Biospherics' hopes rise for sales of D-tagatose; Sugar substitute's Danish licensee plans merger, partnership


Biospherics Inc. said yesterday that it could be getting closer to finally making money from production of a sugar substitute it developed a decade ago.

The Beltsville company sold licensing rights to the substitute, called D-tagatose, three years ago to MD Foods Ingredients, a Danish dairy producer. MD Foods will produce tagatose, sell it to food manufacturers and pay royalties on the sales to Biospherics.

In what Biospherics executives hope is a sign that MD Foods is getting ready to go into high gear on production of tagatose, the Danish company said it is planning to merge with the Swedish dairy-and-food products company Arla. The merger is expected to be completed in April. In addition, MD Foods told Biospherics it is in talks with a Danish sweetener producer, Danisco, about a production partnership.

"We interpret it as a favorable sign because Arla is a big company, and if they also partner with Danisco, then they have a great deal of muscle, and the technology will be readily available to make tagatose," said David Affeldt, executive vice president of Biospherics.

Arla and MD Foods combined would produce about 6 percent of all dairy products in Europe, Affeldt said.

Tagatose is made from whey, a byproduct of dairy foods. It is designed to taste and cook like sugar, but it is not absorbed into the body the way sugar is.

"It helps in digestion because it is a naturally occurring carbohydrate," Affeldt said.

"Unlike aspartame [used in NutraSweet] it is not a synthetic that was created in a laboratory someplace. It's just like a regular carbohydrate -- it's not going to do anything weird to you."

MD Foods paid $750,000 for the license to sell tagatose and another $1 million in advance royalties, Affeldt said.

Biospherics has spent the past 13 months working to get a nod from the Food and Drug Administration to market tagatose. It expects to clear that hurdle early next year.

Last month, Biospherics reported that it had been awarded a U.S. patent on using tagatose to treat anemia and hemophilia. The company said it sought patent protection as a result of studies that found the sweetener improved certain blood factors in laboratory rats with anemia and hemophilia.

News of the patent sent shares up $1.4375 to $5.25 Sept. 8, but the price has since declined, closing yesterday at $4.90625, down 84.375 cents for the day.

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