The three-year program, in which Advitech is also investing C$305,000, aims to identify new applications for the patented composition of growth factors obtained from sweet whey.
"We are devising new strategies to extract growth factors in cow's milk and assess their effects in animals," said Advitech's associate researcher Dr Sylvie Gauthier, who is leading the research.
"Our ultimate objective is to develop natural health products to target chronic inflammatory diseases such as Crohn's disease, ulcerative colitis and arthritis."
Renault Beauchesne, president and CEO, told NutraIngredients-USA.com that the Laval program will also investigate other potential sources besides sweet whey, such as bovine colostrum.
"It will be challenge to see whether we can get the same types of results from other sources, and how the costs compare," he said. "If we are successful it will ensure we have enough product to supply the market."
XP-828L is expected to make its debut as a dietary supplement ingredient in 2006, once clinical trials to provide final proof of its safety and efficacy have been completed and a suitable marketing partner found.
According to Beauchesne, the current source will enable it to meet demand from the US, but an alternative will have to be found if it is to enter international markets too.
"The development of value-added dairy products will yield economic spin-off benefits for the small companies that are the driving force behind the Canadian economy, and ultimately increase the quality of life for Canadians, and people around the world," said David Emerson, Canada's Minister of Industry in a statement announcing the government funding.
Advitech acquired the exclusive rights to the technology behind XP-828L, which is intended first and foremost to help alleviate mild to moderate psoriasis, when it entered into an agreement with French firm Pierre Jouan Biotechnologie in 2003.
It originally hoped to roll out the product by the end of 2004, but decided to delay whilst it carries out a program of placebo-controlled clinical trials, the results of which are expected to give the product weight with dermatologists, as well as just with natural products suppliers.
Advitech's double-blind, placebo-controlled clinical study on XP-828L for mild to moderate psoriasis will be completed in mid-June and the results - expected to confirm the findings of a first clinical trial involving 11 patients over a 112-day period in early 2004 - made public on July 1.
An in vivo study is also underway at Université Laval investigating the use of the ingredient for inflammatory bowel disease.
On 4 May the newly public-traded company released its financial results for 1Q 2005. Its net loss stood at C$671,269, or C$0.01 per share, compared with C$267,378 at the same point in 2004.
The 128.4 percent increased loss was explained by reduced sales of Lactium, Advitech's bioactive ingredient from dairy proteins (C$157,000 compared with C$406.4 last year), R&D expenses associated with XP-828L and sales and marketing expenses during pre-commercialization for the product.