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Forbes Medi-Tech is
competing in the growing cholesterol-lowering ingredient market with their functional
foods compound, Reducol, while they complete Phase II clinical trials of their
cholesterol-lowering drug, FM-VP4
(FMTI-NASDAQ & FMI-TSX)
Forbes Medi-Tech Inc.
750 West Pender Street Suite 200
Vancouver, BC V6C 2T8 Canada
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
September 14, 2006
Charles A. Butt, B.Comm.
President and Chief Executive Officer
Mr. Butt has been a director of the Company since September 1999 and the President of the
Company since April 2002, the CEO since March 2002; formerly the Executive Vice President
and Chief Operating Officer March 2001 to April 2001 and the Senior Vice President,
Commercial Operations of the Company July 2000 until March 2001. Mr. Butt has extensive
international and North American experience in business management, marketing and sales in
the healthcare industry. Prior to joining Forbes as Senior Vice President, Mr. Butt served
as President of The Charson Group Inc., a healthcare consulting company, specializing in
strategic planning and new product introductions, based in Toronto. Before moving into
consulting, Mr. Butt headed up the Consumer Health Products Division for Lederle
Laboratories (Canada), where he was responsible for the initiation and development of the
Consumer Health Products Group. Mr. Butt has also worked in a variety of marketing and
sales roles at Shulton Inc. in Europe, Africa and the Middle East as well as
Forbes Medi-Tech Inc. is a life sciences company dedicated to the research,
development and commercialization of innovative products for the prevention and treatment
of cardiovascular disease (CVD). Our vision is to develop and market products along a
treatment continuum that CVD savvy consumers, healthcare professionals and specialized CVD
research and healthcare institutions; will identify, recommend and seek. Our business
strategy is to develop and commercialize proprietary compounds to address the unmet needs
of patients within the cardiovascular disease market.
Forbes Medi-Tech Inc.'s lead pharmaceutical compound, FM-VP4, is currently in Phase II
clinical trials for management of dyslipidemia. FM-VP4 is a novel analogue representing a
new class in cholesterol-lowering drugs called cholesterol absorption inhibitors.
Reducol is a unique ingredient containing plant sterols and stanols, commonly known
as phytosterols, or Sterols. The combination of a prudent diet and consumption
of products containing the recommended amount of Reducol may help consumers lower
their cholesterol by up to 24%.
CEOCFO: Mr. Butt, what is your vision when you became CEO and
where is the company today?
Mr. Butt: Essentially when I took over the company we
had fundamentally a very strong technology in the area of extraction of sterols from
byproducts of the forest industry. We had done some early work in the nutraceutical and
clinically proven ability of sterols to reduce LDL. Our goal was to take that technology,
apply it to the nutraceutical market in the form of food ingredients and supplements and
more importantly to develop our technology further into the area of sterol analogues and
their application in pharmaceutical compounds. As a result, over the last four or five
years we have been able to build up the revenue generating nutraceutical business as well
as a healthy pharmaceutical development program, which has a lead compound in Phase II and
a pipeline of other analogues, which we are hoping to develop further in the coming months
CEOCFO: What are your main products today?
Mr. Butt: Today, the company in terms of its overall
positioning, is a life science company focused on the prevention of disease,
cardiovascular disease, primarily LDL lowering. We focus on that in two specific ways, one
is in nutraceutical or food ingredients; there we have a lead compound called Reducol,
which is essentially a white, tasteless, odorless powder, which can be incorporated into a
wide range of products. What we have done is a series of clinical tests in various food
matrixes, anywhere from milk, cheese spreads, baked goods and even chocolate where we have
illustrated in human trials that over a period of thirty days, in a healthy diet, by
incorporation of sterols into foods, we can actually reduce LDL by as much as 24%. Nine
percent is contributed by the healthy diet and fifteen percent is contributed by the
increased intake of sterols. We have been able to apply that clinical strength along with
our technical expertise and patent protection around our compound, its process and
We have been able to illustrate commercialization particularly in Europe where we have a
significant edge over our competition because as our sterols are sourced from wood they
are not genetically modified unlike soy, which is one of our key competitors. Therefore,
that gives us an edge in Europe and we have been able to undertake the introduction of
products with Tesco Stores Ltd. private label, which is the largest retailer in the United
Kingdom. Another example is Albert Heijn in Holland; they are also Hollands leading
retailer. There, we are able to sell products such as spreads, yogurt, yogurt drinks,
milk, and we are gradually expanding that across other European markets and hopefully we
will have further announcements in the coming months and into 2007. In North America, our
key product is a product under the Nature Made label called Cholest-Off, which is a
cholesterol-lowering supplement. It has been very successful and has been in the market
for about four years and continues to build business year-over-year. That business
generates revenue, which helps support our pharmaceutical development program, where our
lead compound is called FM-VP4, which is a cholesterol inhibitor, and anyone who is
familiar with cholesterol lowering in the prescription market, knows that it is dominated
by statins such as Lipitor and ZocorŪ.
More recently, with the backdrop of concerns regarding toxicity around muscle, liver and
kidney, there has been an emergence of alternative therapies. The leading one being Zetia
from an alliance between Merck and Schering-Plough Pharmaceuticals, which is a cholesterol
inhibitor, which actually inhibits the absorption of cholesterol from the gut into the
bloodstream. That has been on the market for approximately two years and it is used both
as a monotherapy and as a combination therapy with ZocorŪ under the product name of
Vytorin. Both monotherapy and co-therapy combined now have sales of approximately
around $2.5 billion. Therefore, it is a very large, growing category. Our program is such
that we are about to finish our Phase II trial in the US. We have an end point of 15% LDL
lowering similar to Zetia. If we were successful, then we would look to partner this
compound with a major pharmaceutical and then move forward in scenarios to help develop it
and in turn generate milestones and royalties. The goal for the company is to develop into
the pharma-development area, but a twist to that is that we are to some degree unique in
the sense that we do generate revenue to help support our pharma development program.
CEOCFO: Why do you have one focus in Europe and another in
Mr. Butt: In terms of the functional foods, they are
the same products. It is just that our biggest product in North America now is the
supplements. We have not as of yet, commercialized in the food area, but it is an area
that we are and will continue to develop. It is fair to say that functional foods in
general have developed more rapidly in Europe than they have in North America. There has
been a greater awareness of functional foods and their incorporation into daily diets. We
have experienced, having launched successfully with companies like Tesco Stores, Ltd. and
Albert Heijn, leading retailers in their respective countries, an increased awareness in
North America. We have seen an upturn in the level of inquiry which in turn has allowed us
to work on the technical level with some major manufacturers and hopefully this will in
turn result in the launch and commercialization of products in the US.
CEOCFO: Other companies are working on cholesterol lowering,
why should we be focused on the way Forbes is going about it?
Mr. Butt: The way we are going about it is in the
prescription area, it is a new sub segment of the market; the whole statin market is
around 25 billion and projected to grow to over 40 billion over the next four or five
years. Obviously, the aging population is generating some of this growth. There have been
concerns regarding toxicity levels of long-term use of statins and that by the
introduction of things like cholesterol inhibitors, one is able to treat both mild and
acute sufferers of LDL. Therefore, we are in an exciting category that has huge dollar
opportunities. On the food side, this is a market that is growing, has increased awareness
from consumers and an increased need. Consumers are taking more control over their
lifestyles, moving away from pharmaceuticals as much as they can, and monitoring their
health much more closely. If they can incorporate functional foods into their diet at a
reasonable cost, then it has great appeal now and in the future. From Forbes Medi-Techs
perspective, we feel we are able to address this market on two fronts, which in turn have
sizeable markets and great potential for the future.
CEOCFO: Will you tell us
about the financial picture at the company today?
Mr. Butt: Essentially, we are in good shape. The end of
our last reporting period, we had about $26 million and sufficient cash to carry us
through into 2007 and if we are successful with the FM-VP4 trial, then we will look to
generate revenues through going to the street or looking into licensing with a partnering
CEOCFO: What should
investors expect two or three years down the line and why should they be interested now?
Mr. Butt: I think that the interest now is the fact
that we have this growing revenue business. We have a significant compound in the Phase II
trial with results expected in the 4th Quarter of this year (2006). If successful, that
elevates the profile of the company. To support that, we are working very diligently on
building our own pipeline internally. We have a very active in-licensing program; we are
looking to build our portfolio through acquisition. We have a good cash position going
forward. I also think that the fact that we are dual listed in Canada and the United
States is an attractive proposition for technologies in North America and in Europe in
terms of going forward perhaps with Forbes because we are able to offer the strength of
development as well as the strength of a publicly traded company.
CEOCFO: Any final
thoughts for our readers?
Mr. Butt: I think the uniqueness of Forbes is its
strength. We do not always get recognition for the nutraceutical side of our business, but
can honestly say that the revenue from nutraceuticals provides a buffer to this company in
the face of uncertain financial markets, particularly in the area of biotech, which has
not been a favorite for investors over the last year or so. We as a company have moved
forward. We have set and met all of our milestones despite the climate and we have
progressed in terms of revenue growth and progressed in terms of our long-term plans.
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