Enzymotec seeks to revitalize medical foods arm by buying supplement developer

Enzymotec seeks to revitalize medical foods arm by buying supplement developer

Israeli lipids ingredients specialist Enzymotec has acquired an American supplement developer in a move to revitalize its stumbling medical foods subsidiary that has run into regulatory difficulties in the United States.

Enzymotec announced today that it will acquire Union Springs Healthcare LLC, a company that was already one of its customers, which was founded by entrepreneur Roger Griggs. The company markets a line of supplements focusing on cognitive function and sleep. Its flagship product, LuciPlex, aims at supporting cognitive function among seniors.

Union Springs Healthcare has pursued a strategy of developing multi ingredient dietary supplement products that are based on one or more branded ingredients. In the case of LuciPlex, a multivitamin product that claims to support brain health and forestall the onset of neurodegenerative conditions, one of the core ingredients is Enzymotec’s phosphatidylserine. The label uses the name Sharp Gold PS, though Enzymotec has now rebranded its line of phosphatidylserine ingredients.

Qualified health claims

Phosphatidylserine is one of the few dietary ingredients that has been granted two qualified health claims from FDA for supporting brain health. Like other qualified health claims, the language is hardly a boon to marketers, and does not appear in the marketing language for LuciPlex. Nevertheless, the approval of the claim is an admission by the agency that there is at least some evidence to back the ingredient. The full claims read like this:

Consumption of phosphatidylserine may reduce the risk of dementia in the elderly. Very limited and preliminary scientific research suggests that phosphatidylserine may reduce the risk of dementia in the elderly. FDA concludes that there is little scientific evidence supporting this claim.

LuciPlex also contains BCM-95 Curcumin. The company’s Noctoplex sleep aid product features Suntheanine, a tea extract supplied by Taiyo. Union Springs Healthcare also has a children’s version of the sleep aid and a supplement aimed at relaxation. In addition, the company has a product aimed at ameliorating the nutritional deficiencies often observed in children with behavioral problems such as ADHD.

Rescuing Vaya

Enzymotec will market the supplements under its VAYA Pharma subsidiary in the US. The acquisition is part of what Erez Israeli, Enzymotec’s CEO, calls the company’s ‘renewed growth strategy’ for the struggling division, which currently markets three products positioned as medical foods that have come into the regulatory crosshairs of the US Food and Drug Administration (FDA).

We remain focused on Vayas profitability as these complementary products will immediately contribute to revenue. Additionally, to support our expanded portfolio we intend to partner with local pharmacies, institute a new digital marketing platform with consumer support groups and launch social media programs to drive increased awareness and sales, he said.

In order to fully realize the potential of VAYA, we believe that it's imperative to leverage our sales force and improve the economies of scale to create more efficient revenue generating organization, Israeli said.

Vaya has been hit with an FDA import alert on three products in its current portfolio: Vayarol, Vayarin and Vayacog. This apparently was due to a disagreement about the products’ positioning as medical foods. In addition, an Enzymotec distribution partner, Rainbow Gold LLC, received a warning letter on Vayarin, based on what the agency said were impermissible drug claims.

We are in active dialogue with the agency in order to clarify our products regulatory classification as medical foods while we continue to sell our products. We are keen to provide FDA with sufficient information that these products are clean. I believe in the value of our products and the clinically validated benefits will remain strong regardless of the regulatory classification, Israeli said during a recent earnings call with analysts.

The Union Springs Healthcare deal includes an upfront cash payment of $3.6 million, and also includes a grant of warrants purchase of Enzymotec shares at a discounted price as well as royalties on future sales. The royalty payments could reach a maximum of an additional $22 million if sales targets are met, Enzymotec said.

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