BETTER THAN GOLD: Cawthron scientist Andy Selwood with a bottle of $20,000 worth of toxin produced by algae.

Nelson's Cawthron Institute has broken into an international market selling minute quantities of organic compounds sourced from algae and worth 50,000 times the price of gold.

A level teaspoon of the compounds was worth several million dollars, acting chief executive Daryl Wehner said today.

"Our sales over the first nine months have exceeded a quarter of a million dollars and we have several large orders already placed awaiting delivery," he said.

The compounds, natural toxins produced by algae, often found in food such as shellfish, are necessary for research and other high value products, including pharmaceuticals, making them of special interest to scientists working in these fields, as well as regulatory bodies.

Cawthron is one of only a handful of organisations worldwide with the capability to produce these rare naturally occurring compounds to the market.

"Our process, though, is unique in that we are the only ones able to link the whole process from beginning to end – culturing and producing compounds from our own algal collection prior to extraction and purification, and further synthesis."

He said the emerging market provided a great opportunity, not only for Cawthron, but also for New Zealand, especially once the potential for pharmaceutical development for the treatment of diseases is explored.

"We have spent 15 years developing our science and expertise in this field, initially to ensure the safety of the New Zealand seafood industry, and now we have an opportunity to convert this capability into unique, high-value, highly sought-after compounds. Any product that sells for about 50,000 times the price of gold would have to be the ultimate in New Zealand's search for differentiated high value exports."

Cawthron recently sold 1 milligram of an extracted natural compound, equivalent in volume to three grains of salt, to a European country for 3000 (NZ$5500), and 10 milligrams of another compound to the US for more than NZ$45,000.

"The caution is that it's not to say there's a whole lot of organisations lined up at the door to buy teaspoonsful," Mr Wehner said.

"It's very much in its infancy for us, so we're not sure how big the market is.

"I suspect it will be a unique niche market and we'll continue to get these prices, but the volume won't be huge."

Cawthron's laboratory services manager Nico Van Loon said the compounds were present in very small amounts in the algae, compared with the likes of omega 3 fatty acids, so extracting them was very difficult, "very much akin to finding a needle in a haystack".

But he says the potential returns could be phenomenal with sales to date solely in response to customer inquiries.

"We had initially intended to investigate the worldwide demand for these compounds, but preliminary conversations with potential customers have already produced more demand than we can cope with at the moment."

Mr Wehner said Cawthron was considering what capital investment might be needed to enable the institute to rapidly expand the range of compounds it can provide and to establish wider markets.

"It is still early days in terms of this new, but clearly lucrative, market opportunity but we are confident we have the skill and ability to make our mark."

The announcement comes as Cawthron, New Zealand's largest independent research organisation, is completing the sale of its Marlborough-based wine testing and microbial testing laboratory, and its Nelson environmental chemistry testing facility.

About 15 staff were affected, but Mr Wehner said less than one full-time-equivalent job had been lost, with staff reassigned within Cawthron or transferring to RJ Hill laboratories, which has bought the Marlborough lab.

"There isn't really any loss of jobs. It's fantastic news," he said.