Natural Food formulation for the prevention and treatment the Obesity and Metabolic syndrome obtained with herbal extracts

Periodic Reporting for period 1 - INNOPREFAT (Natural Food formulation for the prevention and treatment the Obesity and Metabolic syndrome obtained with herbal extracts)

Periodo di rendicontazione: 2015-07-01 al 2015-10-31

After a four-year program of research and development, MONTELOEDER has identified highly active components in well-known and safe herbal extracts (Hibiscus sabdariffa and Lemon verbena), that preclinical results shows to modulate triglyceride accumulation, oxidative stress and inflammation in insulin-resistant adipocytes and their capacity to decrease body weight, serum cholesterol and triglycerides levels and hepatic steatosis signs in a hyperlipidemic mouse model subjected to high-fat diets.

The company will put in the market a natural functional food ingredient, based on the selected combinations of two herbal extracts that exhibit synergy in their ability to activate AMPK –enzyme, for the treatment and prevention of overweight and conditions associated with Metabolic Syndrome.

The specific objectives of the project are:

• Develop and place on the market a novel environmentally friendly natural functional food ingredient, clinically proven, for the treatment and prevention of overweight and conditions associated with Metabolic Syndrome.
• Plan and execute of clinical studies for the scientific substantiation of EFSA health claim. Develop claim strategies, especially with respect to the scientific requirements of for the substantiation of health claims. The publication of the authorized health claims list is an opportunity for our communication on the Nutrition and Health market and is also a challenge for industrials using unauthorized health claim
• Ingredient will be develop to be applied in the field of functional food so it will be necessary design functional foods with our bioactive ingredient, preferentially in milk and dairy products, beverages, juice and food supplements

To achieve those general objectives, MONTELOEDER has worked in Phase I, in a wide feasibity study –according to the Work Plan Submitted in the Proposal - which includes Technical, Commercial, Productive and Economical parameters.

The objective of this Phase I is to analyze and study the technical, legal and industrial parameters, to elucidate the best commercialization and marketing strategy for METABOL AID (name that has been given to the mixture of natural Herbs), in order to prepare for EU’s market uptake, and evaluate reaching non-EU countries’ market.

To achieve those general objectives, MONTELOEDER has worked in a wide feasibility study, which includes Technical, Commercial, Productive and Economical parameters. During this Phase I the Company has analyzed and studied the technical, legal and industrial parameters, to elucidate the best commercialization and marketing strategy for METABOL AID (name that has been given to the mixture of natural Herbs), in order to prepare for EU’s market uptake, and evaluate reaching non-EU countries’ market..

The Phase I proposed work program, accomplished during July to October 2015, and the main results achieved are presented below:

TASK 1.1 – TECHNICAL FEASIBILITY STUDY:

During the Phase I, an efficacy of the selected formulation has been tested in a proof-of-concept human trial in light-to-moderate overweight volunteers. The trial is double-blind and placebo-controlled and has been conducted in the Miguel Hernández University from Elche (Spain), and carried out by doctors and expert nutritionists in accordance with the ethical principles for medical research.

The results has shown that the consumption of 500 mg/day MetabolAid® for two months in overweight women:

- Improvement of anthropometric parameters: Higher reductions of body weight (4 Kg), waist circumference (5.6 cm) and percentage of body fat (4.8 %) compared to the placebo group.
- Improvement of blood pressure: Greater decrease in the heart rate (80 to 71) and systolic blood pressure (128.4 to 111.9 mm Hg) compared to the placebo group.
- Improvement in the Blood lipid profile: Higher reductions in total cholesterol (231.2 to 203.9 mg/dl) and LDL cholesterol (155.5 to 126.58 mg/dl) compared to the placebo group.
- Higher decrease of blood sugar level (93.4 to 90.3 mg/dl) compared to the placebo group.

In conclusion, the consumption of 500 mg/day of MetabolAid® in combination to isocaloric diet may be considered as a dietary supplement for weight management and the prevention of metabolic syndrome.
For Phase II, new Technical Objectives have been established, as follow:

TASK 1.2 – INDUSTRIAL FEASIBILITY STUDY:

One of the important aspect that MONTELOEDER have studied in Phase I is the manufacturing proposal, including the herbs extraction (Lemon verbena and Hibiscus flower), the final mixture to obtain METABOL AID, the annual production capacity, the costs structure and the facilities and investments needed.

Regarding the herbs extraction, according to the MONTELOEDER priorities and internal evaluation, two are the suppliers selected to start with the industrial experiment in PHASE II. If the industrial scale experiment goes well with the two supplier selected, they will manufacture the ingredients separately as explained later.

1.-) NUTRAFUR S.A. is a world leader in developing, manufacturing and marketing natural plant extracts. The company has an area for industrial use of 80.000 m2 and includes two production plants equipped with the latest extraction technology. Nutrafur could manufacture more than 24 Tons per year of each raw material of MetabolAid. Minimum capacity 2 Tn/month.

2.-) ESPECIALIDADES FARMACÉUTICAS CENTRUM S.A. extracting plant in Succina (Murcia) is a manufacturing of natural ingredients (solid, semi-solid and liquid extracts) from plants using healthy raw materials and environmentally friendly processes. The company could manufacture more than 12 Tons per year of each raw material of MetabolAid. Minimum capacity 1 Tn/month.

TASK 1.3 – COMMERCIAL FEASIBILITY STUDY:

During the last four months, MONTELOEDER have been working with INVENIERE (www.invenire.fi) to explore the current competition, substitutes and overall demand to obtain a Market and competitive analysis for METABOL AID in E.U. and International environment. Next, the main results of the Market research are summarized:

Markets Segments: HealthFocus® has identified five primary benefit platforms for positioning health and nutrition products to shoppers. Virtually any functional product can be positioned against any one or a combination of these benefits:

• Prevention. Foods that provide health management through disease and symptom prevention fall into this category.
• Performance. A product that provides health enhancement through improved physical and mental condition.
• Wellness. Wellness benefits are about feeling good and finding balance.
• Nurturing. Foods that can supply a sense of caring for the health and quality of life for others and the associated sense of satisfaction for the caregiver.
• Cosmetics. Cosmetic benefits are about looking good and enhancing self-esteem through improved physical condition and personal appearance.

Typical customer profile depends totally on the chosen business model. One attractive model could be to provide overall concepts and ready-to-launch consumer product. This would increase partners’ success rate in insecure markets. To define possible potential customers, the following assumptions related to the offer apply:

1) Ready-to-launch consumer product concept leaving room for co-branding (like Kyolic)
2) Clear guidelines for communication incl. brand book
3) Support package including scientific materials, ready-to-be used/translated sales materials
4) Overall active global brand communication online, even the MetS program, as described earlier
5) Supporting distribution partners in marketing and sales

Market issues consists of key issues driving and transforming the market from customer perspectives:

• Limited consumer understanding for MetS despite the high prevalence
• The education push for MetS has begun by the industry, the US is leading
• The perception of naturalness drives the use of botanicals, also in supplements
• Market polarisation of premium and private-labels

Consumer needs, wants and demands, and how well they are served with the offering dictates the market success. These depend on the consumer segment (defined by lifestyle consumption habit variables, not by demography) in question, but significant general demands for a health product include:

• Easy solutions to adopt
• Quick and measurable results
• Feeling the benefit

Current Solutions for metabolic syndrome: In both the US and Europe, currently there is a lot of health and nutritional information and advice about MetS online. However, most recommendations (including from drugstores/pharmacies) direct consumers towards individual ingredient supplements, such as Chromium, Garcinia Cambodia etc. In the US market, there is a greater prominence of MetS support being offered via medical and nutritional programs, supplied through hospitals and medical practitioners. Corporate MetS testing programs are also in place.

In the more Westernised markets, MetS is seen more as a serious medical condition where blood sugar, blood pressure and the impact on heart health are equally as important as obesity. However, in Japan, the focus has long been on obesity and waist circumference. Metabolic Syndrome (or “metabo”) has been well known in the consumer culture for almost a decade.

The competitive space is primarily defined by substitutes ie. How consumers can solve the MetS issue today. Key issues in competitive space include:

• Holistic nutritional solutions for MetS
• Ingredient pool to create efficient solutions quickly

Heart health and weight management are two of the biggest categories in nutritional markets and markets for blood sugar control, including low Glycemic Index products and products for diabetics, and are also well established.

In general, the products are positioned to alleviate or help in one MetS factor at the time, and often products are positioned to support e.g. the overall heart health rather than detailed disorder e.g. high cholesterol.

According to Euromonitor International the retail market value in 2014 for weight management food and beverage market was 115bn EUR and for weight management dietary supplement market4 was 10bn EUR. The cardiovascular health food and beverage market was 5.4 bn EUR in 2014. In the other hand, the retail market value in 2014 for Omega fatty acid supplements was 2.7 bn EUR and for Herbal and traditional dietary supplements7 27 bn EUR.

The purpose of these estimates is to support decision-making, when choosing the overall approach and dedication level to commercialize MetabolAid as an ingredient for alleviating MetS.

TASK 1.4 – ECONOMIC FEASIBILITY STUDY:

MONTELOEDER S.L. have elaborated an specific Economic Feasibility Study for “METABOL AID”, to determine the profitability of the investment needed to market the new product in the coming years, covering all technical, commercial, production and business factors and analysing possible variations in market that could influence on the company Profit and Loss Account. The study incorporates a work methodology to define the Basic Hypothesis and the Sensitivity study.

MONTELOEDER have demonstrated the profitability of METABOL AID Business Idea even in the Basic Hypothesis, which is defined as the most conservative scenario and criteria, reaching 30% IRR without the SME INSTRUMENT E.U. Grant, and it grows up to 41% IRR when considering such public fund.

TASK 1.5 – BUSINESS PLAN

MONTELOEDER has made a major effort in recent years to define a corporate strategy to ensure the launch of innovative functional ingredients for the global market. It is no easy task given the level of demand that is imposed on these products, but we can conclude that has managed to articulate a methodology, alliances and strategy so far has proved successful. The launch of METABOL AID - to deal with the metabolic syndrome which is the great pandemia if the modern civilization - is the main channel to satisfy and integrated into the corporate strategy of launching products with high added value and product protection strategy through the control and ownership of the brand.

Based on the conclusions of the several tasks described ande executed in the work Planning of the feasibility study, and the previous studies already carried out, a business plan and the commercialisation strategy for METABOL AID have been elaborated, and it will be fully presented at PHASE II SME PROPOSAL.

It is important to highlight that, for a company like Monteloeder, who has a new ingredient and at the same time is a new player in the MetS space, the traditional ingredient supplier business model won’t create successful business. However, there are plenty of possible business models, and the key question is what makes it unique (unable to copy) solution, and at the same time creates loyalty. The following points in combination create attractive business opportunities for a new entrant, who seriously wish to target MetS and become a MetS expert.

• Holistic and efficient concept to alleviate MetS
• MetS expert actively developing the market
• Direct contact to consumers
• Trust via measurable results
• The control of the value chain
• Finding right stakeholders and influencers

MONTELOEDER INTERNAL IMPACT

- Based on the Feasibility Economic Study, MONTELOEDER would double its Turnover after 4 years from the start of the sales, and would also increment staff at least in 7-10 people.
- Improved company image, difficult to assess. This improvement is not only important in relation to customers, institutions and the market in general, but would also have a positive impact on the company's own workers, that would be materialized in an exciting future.
- Entering new markets, resulting in new ways and channels of commercial distribution. This, could result in the potential introduction of other commercial products of MONTELODER SL for new clients or costumers.
- Improve the overall profitability of the company, which could affect new investments in R & D, production, structural, and improving economic conditions and labour's own staff.

METABOL AID MARKET AND SOCIO ECONOMIC IMPACT

Metabolic Syndrome is a result of unhealthy lifestyle habits. Lifestyle changes are difficult to apply and generally people don’t take action without a wakeup call. Therefore, the opportunity for MetS products is not that much in the preventative side, but rather fixing the problems quickly to revert back to better health. Therefore, active reduction as well as evident and measurable results are crucial for a solution to deliver trusted results.

Success on the project’s targets will affect directly to decisive European Policies such as Health and well-being of European citizens; Decrease of Health Care expenses; Lowering of environmental impact by using food ingredient production compatible processes; Food safety and quality.

Typical customers within dietary supplements: typical customers for co-branded ready consumer products (in supplement category) tend to be small and medium sized companies as many big consumer brands want to have their own brands. They can be either pure distributors or companies having also their own brands. Customer list depends on the business model and overall offer. The list provided in the market research report serves as an example of such companies who are taking on ready concepts with focus on natural plant based products.

Typical customers within food and drinks: For MetS food or beverage product the typical next step customer could be e.g. a specialised distributor for particular sales channel (ie. also serving other channels than main supermarkets). As Kyolic concept works as a reference point, the focus is on dietary supplement customers.

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Periodic Reporting for period 1 - INNOPREFAT (Natural Food formulation for the prevention and treatment the Obesity and Metabolic syndrome obtained with herbal extracts)

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