Biospherics has a sweet day, indeed

Its sugar substitute tagatose wins key OK and shares leap 26%

Coming to U.S. shelves

`It tastes, looks, feels and performs' like the real thing

April 12, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Biospherics Inc., a Beltsville-based biotechnology company, said yesterday that its patented low-calorie sweetener received approval from an independent panel of qualified experts, a finding that effectively clears the way for its sale in the United States.

Biospherics stands to reap royalties from a roughly $2 billion world market for tagatose, a sweetener that "tastes, looks, feels and performs like table sugar," according to a company statement.

"The approval was tremendously important," said Dr. Gilbert V. Levin, Biospherics' chief executive officer and chairman.

"There really aren't any [direct competitors to sugar]. We think it addresses a big niche that hasn't been addressed in the past."

Arla Foods amba, the Danish dairy products company that has licensed tagatose, is in the process of notifying the U.S. Food and Drug Administration of the expert panel's finding, according to a company statement.

Arla plans to build a manufacturing facility, probably in Europe, over the next two years, according to Biospherics officials. Arla officials could not be reached immediately for comment.

Investors drove shares of Biospherics up $1.86, or 26 percent, to $8.86 on the Nasdaq stock market yesterday.

Tagatose occurs naturally in lactose and is derived from whey, the watery part of milk that remains after the separation of curd.

The sweetener has a wide range of use in food and nonfood products, according to Biospherics.

Tagatose has 1.5 kilocalories per gram while sugar has 4 kilocalories per gram. And that has far-reaching implications for the low-fat, reduced-fat and fat-free food industry in America, said Lyn Nabors, executive vice president for the Calorie Control Council, a trade association that represents makers of low-fat products.

"One of the problems in making really good low-calorie foods is you can substitute the low-calorie sweeteners like aspartame, saccharin, sucralose or Ace-K, but when you take the sugar out of the product, you lose the bulk that it provides," Nabors said.

"For example in a baked good, the sugar provides bulk. You take a cup of sugar out of cake, you're going to have a very flat cake.

"To have a sweetener that has the same bulk as sugar, and that's almost as sweet as sugar, it would be a real asset to the low-calorie food and beverage industry."

The United States is the largest consumer of sweeteners, including high fructose corn syrup.

Tagatose was tested in products such as diet health bars, hard and soft candies, cereals, icings, desserts, chewing gums, and diet soft drinks.

It offers more bulk for baking purposes than do high-intensity sweeteners such as aspartame and saccharine.

Its characteristics suggest that tagatose can become a direct competitor with the sugar industry, the company said.

"Certainly [tagatose] wouldn't be fruitful for the industry," said U.S. Department of Agriculture economist Stephen Haley.

"The U.S. government now owns 793,000 short tons of sugar" as a way of keeping market prices stable, Haley said.

"If you had a competing product taking away demand, presumably you would have more unsold supply, which would be price-depressing."

The panel's finding caps a four-year effort for Biospherics and Arla that involved patenting, licensing and testing of the sweetener, said Levin.

The company holds patents in Europe, Asia and South America, Canada and the United States for both the manufacturing and use of tagatose.

Biospherics, which plans to change its name to Spherix Inc. if its shareholders approve next month, has also retained the manufacturing and licensing rights to tagatose as a pharmaceutical product. Levin said clinical trials have shown that tagatose is a "very good product for treating Type II diabetes.

Biospherics approached MD Foods, a Danish dairy cooperative, in 1995 to see if the company was interested in making tagatose. MD Foods was, indeed, interested, and decided to license it, Levin said.

MD Foods later merged with a Swedish dairy producer to form Arla, now the world's second-largest volume milk producer with annuals sales of more than $4 billion.

Biospherics' shareholders have "been anticipating this a long time," Levin said. "We've got a lot of faithful shareholders who've hung in there.

"You may have noticed that over the last couple of weeks, while everything has been going in the tank, our stock has remained steady."

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