With a $1.9-million loan from the Atlantic Innovation Fund, Island Abbey Foods of Charlottetown is tripling its research staff and pioneering the delivery of health supplements and pharmaceuticals through its honey-based products.

The company is famous for its honey-based candies and lozenges, and for walking away from a $600,000 funding agreement with four dragons from CBC’s Dragons’ Den. The collapse of that deal was the dragons’ loss because Island Abbey now appears to be in the midst of its second straight year of 100 per cent revenue growth, and is not only cash-flow positive but profitable.

The company was in the news earlier this month when the Atlantic Canada Opportunities Agency announced it would receive a $1.9-million Atlantic Innovation Fund loan over four years to help finance a $4-million research and development project. With that money it will build its three-member R&D staff up to nine or 10 positions.

For several years, Island Abbey has been moving into health supplements to complement its food products, and in March, released a new line of honey-based vitamin products. It is now proceeding into over-the-counter drugs and then pharmaceuticals, all using the honey-based delivery system.

“We’re literally working with the top 10 pharmaceutical companies in the world,” said Island Abbey CEO John Rowe in an interview. “We have the first all-natural delivery system for their product and that’s why they’re interested. People are demanding this sort of product.”

There are several reasons for combining medicinal products with the honey-based delivery system, said Rowe, including the fact that it tastes good. Honey itself has curative properties, and there are health synergies from combining a medicine with honey. And the alternative to mixing medicine with honey is to use processed sugar or put it in a synthetic capsule, both of which turn off some customers.

Rowe said the company is now working its way up the regulatory ladder: it has approval to sell food and health supplements and is working toward receiving certification for over-the-counter drugs, and then pharmaceuticals. Within five years, it hopes to be manufacturing prescription drugs delivered through its solidified honey technology.

“We can literally imbed any type of therapeutic ingredient in our honey-based platform,” he said.

While the move into new markets is exciting, the company is making vast headway with its existing products. Its candies and lozenges were sold in about 2,000 Canadian outlets at the end of 2011, and a year later that number had risen to 4,500. Rowe said that by the end of this year, including export markets, the products will be sold at 10,000 stores.

Island Abbey raised about $1 million by selling preferred shares to angel investors from P.E.I. in early 2012, but Rowe said there are no plans to sell more equity now that the company is profitable and has received funding from the Atlantic Innovation Fund.

Rowe also attributed a lot of Island Abbey’s success to the fact it is based in Charlottetown, meaning it benefits from the wealth of expertise and research resources in the food, health and life sciences segments. He said the company has benefited from its relationship with the National Research Council, University of P.E.I. and the growing private sector.

“We wouldn’t be able to do this elsewhere,” he said. “The bioscience community here is as good as anywhere I’ve seen in the world.”