 29 percent of breakfast cereals, 64 percent of cereal bars, and 19 percent of noodles.

None of the goat's milk, honey or organic produce samples tested contained pesticide residues. The activist group Friends of the Earth (FOE) has asked retailers in the U.K. to prohibit the use of the listed pesticides on food grown in the U.K. and abroad.

Stocks & Financial News:

Nutraceutical International Corp. (NUTR) reported 4Q01 net income of $1.9 million or $.17/share vs. 4Q00 net income of $1 million or $.10/share. For FY01, NUTR showed a net income of $7 million or $.64/share vs. $5.6 million or $.49/share last year.

Martek Biosciences Corp. (MATK) announced a private placement of approximately $1.2 million in newly issued shares of common stock to a limited group of accredited investors at $19.25/share. Boston-based investment firm Adams, Harkness & Hill served as the placement agent.

BioProgress Technology International Inc. (BPRG) announced it has entered into a common-stock purchase agreement with Chicago-based Fusion Capital Fund II, whereby Fusion has agreed to purchase up to $6 million of BPRG's stock. BPRG closed at $.75 on Dec. 19.

Sarasota, Fla.-based Living Naturally has announced that the Kansas Technology Economic Council and a group of private investors have completed a $300,000 investment in the firm's current round of funding to complete a rich text database for 80,000 skus. Living Naturally has teamed up with distributor Nature's Best to access 18,000 grocery and perishable food items from more than 600 manufacturers.

Briefs:

NBTY Inc. (NBTY) announced an agreement to acquire the Knox NutraJoint and Knox for Nails nutritional supplement business from Kraft Foods (KFT) for approximately $4 million. KFT's revenues for the two products totaled approximately $15 million in 2001.

Forbes Medi-Tech Inc. (FMTI) announced it has reached an agreement with Novartis Nutrition AG to acquire the licensing and distribution rights to consumer products fortified with Reducol, a cholesterol-lowering functional foods ingredient, for $4 million, payable by March 18, 2002. Novartis will retain its interest in the Quaker Oats/Novartis joint venture, and Altus Food Co., as well as its exclusive option for worldwide royalty-bearing license to use Reducol in medical foods.

St. Petersburg, Fla.-based Nutraceutical Clinical Laboratories International Inc. announced it has completed negotiations for the acquisition of Tampa, Fla.-based nutraceuticals wholesale distributor Health Care Direct Services Inc., whose distribution reaches more than 12,000 retail outlets.

The Lincoln, Neb.-based Organic Crop Improvement Association International (OCIA) and International Certification Services Inc. (ICS), based in Medina, N.D., have announced the establishment of formal certification acceptance procedures. The agreement comes from the International Federation of Organic Agricultural Movements (IFOAM), to which both OCIA and ICS belong. IFOAM allows all its members to sign on to a multi-lateral mutual recognition agreement, which forms the basis for the establishment of certification acceptance procedures between two IFOAM-certified bodies.

LaGrange, Ill.-based Cognis Nutrition and Health has denied allegations made by Kemin Foods of Des Moines, Iowa, last week that Cognis makes untruthful, unsubstantiated claims regarding its lutein ester products Xangold.

The National Institutes of Health is co-sponsoring a conference on the science and policy of performance-enhancing products on Jan. 8-9 in Bethesda, Md. The conference is being co-sponored by the NIH Office of Dietary Supplements and the Council for Responsible Nutrition. For more information visit: www.crnusa.org/PEP.html.

Florida-based U.S. Nutraceuticals was awarded $4 million in industrial-development revenue bond financing to support the construction of the company's new Supercritical CO2 Extraction facility in Eustis, Fla., which should be completed in March 2002.

People News:

Herbalife International Inc. (HERBA) has appointed Douglas Sages as executive VP, chief administrative officer, and CFO of the company. Sages has formerly worked as CFO for the World Wrestling Federation Entertainment Co. and Bla-Bla.com, an Internet integrator. Former CFO Timothy Gerrity concurrently announced his resignation after 16 years with the company, to pursue entrepreneurial opportunities.

The Washington-based Council for Responsible Nutrition announced it has appointed Judy Blatman as VP of communications. Blatman formerly served as VP of public affairs and communications for the Distilled Spirits Council of the U.S. in Washington.

Shortly after the announcement that President Michael Maves, M.D., would be leaving the Washington-based Consumer Healthcare Products Association (CHPA) to become head of the American Medical Association, the group announced that it has hired Robert Donovan as interim president. Donovan is a board member and owns his own consulting firm.

Mannatech Inc. CEO Robert Henry has been elected to the board of directors of the Direct Selling Association, a national trade association of companies that manufacture and distribute goods and services sold directly to consumers.

Advantage Marketing Systems Inc. (AMM) announced it has appointed Joni Billings as its new VP of sales and marketing. Billings previously was the west coast region VP of sales for AMM.

Health and Nutrition Systems International Inc. (HNNS) announced that its CEO Steven Pomerantz has resigned effective Dec. 14 to pursue other opportunities.

Paul Mulhollem has been elected president of Decatur, Ill.-based Archer Daniels Midland Co., succeeding John McNamara, who resigned to pursue other interests.

Legal/Regulatory Briefs:

The U.S. Department of Justice approved the merger of Suiza Foods Corp. (SZA) and Dean Foods Co. (DF) on Dec. 18. Controversy has surrounded the merger because of a lawsuit filed by Boulder, Colo.-based soy manufacturer White Wave. White Wave filed the suit against the two dairy processors after DF and SZA announced plans to merge, because DF owns 36 percent of White Wave's privately held common stock, and SZA, which makes Sun Soy, is White Waves largest competitor. SZA owns and operates 67 dairy processing plants in 29 states and has net sales of approximately $5.76 billion. DF owns and operates 43 plants with net sales of about $4.4 billion. Both companies said they hope to close the deal before the end of 2001.

The United States Department of Agriculture has awarded $1.2 million in grant monies to Cornell University's Department of Horticulture for the creation of a new organic farming network. The Northeast Organic Network, will be comprised of farmers, nonprofit organizations and university researchers and will research ways to increase production and consumption of locally grown organic foods in the Northeast.

Research Briefs:

The Bellevue, Wash.-based Hartman Group has released a new report titled ""Selling Health & Wellness in the Drugstore,"" which focuses on the $25 billion market for natural personal care products, dietary supplements and organic and natural food products sold in drugstores in the U.S. The report notes that drugstore staff must be experts on wellness products and provide essential resources for the wellness-oriented customer. Covered in the report are percentile breakdowns of how much is sold in the following categories at drugstores: vitamins & minerals, natural personal care, herbal supplements, natural household products, and organic products. Vitamins top the charts, with 48 percent of drugstore shoppers purchasing their vitamins at the drugstore, while only 30 percent of drugstore shoppers purchase natural personal care products at the drugstore. For more information contact: www.hartman-group.com.

In passing HR 3448, the Public Health Security and Bioterrorism Response Act of 2001, last week, the U.S. House of Representatives mandates that all food manufacturing processing, packing and holding facilities be registered. Says National Nutritional Foods Association (NNFA) Executive Director David Seckman, ""Basically, any facility that manufactures or sells food that is not to be eaten immediately, such as a restaurant, will need to register with Health and Human Services or one of its agencies, perhaps as soon as 60 days after the bill's passage. How this will be accomplished, from a practical standpoint, is still very unclear, especially with the short implementation period.""

The Nutraceutical Research Institute, a new institute at Clemson University, announced it will coordinate statewide research into the development of commercially attractive herbs, according to Columbia, S.C.-based newspaper, The State. The institute hopes to scientifically grow feverfew, valerian and other medicinal herbs.

A study published in the November issue of the journal Arthritis & Rheumatism found that ginger extract may ease osteoarthritis knee pain. The study examined 247 patients. Researchers found that 63 percent of patients taking the ginger reported a reduction in knee pain while standing vs. only 50 percent of those who took a placebo.

The Finland-based National Food Agency has reported that 42 percent of the multivitamin drinks tested by the Agency in cooperation with the National Customs Board laboratory contained significantly higher levels of vitamins than indicated on the labeling. Annika Nurttila, a senior officer for the Agency told Reuters, ""The primary concern is one of consumers being duped. Package descriptions should comply with the contents of the package."" She refused to name company names.

The Canadian-based National Research Council announced it will spend a portion of the $110-million it was granted in the federal budget for the expansion of facilities in the Saskatoon region for increased research on nutraceuticals that improve human health.

A study conducted at Arkansas State University found that athletes who use creatine can train without raising the risk of injury. The study compared baseball players who used the supplement with those who did not and found that those who were taking creatine reported fewer cases of muscle pulls or strain, missed practices due to injury, and cramping.

Researchers at the American Institute of Biosocial and Medical Research (AIMBR) in Tacoma, Wash., have challenged the results of a study saying that garlic supplements impact the bioavailability of Saquinavir, a drug used by some HIV patients. Alexander Schauss, Ph.D., director of natural and medicinal products research at AIBMR said, ""The recent attention given to a nine-subject pharmacokinetc study modeling the effect of garlic on Saquinavir among HIV patients is very disturbing … Saquinavir is not even approved by the FDA in the way it was used in the study."" He also noted that information distributed to the media could have been incomplete and perhaps even misleading.

International Briefs:

According to the United Nations Food and Agriculture Organization (UNFAO), Italy is the fastest-growing market for organic foods, has the largest organically farmed area in Europe with more than one million hectares planted in 2000, some 200 times the area planted 15 years ago, and financial support for organic producers has encouraged farmers to convert to organic production. However, Italian bureaucracy seems to be stifling trade opportunities, says UNFAO. Apparently farmers have reported difficulties in obtaining organic import certificates from the Italian Agriculture Ministry, in some cases waiting for more than six months or even being flat out refused.

A French court has ruled that vitamin C at a level of 1000 mg is not a medicine and can therefore be sold outside pharmacies, according to IADSA. The decision applies only to region in which the judgment took place, and the official opinion of the French authorities that the maximum dosage of vitamin C for food supplements should be 120mg, will continue to apply across the rest of France.

The German Federal Institute of Drugs and Medical Devices has issued a letter to all manufacturers of products containing Kava notifying them that it may impose a ban on the marketing of kava due to alleged adverse events related to the herb. Separately, the U.K. regulatory body, the Medicines Control Agency (MCA) has requested manufacturers to 'voluntarily' withdraw all Kava products from the market pending a closer evaluation of its toxicity. American trade organizations, such as the American Herbal Products Association have responded by opening communication with its European counterparts and forming a coalition to work on addressing the Kava controversy.