Suppliers' News

Cyanotech Corporation Provides Update on Pond Conversion

Wednesday, January 5, 2005

Cyanotech Corporation, Kailua Kona, Hawaii, US, a producier of high-value natural products from microalgae, has provided an update on the Company's expansion and conversion of certain of its culture ponds from Spirulina production to astaxanthin production. Of the 10 ponds identified for conversion, the Company anticipates that six ponds will be completed by the end of this month.

In the company's 2nd Quarter Fiscal 2005 press release dated November 1, 2004, it was noted that demand for natural astaxanthin during the quarter had been impacted by inclement environmental factors in Japan which affected customers' fish farming operations, as well as by competitive pricing issues from synthetic astaxanthin aquaculture products in Europe. In addition, the company had also noted that over the next two quarters (fiscal year 2005 3rd and 4th quarters, respectively), demand for its natural astaxanthin in aquaculture was anticipated to be level with that of the second quarter.

However, also in the same release, the Company stated that demand in the future is expected to rebound to levels consistent with prior demand patterns. In response to such shift in product demand, the company is deferring the conversion of the four remaining ponds for the continuing cultivation of Spirulina Pacifica.

Cyanotech's Chairman, President and Chief Executive Officer, Gerald R. Cysewski, said, "When we implemented the conversion of our ponds, our intent was to increase our flexibility to adjust production of both of our products as required so that we would be in a better position to respond to the varying demands of the marketplace. The benefits of this have been immediate. By rapidly assessing market demand we are able to improve our response and adjust our cultivation accordingly. In this instance, we experienced reduced demand for astaxanthin in the aquaculture market and retained for Spirulina production the remaining ponds marked for conversion." Dr. Cysewski concluded, "As we see conditions improving in the aquaculture markets, the company will reassess the timing and appropriateness of full conversion."

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