Blis hindered by hygiene glitch

By KEVIN TAYLOR

Production of Blis Technologies' sole product was stopped for about three months by a Health Ministry unit reviewing the procedures used to make it.

But the problem with the production of K12 Throat Guard was revealed only yesterday by the listed company, nearly seven months after the Medsafe unit ordered the halt.

The interruption came when K12 was being launched on the domestic market, but neither consumers nor the market were told.

Medsafe, which assesses medicine safety, wanted to review the procedures used by Nelson firm Alaron Products to make K12. The process involves putting live bacteria in lozenges.

The halt hit sales, but Blis chief executive Kelvin Moffatt could not quantify the impact yesterday and described the issue as minor and "one of those startup things".

He said he was unaware of the halt until about July, when Blis tried to re-order stock from Alaron.

"Our view was always it [the halt] was a temporary issue to convince Medsafe that this was a beneficial bacteria and there was no issue with it."

Blis yesterday revealed a $1.278 million loss in the six months to the end of September, compared with a $274,000 loss over the same period last year.

Sales revenue was $182,000 for the period.

K12 production came back on stream only in late September, which meant the company was unable to take advantage of peak demand for the product over the winter months of August and September.

Peter Pratt, Medsafe's team leader, compliance, said the halt was ordered in early May and approval was given to resume production about three months later.

The unit's audit covered many products Alaron made, but K12 was the only one where production was stopped.

"They need a certificate of good manufacturing practice to be able to export this product. So they had to apply to us for that and in order to obtain it they had to reach a certain standard of manufacture," he said.

Medsafe found Alaron did not have validated cleaning procedures.

"In the case of a product like this you need to do swabs on the cleaned manufacturing equipment to make sure there was no regrowth, and then that would validate your cleaning system as satisfactory.

"They hadn't done that, so we advised them to cease manufacturing of that product until they could assure us they had done the validation and the cleaning procedure was done to our satisfaction."



Asked why the production halt was not revealed to the market earlier, Moffatt said he had not thought it would drag on so long and did not see it as a major issue anyway.

"There's so much else going on that in the scale of things, no, it's not particularly significant. Anytime you launch a new product you will have this hiccup you have to overcome."

Stock Exchange marketing and communications manager Melissa Jenner said the issue had been referred to one of the market surveillance panel executives after the Business Herald inquiry.

The executive would assess if there was a possible breach of market listing rules, a process that would take one to three days.

Moffatt said the production halt resulted in Blis running out of stock of one flavoured lozenge and reaching low stock levels in the other flavour.

The company ceased promotions for a few months so stock did not run out.

Meanwhile, he said the half-year loss had been expected and new products would soon arrive.

The company was excited about the commercial possibilities of its dental product to fight tooth decay. Clinical trials would start at Otago University in February and continue for six months.

No dividend was issued. Blis Technologies listed in July last year at $1.05 and yesterday the shares fell 3c to close at 39c.