Biospherics Inc. said yesterday that it had completed a licensing deal with a Danish food company for the rights to manufacture and market its D-Tagatose sugar substitute worldwide.
Shares of the Beltsville company's stock closed up 87.5 cents at $8 on the news.
Under the agreement, which has been in the works for a year, MD Foods Ingredients of Denmark will pay Biospherics an upfront signing payment and another payment before Jan. 7, once legal matters in the agreement are wrapped up, the companies said. The amount of the payments was not disclosed.
Also, the agreement calls for Biospherics to get an undisclosed share of sales revenues.
"It's a very exciting day for us to see one of our technologies licensed," said Richard Levin, vice president and chief operating officer for Biospherics.
In addition, under the agreement MD Foods assumes all responsibility for clinical studies and other financial costs for getting the additive approved by regulators. That relieves Biospherics of a substantial burden. The company generates most of its revenues from an information and telecommunications management service and has no experience with seeking regulatory clearances, Levin said.
When Biospherics' officials first began seeking a marketing partner for D-Tagatose, it expected that it might have to use royalties generated from sales overseas to finance clinical studies in the United States or Europe to show regulators that D-Tagatose is safe.
No one is sure what the market for the sweetener will be, but Biospherics, which netted $400,000 on sales of $13 million in 1995, believes D-Tagatose could prove a strong competitor to Monsanto Co.'s artificial sweetener products, including NutraSweet. Those products generated sales of more than $600 million in 1994.
Biospherics has argued that D-Tagatose is a superior sweetener because it has the same bulk as sugar.
Artificial sweeteners lack bulk, which makes them difficult for bakers to work with. And NutraSweet breaks down chemically when exposed to sustained heat. Monsanto says it is attempting to rectify that quality.
Peter Lauritzen, managing director of MD Foods, said the company expected D-Tagatose to give the company an edge in the marketplace.
"However, we realize that a lot of work lies ahead of us before we can start to capitalize on D-Tagatose's significant market potential," he said.
For one, MD Foods must build a manufacturing plant for producing D-Tagatose, and then it must begin the long and expensive process of gathering clinical data for regulators.
The company may also seek to prove that the substance is so common in natural foods that it should be "generally recognized as safe." This so-called GRAS rule would excuse MD Foods from cancer studies required of food additives.
Levin said MD Foods intends to market the product first in Australia and Asia by late next year, or early 1998.
He said the agreement marks the end of Biospherics' work to get the sweetener marketed as a food additive.
The 29-year-old company has been developing the sweetener, which is found in the cheese byproduct whey, since the late 1980s.
However, Levin said, the company is still seeking to show D-Tagatose may have a medical use.
The company and researchers at the University of Maryland Medical Center in Baltimore have been investigating whether D-Tagatose might serve as a supplement for treatments for the most common form of diabetes.
The right to market or license D-Tagatose for medical uses was not part of the MD Foods agreement.
Pub Date: 10/03/96