US health science company Forbes Medi-Tech announced this week that it has exercised its right not to buy back the licensing and distribution rights to its cholesterol-lowering food ingredient Reducol from Novartis Consumer Health and will not make, or request an extension of, the US$4 million (€4.53m) payment otherwise due this month.
Forbes Medi-Tech, the developer and manufacturer of Phytrol, which was brand-named Reducol™ by Novartis, originally licensed the rights to this cholesterol-lowering food ingredient to Novartis in 1999.
As a result of today's announcement, Forbes' relationship with Novartis will revert back to the terms of the original Master License Agreement (MLA) as of March 19, 2002.
Under the terms of the MLA, termination becomes effective on or about June 18, 2002, at which time the licensing and distribution rights to the Company's cholesterol-lowering ingredient will revert back to Forbes.
The name "Reducol" will remain the property of Novartis and accordingly, Forbes will revert back to the ingredient's original name of "Phytrol".
In a statement this week Forbes claimed that the effect of Novartis' non-compliance with certain requirements of the MLA, and the delay in termination of the MLA until mid-year, will have an effect on sales for this year. At the same time the company has also suffered from the delay by the US government in issuing a health label claim relating to phytosterol-based food products.
The company is accordingly reassessing its production estimates for 2002 and anticipates reporting revised estimates shortly. In the meantime, Forbes estimates that it has sufficient funds and near-term revenue to fund it into the third quarter 2002. In an upbeat fashion the company said it will continue to aggressively pursue new business opportunities and commercialise its cholesterol-lowering phytosterol products.