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Aquasearch stock
soars as product
debut nears
Its shares have gained 113%
By Russ Lynch
this year despite mounting losses
Star-BulletinAquasearch Inc. continues to run up losses as it gets ready to sell new products after years of development, but the company has been enjoying a big run-up in its stock recently.
A top official of the Kona-based company said several factors probably caused the surge in the stock that were unrelated to a filing this week with the Securities & Exchange Commission showing ongoing losses.
David Watumull, executive vice president of strategic development and corporate finance, said the significance of the company's recent court win over rival, neighbor and former partner Cyanotech Corp. in a trade-secrets lawsuit is now being understood by investors.
Also Aquasearch has been featured in a positive way on an Internet Web site and in a Hawaii business publication in recent weeks, Watumull said. The big factor, he said, probably is that Aquasearch is close to launching a dietary supplement, called a "nutraceutical," that has beneficial effects on the human body.
The $4.07 million loss reported Jan. 31 for the fiscal year that ended Oct. 31, an increase in red ink from a loss of $2.75 million in the previous year, apparently did not deter investors.
Aquasearch over-the-counter shares have risen 36 percent in the last two days, closing today up 1 cents at 79 cents, a 52-week high, after a 20-cent jump yesterday in heavier-than-usual trading. The stock is up 113.5 percent this year.
The company says in its financial reports that it is a start-up business, with risks associated with being new in a competitive market. It began selling products only in mid-1999 after 11 years in the development phase, and has had huge research and development expense.
"We're making the transition from an R&D company to a commercial company," Watumull said.
Aquasearch promotes natural astaxanthin, produced from microalgae grown in Kona ponds, as an antioxidant for protecting against degenerative diseases such as Alzheimer's and Parkinson's and even some kinds of cancer. The 26-employee business, with a five-acre production and processing facility in Kona, believes it has the capacity to generate $5 million a year in retail sales of nutraceutical astaxanthin. Aquasearch began by developing a natural astaxanthin for aquaculture, as a food supplement that increases the pink coloring of pond-raised salmon.
On Dec. 30, Aquasearch won a federal court decision that Cyanotech stole its trade secrets through a joint venture, later disbanded, which was intended to develop astaxanthin technology. Aquasearch said it plans to seek damages from Cyanotech.
Since its inception, Aquasearch has run up a cumulative net loss of $11.7 million, according to the SEC filing.
