Your monthly digest of news and views from the omega-3 industry

Issue 01 March 2012

Optimal Ω-3
Omega-3 Fatty Acids:
Essential and Exceptional

In this issue...
• Health Benefits • Company Profile • The Global Market • Omega-3 Sources • The Players

Omega-3s: An Introduction
With a growing global awareness of their abundant health benefits, omega-3 fatty acids continue to enjoy considerable cachet in the nutraceutical and food-additive markets. Omega-3 fatty acids are a family of polyunsaturated fatty acids that are commonly found in marine and plant oils. Omega-3s are naturally abundant in fish, seafood, and algae, as well as some land-based plants such as flaxseed. Omega-3s offer a wide variety of health benefits, and are considered essential fatty acids because they can’t be synthesized by the human body, but are vital to good health and normal metabolism. And while marine life (krill, plankton, squid, and fish such as sardines, anchovies, herring, mackerel, and salmon) provide a rich dietary source of omega-3s, they too are unable to synthesize omega-3s; their source of these essential fatty acids lies in their diet of algae. The main types of omega-3 fatty acids are Alpha Linoleinic Acid (ALA), Stearidonic Acid (SDA), Eicosapentaenoic Acid (EPA), Docosapentaenoic Acid (DPA) and Docosahexaenoic Acid (DHA). EPA and DPA appear to be the most beneficial to the human body — particularly for the heart, brain, joints, and cardiovascular system — and, as a result, have been the subject of the most scientific research. And thanks to that ever-increasing public awareness, the global appetite for omega-3s continues to grow at a startling rate. With demand far outstripping supply, one American market research publisher says the industry is far from reaching saturation, and that consumer demand for omega-3 products will “continue to grow briskly” through 2015.

Brought to you by Algae Biosciences Corporation www.algaebio.com

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Company Profile
In the high desert plains of the American Southwest, a Canadian startup company has created a perfect storm of omega-3 opportunity. Algae Biosciences Corporation (TSX.V:ABV) expects to reach full commercial production of its ultra-pure, vegetable-based omega-3 fatty acid oils during the second quarter of 2012. Plentiful Arizona sunshine, scientific resourcefulness, technological advances, and a pristine source of saline groundwater have all combined to produce highly regarded algal oils — which include equal proportions of the essential fatty acids EPA (eicosapentaenoic acid) and DHA (docosahexaenoic acid) at a blended ratio of 40 per cent. “Between our consistent sunlight exposure, our ultra-pure water supply, and our advanced proprietary technology, AlgaeBio has the best algae-growing conditions in the world,” says AlgaeBio chairman Robert J. Thompson. “We can produce the highest quality omega-3 fatty acid oils available on the market.” AlgaeBio (www.algaebio.com) and its operating subsidiary, Algae Biosciences Incorporated, are in the final stages of a $5-million, first-phase expansion of their production facilities near Holbrook, Ariz. The company’s proprietary bioreactors were developed with the assistance of one of the world’s most celebrated centres for algae research, Arizona State University’s Arizona Center for Algae Technology and Innovation (AzCATI). AlgaeBio co-founder Andrew Ayers has refined an array of specific algae strains that are ideal for the Holbrook facility’s near-perfect growing environment. Because AlgaeBio uses photosynthesis to grow its algae, rather than batch fermentation, its resulting omega-3 fatty acid oils also include compounds such as carotenoids, phytosterols, chlorophyll, and antioxidants that provide even more health benefits. Unlike some of its competitors, AlgaeBio also uses a supercritical carbon dioxide (CO2) extraction process rather than using hexane, a hydrocarbon-based solvent. Thanks to a U.S. patent, AlgaeBio enjoys the exclusive right to culture marine species from the Coconino Aquifer, an ancient underground sea that produces remarkably pure saline groundwater — the perfect medium for growing marine algae. AlgaeBio has a long-term agreement in place with Global Health Trax, Inc. of Vista, Calif., that gives GHT exclusive rights to purchase and distribute AlgaeBio’s ultra-pure omega-3 products destined for the nutraceutical, food additive, and animal feed markets.

Health Benefits
The scientific community is discovering new links between omega-3s and improved health all the time — particularly the long-chain fatty acids EPA and DHA.
DHA is especially important to babies’ visual and cognitive development, as well as the growth and development of the central nervous system. Women who take daily supplements of up to 1.1 grams of DHA while pregnant have children with higher IQ scores through the age of four; their babies experience lower allergy rates, better sleep patterns, and superior vision; and the mothers taking DHA have lower rates of post-partum depression. DHA is also believed to protect against the increased risk of heart attack associated with stress and depression. EPA is considered beneficial for numerous inflammatory and autoimmune disorders, including asthma, arthritis, and bowel disease; it has also shown, through limited research, to improve symptoms of schizophrenia, depression, and bipolar disorder. Both DHA and EPA are essential for heart health, having been credited with lowering blood pressure, reducing fat levels in the blood, and decelerating the development of clots. Omega-3 fatty acids have also demonstrated an ability to reduce blood vessel stiffness, according to the British Journal of Nutrition. They’re also believed by some to provide cell lubrication, the same way oil lubricates the moving parts in an engine, reducing inflammation and reducing joint pain. Omega-3s have also been linked to a reduced risk of certain cancers, as well as improved behavior and mood; recent research suggests that omega-3s may help in treating autism, attention deficit hyperactivity disorder (ADHD), and Alzheimer’s disease.

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Omega-3 Sources
The vast majority of omega-3s for human consumption come from the oceans, but new sources include the likes of algae, cranberries, chia seed, and hemp.
• Fish: Fish oil accounts for the majority of the global supply of EPA and DHA, and according to research data, represented about 80 per cent of the world market for human-consumable omega-3 in 2010. Cold-water oily fish sources include salmon, herring, mackerel, anchovies, and sardines. • Krill: These shrimp-like marine crustaceans are extremely rich in omega-3 oils — again, like fish, because of their diet of algae. • Algae: Algae are the No. 1 producer of omega-3s on earth; producers can grow algae and extract the omega-3 oils directly. Algae also grow so rapidly that half of the algal biomass may be harvested every day the sun shines; in favorable cultivation conditions, algae produce biomass with yields 30 to 100 times as productive, per acre, as land-based plants. • Oilseeds: Rapeseed oil contains omega-6s and omega-3s in a two-to-one ratio, while flax oil and chia oil are higher in omega3s. Transgenic oilseed crops can be genetically engineered to produce omega-3s by inserting various genes encoding certain enzymes. • Hemp: Hempseed consists of approximately 44 per cent healthy edible oils, and about 80 per cent of that number represents essential fatty acids, including ALA. • Nuts: Walnuts have more omega-3s than any other nut, with a quarter-cup providing 2.5 grams’ worth. Butternuts (“white walnuts”) have a similar omega-3 content. • Cranberries: Cranberry seed oil is believed to provide omega-3 and omega-6 fatty acids in an equal ratio.

The Global Market
In an August 2011 report entitled Omega-3: Global Product Trends and Opportunities, U.S. market research publisher Packaged Facts predicted that worldwide consumer spending on omega-3-enhanced food and beverage products (excluding fish), health and beauty care products (including nutritional supplements), and pet products would hit the $13-billion mark by the first quarter of 2012. Packaged Facts predicts that the industry is far from reaching saturation, and that consumer demand for omega-3 products will “continue to grow briskly” through 2015. Meanwhile, projections by American market research firm Frost & Sullivan have set annual growth for the omega-3 market at 24 per cent. The market sector is being driven by several factors, including: growing medical, governmental, and public awareness of omega-3s and their array of health benefits; continued consumer receptiveness to functional food and supplement products; positive mainstream and trade media coverage; and increased participation by major marketers.

The Players
Here’s a look at some of the major producers/suppliers to the burgeoning omega-3 market, as well as some new players entering the omega-3 space:
Marine-Sourced Omega-3
• Omega Protein: The world’s largest producer of omega-3 fish oil, Houston-based Omega Protein is also North America’s largest manufacturer of protein-rich specialty fish meal and organic fish solubles. • Ocean Nutrition Canada: Based in Nova Scotia, Canada, ONC is the world’s largest supplier of omega-3 EPA/DHA ingredients to the dietary supplement and food manufacturing markets. • Aker BioMarine: Aker, an integrated biotechnology company based in Oslo, Norway, creates krill-derived biotech products, including marine oil Superba Krill. • DSM Nutritional Products: The world’s leading supplier of vitamins, carotenoids, and other chemicals to the feed, food, pharmaceutical, and personal care industries, (continued on Page 4)

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The Players (continued from Page 3)
Switzerland-based DSM manufactures and sells polyunsaturated fatty acids in the form of chemically unmodified marine oils. • GC Rieber: Based in Bergen, Norway, GC Rieber produces marine oils under the subsidiary GC Rieber Oils AS. • Neptune Technologies & Bioressources Inc.: Neptune, based in Quebec, Canada, has become an industry-recognized leader in the innovation and production of marine omega-3s, pioneering research, development, and commercialization of krill extracts. • Croda Canada: Headquartered in Vaughan, Ont., Croda is a leader in the specialty chemical industry, producing plant and marine oils, excipients, solubilizers, proteins, and biopolymers. • Enzymotec Ltd.: One of the major players in the krill oil market, Israel-based Enzymotec provides ingredients for the pharma, dietary supplements, and functional foods markets, also targeting orthomolecular medicine and infant nutrition. • EPAX AS: EPAX is a leading global supplier of highly concentrated, marine-derived EPA/DHA omega-3 oils to the global dietary supplement industry. EPAX is based in Oslo, Norway. • Cognis: Headquartered in Monheim, Germany, and now part of BASF, Cognis produces Omevital liquid omega-3 fatty acids. • Solazyme-Roquette Nutritionals: Solazyme, based in San Francisco, and France’s Roquette formed a 50-50 venture in late 2010 to market microalgae-based oil, including omega-3s, as well as algalin flour to the food ingredients sector. • Algae Biosciences: The Canadian startup, producing ultra-pure algal oils with both EPA and DHA in the abundant Arizona sunshine, will reach commercial production levels in the second quarter of 2012. • Aurora Algae: This California firm, with growing facilities in Karratha, Western Australia, aims to begin producing an EPA-rich oil during the fourth quarter of 2012.

Oilseed-Sourced Omega-3
• Glanbia Nutritionals: Headquartered in Ireland, with a North American head office in Evanston, Ill., Glanbia is a leading supplier of advanced flax ingredients rich in omega-3s. • Bioriginal: This Saskatoon, Canada-based company is a world leader in the production and distribution of essential fatty acids, including omega-3s, from both marine and plant sources. Bioriginal’s EFA products are used around the world in various market sectors, including nutraceuticals and functional foods. • Biodroga Inc.: Biodroga stocks omega-3s from marine sources, but the company from Quebec, Canada also manufactures and distributes omega-3 oils from flax, pumpkin seed, and black cumin. • Barlean’s Organic Oils: This company out of Ferndale, Wash., touts its flaxseed oil as the No. 1 best-selling supplement in America. • Arista Industries: Based in Wilton, Conn., Arista has supplied a variety of natural plant-based oils, in addition to specialty marine oils, to the cosmetic, pharmaceutical, and food industries for more than 80 years.

Algae-Sourced Omega-3
• Martek: Now owned by DSM, Maryland-based Martek has developed and patented two fermentable strains of microalgae through fermentation that produce oils rich in DHA. • Lonza: Headquartered in Basel, Switzerland, Lonza produces DHAid, a source of DHA, via a patented fermentation process.

Your monthly digest of news and views from the omega-3 industry
Issue 01 March 2012

Optimal Ω-3

Brought to you by Algae Biosciences Corporation • www.algaebio.com

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