Vystar pursuing more opportunities for growth

By Mike McNulty, Crain staff (R&PN)

Duluth, Georgia -- As Vystar Corp. prepares to embark on its biggest move since it was formed in 2005-a proposed merger with EcoGlove Asia Pacific Sdn. Bhd.-it continues to branch out in its quest to find new avenues for growth.

The creator of Vytex natural rubber latex recently signed a letter of intent with urological medical device manufacturer MedicaMetrix Inc. of Wayland, Mass., to use Vytex as a material of choice in its ProstaGlove, a diagnostic device currently in clinical trial development.

The glove is being designed to improve the diagnosis of prostate cancer and reduce unnecessary prostate biopsies. It could eliminate hundreds of thousands of biopsies and save hundreds of millions of dollars annually in the cost of diagnosing prostate cancer, Vystar claimed.

MedicaMetrix CEO Christopher J. LaFarge said the firm has developed a system “that we believe will become the new 'gold standard' for prostate exams.” He said that the physical characteristics of Vytex, including its durability and tactile sensitivity, make it the superior material for the new product.

Making inroads

It's the second key pact Vystar has made in the last five months. In late February, Pioneer Balloon Co., the largest US producer of latex balloons, began using Vytex in the firm's premium line of Qualatex brand balloons.

Pioneer became the exclusive toy balloon maker using Vytex after it tested the raw material and discovered that it produced balloons with enhanced clarity and color vibrancy, characteristics that its high-end customers require, Pioneer Vice President Ted J. Vlamis said.

The positive attributes of Vytex gives the firm an advantage in the marketplace, he said.

The Pioneer and MedicaMetrix pacts have the potential to be major building blocks for Vystar, according to William R. Doyle, president and CEO of Duluth-based Vystar.

He said 2010 was a breakout year for Vystar as it transformed from being a research and development company to one that also emphasises sales and marketing.

Its next step will be to become a manufacturer, which it's hoping to do by merging with EcoGlove.

When Vystar was launched in 2005, and Vytex was introduced, the company's primary focus was developing its unique natural rubber latex that significantly reduces antigenic proteins found in NR latex and looking for ways that the product would fit into the health care industry.

“I expected that I was going to work with a company that would produce Vytex for us and we would sell the material in 14-gallon drums,” Doyle said. Once Vytex was approved by federal agencies, he thought manufacturers would flock to the company.

That never happened. He discovered that even with a high-end product like Vytex, the firm has had to go out and increase market acceptance of the product, not just in the health care industry but throughout the industry.

He also learned that one type of Vytex would not cut it in the market. “We now have five different versions in four different container sizes” rather than a one-size-fits-all 14-gallon drum, he said.

Balanced approach

Now the firm is “strategically marketing to multiple industries concurrently,” Doyle said.

It produces its product in both small and large batches, and last year it headed down numerous paths to develop additional areas of growth, targeting segments that are regulated-including surgical and examination gloves and condoms-and those that aren't regulated-foam and non-medical and non-food packaging adhesive-“to balance the lengthier sales cycles inherent in medical devices,” he said.

By diversifying and taking a balanced approach, Doyle figures the company reduces its exposure to individual market fluctuations while increasing its revenues.

Vytex is currently used in gloves, condoms, foams, adhesives and other products. Numerous other opportunities exist, Doyle said, citing the use of the material as a good fit for insoles, pillows, mattresses and countless other products as examples.

The company also became much more open minded on the development of special projects-most of which worked-after the cost of latex skyrocketed and has yet to show a significant drop. That suppressed business development efforts as some customers moved to synthetic alternatives.

The firm now has a strong pipeline of new business it expects to develop during the remainder of 2011, Doyle said.

Vystar-which posted a 43-percent rise in sales to $119,039 and a net loss of $1.06 million in the first quarter of 2011, although the firm's EBITDA showed a 6-percent improvement-also was faced with balance sheet constraints that limited its ability to sign supply contracts.

In the last few months, however, the firm moved into a much better position after reaching agreement with lenders on two credit facilities, giving it the financing of about $3.8 million needed to support its inventory and working capital requirements to fund growth, Doyle said.

From Rubber & Plastics News (A Crain publication)