Aquasearch shares rose as high as $1.19 in early trading on the Nasdaq stock market, up 32 cents from Monday's close of 87 cents, before settling back to end the day up 13 cents, or 15 percent, at $1. The stock trades under the symbol AQSE.
Cultor Ltd., a major producer of animal feeds and food products, headquartered in Helsinki, Finland, will be distributor for astaxanthin under the three-year agreement, Aquasearch said.
A major use of astaxanthin is as a food additive to cause a natural pink coloration to salmon produced in fish farms, replacing what the fish would ingest in the wild.
Based at the state's Natural Energy Laboratory on the coast near Kona's Keahole Airport, Aquasearch is a neighbor of microalgae pioneer Cyanotech Corp. and was in partnership with Cyanotech until a few months ago.
Cyanotech, which is planning its own production of astaxanthin, said the parting was amicable.
Aquasearch built its 40,000-square-foot facility last year. It was founded in 1989 by a group of scientists from the Scripps Institution of Oceanography who developed the processes in California before shifting to Hawaii to use the nutrient-rich water from the ocean depths off Kona.
Mark Huntley, Aquasearch chief executive officer, said on Tuesday that Aquasearch will produce the astaxanthin and Cultor, which will acquire a small minority stake in Aquasearch, will be responsible for global sales, marketing and development of applications for the product.
Huntley said Aquasearch and Cultor have agreed to form a partnership to produce astaxanthin and Cultor could own up to 75 percent of the partnership by the end of the three-year agreement.
Cyanotech, which has based its growth on Spirulina Pacifica, a beta-carotene rich microalgae supplement, is counting on its own production of astaxanthin to eventually surpass Spirulina in sales.
Asked about Aquasearch's pending announcement, Cyanotech President Gerald Cysewski on Monday said: "The trick is to produce (the product) ... Signing a contract is not difficult."
Cyanotech is moving ahead with plans to begin producing astaxanthin by year's end. But "the market is big enough for both of us," Cysewski said.
Aquasearch said its agreement with Cultor is subject to approval of Aquasearch shareholders.