Forbes Medi-Tech Inc.
OTC Bulletin Board : FMTI

March 30, 2005 16:05 ET

Forbes Medi-Tech Announces Financial Results for the 4th Quarter and Year Ended December 31, 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: FORBES MEDI-TECH INC.

TSX SYMBOL: FMI
NASDAQ SYMBOL: FMTI

MARCH 30, 2005 - 16:05 ET

Forbes Medi-Tech Announces Financial Results for the
4th Quarter and Year Ended December 31, 2004

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 30, 2005) - Forbes
Medi-Tech Inc. (TSX:FMI)(NASDAQ:FMTI) -

4th Quarter Revenue Increases 47%; FY2004 Revenue up 23%; Increased R&D
Activity

Forbes Medi-Tech Inc. today announced its financial results for the
fourth quarter and year ended December 31, 2004 versus the fourth
quarter and year ended December 31, 2003. All amounts are in Canadian
dollars unless otherwise noted.

Fourth Quarter and Fiscal Year 2004 Highlights

- Reported total revenue of $5.76 million for the fourth quarter ended
December 31, 2004 versus $3.93 million for the fourth quarter ended
December 31, 2003

- Reported total revenue of $17.6 million for year ended December 31,
2004 versus $14.3 million for year ended December 31, 2003

- Reported net loss of $0.06 per share for the quarter ended December
31, 2004 compared to a net loss of $0.09 per share for the quarter ended
December 31, 2003

- Increased R&D activity to support the clinical development and the
Company's lead compound, FM-VP4

- Reported net loss of $0.25 per share for the year ended December 31,
2004 compared to a net loss of $0.09 per share for the year ended
December 31, 2003

- Contributing to the net loss is: a significant increase in R&D
activity; an increase in the non-cash stock-based compensation expense;
and greater G&A expenses reflecting the growth of the Company's
operations

- Manufacturing facility expanded to 1,500 metric tonnes per annum

- Completed equity financing of US$10.75 million, Great Point Partners &
BioAsia acting as lead investors

- Appointed leading North American cardiologists to the Medical &
Scientific Advisory Board

- Received final approval for Reducol™ sales in the European Union in
certain food groups

- Announced US$24.4 million in sterols sales agreement between Forbes'
manufacturing joint venture, Phyto-Source LP, and a leading
multinational ingredient company

- Completed European Phase II trial of the Company's lead pharmaceutical
compound, FM-VP4

- Improved net cash and investments position to $15.2 million at the end
of December 31, 2004 versus $5.8 million at December 31, 2003

"As a result of our growing nutraceutical business, the Company
continues to show excellent revenue growth helping us offset a
significant portion of our 2004 pharmaceutical R&D expenses," says
Charles Butt, President and CEO of Forbes Medi-Tech Inc. "We have
achieved previously stated 2004 objectives including: obtained
regulatory approvals for Reducol™; expanded our joint venture
manufacturing facility; and made progress towards the US Phase II trial
of our cholesterol-lowering compound, FM-VP4, scheduled for later this
year."

Revenue Outlook

Based on existing sales contracts, and assuming that forecasted supply
requirements will be ordered and shipped, the Company anticipates total
revenue of $21-22 million for fiscal 2005. This figure represents the
Company's projected revenue from its own sales and from its share of the
Phyto-Source joint venture revenue.

Pharmaceutical Research

Forbes remains committed to the further clinical development of its lead
cholesterol-lowering compound, FM-VP4. Taking into account the results
of the European trial completed last year, the Company plans to
undertake a U.S. Phase II clinical study of FM-VP4 involving an expanded
number of participants, a longer trial duration and a narrower dosage
range. The U.S. Phase II clinical trial design will focus on identifying
the reduction in LDL-cholesterol produced by FM-VP4 with a target
reduction of 15% of LDL in comparison to baseline. To support this
planned trial, the Company has recently commenced a 90 day preclinical
toxicology study, and currently anticipates filing of an investigational
new drug application with the U.S. FDA and commencing the U.S. Phase II
trial later this year.

Nutraceutical Business

In November 2004 and more recently, in March 2005, the Company received
approval from regulatory authorities in the European Union to market
Reducol™ in a number of foods. Currently, Reducol™ has been
approved for use in milk-based drinks, yellow fat spreads (margarine),
fermented milk type products, soy drinks, low-fat cheese type products,
yoghurt type products, spicy sauces, and salad dressings. The Company
and its strategic partners are preparing for Reducol™-based product
launches scheduled for the coming months. In support of the expanded
business opportunities in Europe, the Company's 50-50 manufacturing
joint-venture facility, Phyto-Source, was expanded from 1,000 to 1,500
metric tonnes per annum in December 2004.



Financial Results

-----------------------------------------------------
Summary Year ended Year ended
($millions of $ except December 31-04 December 31-03
per share values) (restated)
-----------------------------------------------------
Total revenues $ 17.6 $ 14.3
-----------------------------------------------------
Total expenses (24.7) (18.6)
Other income 2.2
Income taxes (0.9)
-----------------------------------------------------
Net loss $ (8.0) $ (2.1)
Basic loss per share $(0.25) $(0.09)
-----------------------------------------------------


Net loss - Contributing to the net loss for the year ended December 31,
2004 of $8.0 million is an increase in R&D activity to support the
Company's clinical development plan; the increase in non-cash
stock-based compensation expense, which is based on the fair value
method of valuing options, is attributable to the granting of additional
options to existing employees, options to new employees and
non-employees, and the recognition of the expense from options granted
in prior years; and an increase in G&A reflecting the growth of the
Company's operations.

Revenues - Revenue for the Company's ingredient products, Reducol™
and Phyto-S sterols remains strong. In June 2004, the Company announced
the renewal of a major phytosterol agreement between Phyto-Source LP and
a large multinational company. The renewed contract is effective through
the end of 2005. In September 2004, Forbes announced that it had secured
an additional phytosterol supply agreement between Phyto-Source LP and
another leading multinational ingredient company. This agreement is for
US$24.4 million over a three year period, commencing January 2005.
Accordingly, revenues from this latter agreement will be reflected in
future periods. Additionally, the Company and its strategic partners
have scheduled Reducol™-based product launches in Europe which may
have an impact on future sales.

Liquidity & Capital Resources

Cash, cash equivalents and working capital - As at December 31, 2004,
the net cash and short-term investments totaled $15.2 million, compared
with $5.8 million as at December 31, 2003. The Company had working
capital of $15.1 million at December 31, 2004 (2003 - working capital
$6.7 million). The increase in cash and working capital in 2004 was
mainly due to increased sales revenues and the proceeds of a US$10.7
(Cdn $12.9) million financing.

Operations - In the fiscal year 2004, cash used in operating activities
was $4.5 million in fiscal 2004, compared to $4.7 million in fiscal
2003. Net changes in non-cash working capital items used cash of $0.9
million in 2004 compared with $3.8 million of cash used in the year
2003. The changes in non-cash working capital items each year mainly
reflect the changes in accounts receivable and changes in inventory
levels and accounts payable and accrued liabilities and taxes payable.

Investing Activities - In the fiscal year 2004, investing activities
utilized net cash of $4.9 million, compared with net cash provided of
$1.9 million in 2003. Cash used in 2004 was primarily used in the
acquisition of capital assets at the Phyto-Source manufacturing facility
near Houston, Texas, and the acquisition of short-term-investments,
offset by the final proceeds from the divestiture of the AD/ADD
technology.

Financing Activities - In the year ended December 31, 2004, financing
activities provided $14.1 million of cash compared with $6.9 million in
2003. This increase was primarily the result of a private placement
financing completed in January of 2004 in the amount of US$10.7 million
(Cdn $12.9 million)



Expenses

-----------------------------------------------------
Summary Year ended Year ended
($millions of $ except December 31-04 December 31-03
per share values) (restated)
-----------------------------------------------------
Cost of sales,
marketing & product
development $ 9.4 $ 8.2
General & administrative 6.2 4.9
Research & development 4.7 2.1
Stock-based compensation 2.8 1.5
Depreciation and
amortization 1.6 2.0
-----------------------------------------------------
Total expenses $24.7 $18.7
-----------------------------------------------------


Cost of sales, marketing and product development - For the year ended
December 31, 2004, cost of sales totaled $9.4 million on phytosterol
revenues of $17.2 million, or 55% of phytosterol revenues, versus $8.2
million on phytosterol revenues of $14.1 million for the year ended
December 31, 2003, or 58% of phytosterol revenues. The decrease in cost
of sales as a percentage of sales can be attributed to improvements in
production efficiencies and product mix. While Cost of Sales as a
percentage of phytosterol revenue has decreased in 2004 resulting
primarily from improvements in production efficiencies, such percentage
may continue to fluctuate over time due both to variations in the
phytosterol product mix and to increases in marketing efforts.

Research and development- For the year ended December 31, 2004, the
Company's net research and development ("R&D") expenses totaled $4.7
million compared with $2.1 million for the year ended December 31, 2003.
The increase in R&D expenditures in fiscal 2004 over 2003 is mainly a
result of Forbes' decision to focus its core research and development on
cardiovascular and, specifically, cholesterol-lowering compounds such as
FM-VP4. A major part of R&D expenditures in 2004 was in the area of
pre-clinical and clinical development, including the European Phase II
trial of FM-VP4.

General and administrative Expenditures ("G&A")- For the year ended
December 31, 2004 G&A totaled $6.2 million, compared with $4.9 million
in fiscal year 2003. The increases in administrative expenses are
primarily attributable to increased business activity and professional
services including legal and consulting in 2004.

Conference Call and Webcast

A conference call and webcast to discuss these financial results will be
held on Wednesday March 30, 2005 at 1:30pm PT. (4:30pmET) To participate
in the conference call, please dial 1-877-888-7019 or (direct)
416-695-5259. For those investors unable to participate in the call, the
live webcast can be accessed through the Company's website at
www.forbesmedi.com. The call will also be available for replay until
April 11, 2005 by calling 1-888-509-0081 or 416-695-5275. The webcast
link will be archived on the Forbes website afterwards.

Fiscal Year Ended December 31, 2004 Report

This news release includes by reference the Company's audited financial
statements for the fiscal year ended December 31, 2004, including the
full Management Discussion & Analysis (MD&A). The MD&A and financial
statements are being filed with applicable Canadian and U.S. regulatory
authorities.

About Forbes Medi-Tech Inc.

We are a life sciences company dedicated to the research, development
and commercialization of innovative products for the prevention and
treatment of cardiovascular disease. Our vision is to develop and market
products along a treatment continuum that cardiovascular disease
consumers, healthcare professionals and specialized cardiovascular
disease research and healthcare institutions will identify, recommend
and seek. Our proposed business strategy is to develop and commercialize
proprietary compounds to address the unmet needs of patients within the
cardiovascular disease market.

This News Release contains forward-looking statements concerning
anticipated developments in the Company's business and projected sales
volumes, revenues, capital, research and development, manufacturing, and
other information in future periods. Forward-looking statements can be
identified by words such as, "anticipates," "future", "planned",
"scheduled", "outlook", "forecasted", "projected", "further",
"continues", and similar expressions or variations thereon, or
statements that events, conditions or results "will", or "may," occur or
be achieved. Forward-looking statements are statements about the future
and are inherently uncertain, and actual achievements of the Company and
other results and occurrences may differ materially from those reflected
in the forward-looking statements due to a variety of risks,
uncertainties and other factors, including, without limitation, the need
to secure new sales contracts; the need for performance by buyers of
products and by the Company's strategic partners; the need to secure raw
materials at competitive prices; uncertainty as to whether future
clinical trials will be undertaken or completed as planned, and if
undertaken or completed, the risk that such trials may not achieve
expected results; uncertainty as to whether the Company's anticipated
sales volumes, revenues, and expenditure levels will be achieved as
currently anticipated or at all; the risk of technical obsolescence; the
need for regulatory approvals, which may be withdrawn or not be obtained
in a timely manner or at all; intellectual property risks;
marketing/manufacturing risks; partnership/strategic alliance risks and
in particular, the Company's dependency on its joint venture partner,
Chusei (U.S.A.) Inc.; product liability risk; the effect of competition;
the uncertainty of the size and existence of a market opportunity for
the Company's products; the Company's need for additional future
capital, which may not be available in a timely manner or at all;
exchange rate fluctuations; the need to attract and retain key
personnel; risks inherent in the development of pharmaceutical and
nutraceutical research and the development of new products; the ability
of buyers to fulfill health claims of their products; and other risks
and uncertainties affecting the Company and its business, as contained
in news releases and filings with the United States Securities and
Exchange Commission and Canadian Securities Regulatory Authorities, any
of which could cause actual results to vary materially from current
results or the Company's anticipated future results. Forward-looking
statements are based on the beliefs, opinions and expectation of the
Company's management at the time they are made, and the Company does not
assume any obligation to update its forward-looking statement if those
beliefs, opinions or expectations or other circumstances should change.



FORBES MEDI-TECH INC.
Consolidated Balance Sheets
(Expressed in thousands of Canadian dollars)

December 31, 2004 and 2003

--------------------------------------------------------------------
--------------------------------------------------------------------
2004 2003
(restated)
--------------------------------------------------------------------
Assets

Current assets:
Cash and cash equivalents $ 9,229 $ 4,512
Short-term investments 6,018 1,285
Accounts receivable 3,530 3,314
Inventories 708 508
Prepaid expenses and deposits 192 326
--------------------------------------------------------------------
19,677 9,945

Property, plant and equipment 12,989 11,897
Intangible and other assets 5,923 6,592
--------------------------------------------------------------------

$ 38,589 $ 28,434
--------------------------------------------------------------------
--------------------------------------------------------------------

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $ 2,855 $ 2,333
Deferred revenues 344 151
Current portion of long-term debt 1,405 796
--------------------------------------------------------------------
4,604 3,280
Long-term liabilities:
Long-term debt 763 1,074
Deferred revenues - 151
Tenure allowance 765 728
--------------------------------------------------------------------
6,132 5,233
Shareholders' equity:
Share capital 94,223 79,557
Contributed surplus 4,171 1,567
Deficit (65,937) (57,923)
--------------------------------------------------------------------
32,457 23,201
--------------------------------------------------------------------
$ 38,589 $ 28,434
--------------------------------------------------------------------
--------------------------------------------------------------------

Approved on behalf of the Board:


Don Buxton Nitin Kaushal
Director Director



FORBES MEDI-TECH INC.
Consolidated Statements of Operations and Deficit
(Expressed in thousands of Canadian dollars, except per share
amounts)

Years ended December 31, 2004, 2003 and 2002
--------------------------------------------------------------------
--------------------------------------------------------------------

2004 2003 2002
(restated) (restated)

Revenue:
Sales $ 17,046 $ 13,909 $ 6,852
Licensing 151 208 941
--------------------------------------------------------------------
Phytosterol revenues 17,197 14,117 7,793
Interest and other 374 150 187
--------------------------------------------------------------------
17,571 14,267 7,980

Expenses:
Cost of sales, marketing and
product development 9,340 8,199 7,247
General and administrative 6,195 4,892 4,225
Research and development 4,676 2,070 3,209
Stock-based compensation 2,838 1,459 414
Depreciation and amortization 1,635 2,044 2,307
--------------------------------------------------------------------
24,684 18,664 17,402

Gain on settlement of licensing
arrangements - - (6,044)
Write-down of leaseholds and assets - - 1,136
Gain on divestiture of technology - (2,247) -
--------------------------------------------------------------------

Loss for the year before taxes (7,113) (2,150) (4,514)

Provision for income taxes 901 - -
--------------------------------------------------------------------
Loss for year (8,014) (2,150) (4,514)

Deficit, beginning of year (57,923) (55,773) (51,259)
--------------------------------------------------------------------

Deficit, end of year $(65,937) $ (57,923) $ (55,773)
--------------------------------------------------------------------
--------------------------------------------------------------------

Basic and diluted loss per share $ (0.25) $ (0.09) $ (0.21)
--------------------------------------------------------------------
--------------------------------------------------------------------



FORBES MEDI-TECH INC.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)

Years ended December 31, 2004, 2003 and 2002

--------------------------------------------------------------------
--------------------------------------------------------------------
2004 2003 2002
(restated)(restated)

Cash provided by (used in):

Operations:
Loss for the year $ (8,014) $ (2,150) $ (4,514)
Adjustment to reconcile loss for
the year to cash flow used in
operations:
Depreciation and amortization 1,635 2,044 2,307
Amortization of deferred license
revenues (151) (141) (941)
Gain on settlement of licensing
arrangements - - (6,044)
Gain on divestiture of technology - (2,247) -
Loss (gain) on disposal of fixed
assets 4 (38) (32)
Write-down of leaseholds and assets - 29 1,136
Stock-based compensation expense 2,838 1,459 414
License fee paid in shares 49 - -
Foreign exchange translation (22) 131 -
Changes in:
Accounts receivable (1,446) 759 (106)
Inventories (200) 443 2,463
Prepaid expenses and deposits 134 211 804
Accounts payable and accrued
liabilities 522 (2,634) 837
Royalties payable - (3,155) -
Increase (decrease) in tenure
allowance in excess of
amounts funded (11) 114 (233)
Deferred revenues 193 442 -
Other (32) - 95
--------------------------------------------------------------------
(4,501) (4,733) (3,814)

Investments:
Acquisition of property, plant and
equipment (1,445) (1,087) (1,566)
Acquisition of intangible and other
assets - (49) -
Investment in joint venture (net of
cash received) - - (1,222)
Collection of loan receivable from
Phyto-Source LP - 2,369 -
Proceeds on disposal of fixed assets 48 763 407
Proceeds on divestiture of
technology 1,230 1,189 -
Short-term investments (4,733) (1,285) 983
--------------------------------------------------------------------
(4,900) 1,900 (1,398)

Financing:
Issuance of common shares 1,473 7,779 199
Issuance of preferred shares 12,910 - -
Issuance of special warrants - (887) 887
Repayment of notes payable (150) (1,151) 422
Repayment of capital lease
obligations (70) - -
Repayment of term loan (647) (887) (1,593)
Increase in term loan - 2,078 -
Increase in line of credit 602 - -
--------------------------------------------------------------------
14,118 6,932 (85)
--------------------------------------------------------------------

Increase (decrease) in cash and cash
equivalents 4,717 4,099 (5,297)

Cash and cash equivalents, beginning
of year 4,512 413 5,710
--------------------------------------------------------------------

Cash and cash equivalents,
end of year $ 9,229 $ 4,512 $ 413
--------------------------------------------------------------------
--------------------------------------------------------------------



-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Forbes Medi-Tech Inc.
    Darren Seed
    Manager, Investor Relations
    (604) 681-8976
    dseed@forbesmedi.com
    or
    Forbes Medi-Tech Inc.
    David Goold
    CFO
    (604) 689-5899
    dgoold@forbesmedi.com
    www.forbesmedi.com
    NASDAQ and the Toronto Stock Exchange have not reviewed and do not
    accept responsibility for the adequacy or accuracy of the content of
    this News Release.