Texas storms disrupt Qualitas algal production: ‘It’s a setback but we’re still in a unique position,’ says CEO

The storms caused partial damage to the company's manufacturing infrastructure, and destroyed a significant portion of its current algae operation in West Texas, Yuri Shoshan, CEO of Qualitas, told NutraIngredients-USA.

“It’s a setback in terms of timing, but nothing more than that,” ​he told us. “I think we’re still in a unique position. We believe our customers have a long view of the market and omega-3s are not going anywhere.”​

Almega PL​

The company’s Almega PL omega-3 ingredient ingredient sports a unique chemical profile consisting of polar lipid structure featuring both phospholipids and glycolipids that the company says makes for superior absorption and digestibility.

Qualitas derives its algal oil from a salt water, photosynthetic species of algae called Nannochloropsis oculata​.  The species yields an oil rich in EPA (with no DHA) that is bound to phospholipids and glycolipids, known together as polar lipids. These polar lipids have hydrophilic heads and hydrophobic tails, which reportedly enhance solubility, bioavailability and incorporation into tissues/membranes​.

The company completed a successful NDI notification on the ingredient in June 2014. Qualitas notes that its NDI notification is valid only for Almega PL’s specific composition and manufacturing process. Other aspects of Qualitas Health’s intellectual property – including algae growth and extraction techniques and Almega PL’s composition – are patent-protected.

The first two consumer products featuring the company’s algal-based EPA ingredient launched earlier this year, and tens of products in various stages of product development, explained David Hart, VP of marketing. “Some launches will be delayed,”​ he added.

“We’re in close contact with our existing customers and those planning product launches,” ​added Shoshan. “They’re aware of the issues and they’re still very excited about the product. Fundamentally, you cannot get it anywhere else, so they are waiting for us to deliver.” ​

As production resumes and volumes increase, the flow of Almega PL to the market will be in a fair and equitable manner, said the company.

Open ponds​

Qualitas is based in Jerusalem, Israel, but has its production facility in West Texas, where sunlight is abundant and a brackish water supply is available. The company chose a phototrophic process mainly because it matched its organism.

“Our goal was to produce a sustainable, reliable, renewable source of EPA omega-3 at a relevant cost, and that led us to implement growth systems that were agricultural systems,” ​explained Shoshan. “To bring the ingredient to market at the right price we had to grow it in an agricultural and not a biotech way.”​​

Other algal companies have opined that heterotrophic (fermentation) production is the only proven way to go, and that open ponds are at the mercy of the elements.

“The State of Texas was impacted by extreme and unusual storms,”​ said Shoshan. “The region around our facilities received half the annual rainfall in a couple of days. It has impacted our standing cultures and some infrastructure has been affected. ​We’ll be impacted through the end of the year.”​

The emergency action plan initiated will enable the company to rapidly resume normal manufacturing capabilities, he said. The plan includes expedited investment to further expand capacity and infrastructure improvements in order to smooth the supply chain and increase production of algae and Almega PL moving forward.

Lessons learned​

Commenting on the lessons learned, Shoshan said that it was important to establish a safety stock and inventories to buffer against these kinds of things. “You can never design for average, you have to design for extremes,”​ he said. “Recent events will lead to some changes to the SOPs and some retrofitting with slightly costlier systems.” ​

Despite the expedited investment there are no plans to change the price of the product, he said. “We believe we can still deliver at the price we determined.”​

Other developments​

The company is also continuing to build the science to support product claims with a “reasonably sized, statistically significant”​ clinical trial being launched soon to establish primary efficacy of the ingredient. Results are expected to be delivered in six to 12 months, he said.

Regulatory registration is also continuing in select markets around the world, particularly India, Australia and other key Asian markets, said Shoshan.