Cyanotech Corp. and Aquasearch Inc. announced Monday thatthey have formed a joint venture to produce astaxanthin, a redfeed pigment used by the aquaculture industry to make salmonflesh "pink," from microalgae.

The new company, OceanColor Inc., will be located atCyanotech's (NASDAQ:CYAN) 23-acre facility in Kailua-Kona,Hawaii.

All astaxanthin is presently manufactured synthetically. Its usehas come under increasing scrutiny by regulatory agencies inmany of the major salmon-growing countries worldwide.Natural astaxanthin from microalgae should be cost-competitive with the synthetic variety; its market could be inexcess of $100 million annually.

OceanColor will combine Aquasearch's large-scale closed algalculture technology with Cyanotech's commercial-scale openculture systems and advanced processing technology.Aquasearch, a development-stage company in San Diego, willalso provide project funding, while Cyanotech will provide theuse of development facilities and project management.

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