HEPI's patented food agent set for lucrative revenue streams Print E-mail
By Leonard Halliday Berner   
Thursday, 11 November 2010 04:51

Health Enhancement Products (OTCBB:  HEPI), on Wednesday, announced that Zus Health has satisfactorily its completed its due diligence review of the company. 

As a result, the parties are implementing immediately  the multi-year exclusive worldwide distribution agreement for ProAlgaZyme (PAZ), HEPI’s proprietary freshwater algae infusion, previously executed by the two parties. Per the terms of the agreement detailed in a press release by the company on September 8, 2010, “HEPI has granted the Distributor the exclusive right to distribute ProAlgaZyme(R) to customers and distributors worldwide, excluding pharmaceutical applications and food, supplement, and medicinal ingredient applications outside of multi level, network or affiliate marketing ("MLM"). In addition, HEPI has reserved the right to market and sell isolates and natural and synthetic derivatives of ProAlgaZyme(R) in pharmaceutical applications, as well as ingredient applications outside of MLM.”  

Yesterday’s news release stated “An upfront payment of $255,000 was made to HEPI today. In return HEPI will license its proprietary algal extract to Zus effective immediately. In addition to the upfront payment, the agreement calls for increasing monthly minimum payments.   John Gorman, a member of HEPI’s Board of Directors stated “Once PAZ meets the FDA’s GRAS standard, the Agreements calls for Zus to make certain minimum monthly payments to HEPI to maintain its exclusive distributorship. Brad Robinson, Zus Health Chairman, stated, “We’ve completed our due diligence and scientific review of the benefits of PAZ™. We are excited to bring PAZ ™ to market as test results indicate it shows promise in improving Cholesterol levels and offers additional health benefits. It’s our intent to immediately begin our marketing efforts and build orders across sales channels worldwide for PAZ™.”

In a telephone interview moments ago with John Gorman, HEPI Director of Sales and Board Member, he stated “subject to PAZ meeting the FDA’s GRAS standard, beginning with the first shipment to Zus in January, under this contract, the company will be paid a guaranteed monthly payment for product shipment.  This monthly payment amount is expected to escalate during the first two years of the contract.”    He added “this agreement marks the completion of just the first step in the company’s overall strategy towards successful monetization of this unique product.  By retaining all rights to PAZ isolates and derivatives outside MLM, we are insuring our ability to proceed to the second and third phases of our strategy, i.e., sales to food, sports drink and supplement/nutraceutical manufacturers, and ultimately development of pharmaceutical applications.  The potential revenue from these aforementioned streams could be substantial.”   He also reiterated what was said in yesterday’s press release “we want to ensure that as we begin to deliver our product to a mass audience, that PAZ retains its unique beneficial effects, even as production volume exponentially grows.  To this end, we’ve engaged well-regarded scientists, including algal physiologist Dr. Barry Rosen, to insure the maintenance of the integrity and stability of the biomass used to produce our product.”  The company also announced that it has contracted with the Bigelow Laboratories Center for Ocean Sciences to conduct genomics tests and culturing studies to help maintain and enhance the Company’s proprietary stock of algae cultures, as well.  Mr. Gorman concluded “HEPI has a great opportunity to break out and build tremendous volume based on our current research and findings.”

Health Enhancement Products appears to have achieved the holy grail of nutritional supplements/functional foods- product testing indicates that PAZ has the potential to both lower LDL & raise HDL cholesterol.  In 2007, two human clinical trials were conducted in Cameroon at the University of Yaounde.  These test results indicated that PAZ has the potential to significantly reduce c-reactive protein, a marker of inflammation, and LDL cholesterol.  What really excited the investigators were test results indicating a potentially significant elevation in HDL, or good cholesterol.  In March, 2009, HEPI awarded a research grant to the Department of Nutrition and Food Science at Wayne State University (WSU), ranked among the nation’s top 50 public universities engaged in basic and applied biomedical research by the National Science Foundation.  WSU was enlisted to analyze the effects of PAZ on cholesterol and inflammation under a more rigorous protocol and to isolate the various bioactive components.  In July of 2009, Dr. Smiti Gupta, the principal investigator of the research team, reported preliminary results from a three month clinical trial on hamsters indicating that PAZ was reduced LDL cholesterol levels from 131.7 mg/dl to 79.57 mg/dl, a decrease of 39.6%, and improved HDL cholesterol levels from 105.27 mg/dl to 138.67 mg/dl, an increase of 24% in test animals.  In October, 2009, Dr. Gupta reported further test results indicating that PAZ produced a 26.1% decrease in plasma lipid oxidation in test animals. 

Oxidative stress has been linked with inflammation in general and, if left unchecked, a wide variety of conditions and impairments in the human body.  In early November, 2009, Professor of Pathology Dr. Fazlul Sarkar, conducting animal tests at the WSU  School of Medicine, released results, characterized as preliminary until a formal paper is presented for peer review, that point to significant and marked inhibition of certain inflammatory processes at the cellular level in the test animal.  Dr. Sarkar stated "This may be a breakthrough in the management of inflammation, whether that inflammation is caused by metabolic issues, injury or disease. There are few, if any, anti-inflammatory bioactive compounds that exhibit a similar range of desirable benefits with little or no measurable unwanted side effects."

I asked John Gorman about the possible exploitation of PAZ’s potential anti-inflammatory and anti-oxidative benefits, to which he replied “we wanted to focus our resources and we picked cholesterol because of PAZ’ potential to increase HDL, which represents a potentially significant market opportunity & was probably the quickest results for us to obtain.  In the future, I think that HEPI has the potential to realize significant revenues from possible cholesterol regulation applications, and that these revenues could fund many of the other avenues of investigation that I believe could lead to lucrative additional revenue streams.”
In February and March of 2010, HEPI filed for and received multiple provisional patents for the various molecules in PAZ, as well as one for the mechanism of PAZ’s action in raising HDL cholesterol and lowering LDL cholesterol.  At present, researchers are nearing the isolation of the one molecule that is believed to have the greatest potential regarding regulation of cholesterol. It is hoped that this will be achieved before year’s end.  HEPI has hired GRAS Associates of Bend, OR to assist them in achieving GRAS status.  This will allow the company to sell PAZ to food and supplement/nutraceutical manufacturers outside MLM. 
Disclosure:  Long HEPI

Disclosure:  Long HEPI

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