Mannatech-FYI

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The photos have appeared on the Web, in magazines and on the cover of a widely

circulated pamphlet.

Classic " before " and " after, " they depict a girl named , first as a

child with the obvious characteristics of Down syndrome, then as a seemingly

typical teen.

For advocates of Mannatech Inc., the girl's physical transformation is a

testament to the power of the Coppell-based company's dietary supplements, plant

extracts said to provide the body with essential sugars.

" Pictures don't lie, " they say, using them to sell the company's products, known

as glyconutrients.

But what some perceive as a miracle is for others nothing more than the selling

of false hope.

" Distasteful " and " misinformation " are just some of the words critics have used.

's story and others like it define the culture surrounding Mannatech, a

publicly traded company that in recent years has enjoyed surging sales while

facing mounting skepticism.

Ten years after introducing its first and best-known product, Ambrotose,

Mannatech has become a major player in the direct-selling portion of the

supplement industry.

The company's mix of a unique product, a message grounded in faith and a network

of more than 500,000 associates has fueled sales that reached nearly $400

million last year.

But as Mannatech has grown and taken on a higher profile, it also has become

increasingly characterized by associates who push the envelope by implying that

glyconutrients can treat many of the diseases and disorders that defy modern

medicine.

Some even state that the research of Nobel Prize-winning scientists validates

the products, when in fact there's no connection.

These and other issues have caused outrage among some advocacy groups and

brought scrutiny from at least two state attorneys general, a class-action

lawsuit and questions from some of the world's pre-eminent scientists.

" My blood boils when I think about all the desperate people who have taken this

stuff on, " said Hudson Freeze, a professor of glycobiology at the Burnham

Institute for Medical Research in La Jolla, Calif.

In a recent interview at the company's headquarters, a maze-like complex in the

industrial park north of D/FW Airport, Mannatech Chairman and Chief Executive

Sam Caster said legitimate statements relating to lifestyle improvements are

often misunderstood as cures.

" We walk the fine line of always stating our case appropriately and always

training our people: 'We're not into the treatment, cure or mitigation of

disease. We're into the improvement of quality of life,' " he said. " Now, who can

benefit from good nutrition? Sick people, well people, everybody. Everybody

benefits from good nutrition. "

A potential for exaggeration

Mannatech is one of the recent success stories in the burgeoning food and

supplement direct sales industry.

Only Amway parent Alticor Inc. and weight-loss giant Herbalife reported higher

U.S. sales in 2005, according to the Nutrition Business Journal.

" We've been looking more carefully at the companies that are pacing that growth,

and Mannatech certainly is one of them, " said Grant Ferrier, the journal's

editor.

Direct sales companies do business through independent networks of associates

who make money by selling products as well as through the sales of those they

recruit.

But just as direct selling can fuel profits, it can also breed exaggerated

claims.

" The risk associated with direct selling from a corporate standpoint is you're

using independent contractors, who can be difficult to control, " said Van

Winkle, who analyzes the food and nutrition industries for financial services

firm Canaccord . " You can take disciplinary action against those who put

inappropriate things on their Web sites or make claims that aren't justified.

But you can't do it until you know they did it. "

The supplement industry was effectively deregulated in 1994 when Congress passed

the Dietary Supplement Health and Education Act. It allows supplements to enter

the market without the screening required of drugs, as long as they do not make

label claims of curing, preventing or treating specific diseases or conditions.

Supplement advertising and other marketing material, regulated by the Federal

Trade Commission, must be truthful and substantiated by scientific evidence. All

who participate in selling must comply.

Even if a testimonial represents an individual's honest opinion, it must be

backed by appropriate scientific evidence, according to FTC regulations.

" If you are making a claim, either expressed or implied, that your product is

going to cure [serious conditions], I would think you would need the highest

possible level of scientific validation, " said Cleland, assistant

director of the FTC's division of advertising practices. " And testimonials

aren't scientific validation. "

Mannatech's guidelines for associates prohibit them from using printed or

recorded testimonials citing disease-specific improvement when selling products.

But those very materials are sold to associates at bulk-rate prices by a vendor

the company allows to work its corporate events. In many cases, the items are

produced by Mannatech associates or others affiliated with the company.

During a regional gathering for associates at the Arlington Convention Center in

July, that vendor was set up near the entrance to the meeting room.

When the meeting broke for lunch, associates lined up to buy.

One of the items sold at the company's events is the pamphlet " A Gift Called

, " an account by the girl's mother, a Mannatech associate, of how

glyconutrients eliminated the girl's asthma and attention deficit disorder and

ultimately changed her appearance.

" Suddenly, it became evident that these supplements were changing more than

health, " the girl's mother writes. " They were changing the features of a

chromosomal disorder! "

Another item, a CD called Miracle Stories, is a collection of recorded

testimonials in which 15 individuals describe how they or family members used

glyconutrients to deal with such diseases as liver cancer, cystic fibrosis and

multiple sclerosis.

At the beginning of the CD, produced by the son of one of Mannatech's

highest-earning associates, a narrator says that those who will speak are

" ordinary people " sharing their experiences.

" Some have had conditions that were deemed terminal, but found something that

brought about a miraculous recovery, " the narrator says.

" In whatever way this recording came into your hands, it was no accident.

Perhaps you need a miracle or know somebody who does. If you feel moved by these

stories, please take the time to share them with others, just as someone did

with you. "

The vendor also sells this material online as " Glycotools. " There is a link to

the vendor's Web site on the home page for MannaRelief Ministries, a nonprofit

organization tied to Mannatech.

Caster said he sees nothing disingenuous about the practice of allowing such

items to be sold at corporate events, comparing the practice to a natural food

store selling third-party literature.

" We think it's appropriate for people to have access to that, " he said. " What we

tell people is, 'You can't use that in the sale of product. If you want to use

it to educate yourself,' " that's fine, he said.

Mannatech has been in a defensive posture since a series of class-action

lawsuits were filed against it last year.

Stockholders filed the lawsuits after the price of the company's stock fell 40

percent in the days after an article in Barron's, the weekly financial

publication, detailed some of its business practices.

A consolidated class-action complaint, filed in March, quotes unnamed former

employees as saying the company turned a blind eye to excessive claims by

top-earning associates and kept video testimonials of health claims on a

password-protected portion of its Web site.

Caster and other company officials declined to comment on the suit.

Two of the former employees quoted in the complaint told the Star-Telegram that

they were contacted by the Texas attorney general's office and interviewed about

Mannatech after serving as sources for the class-action attorneys.

Tom , a spokesman for Attorney General Greg Abbott, said policy prohibits

him from stating whether an investigation has been initiated.

Unusual route to the top

As its name implies, there is a spiritual side to Mannatech, stemming largely

from Caster and his wife, .

Both talk openly about how prayer was involved in the company's formation and

still plays a major role in its decisions.

In a book she published about Mannatech in 2002 called Undeniable Destiny,

Caster compared her husband to ph, the Old Testament figure who stored grain

to stave off famine.

" Like most of the people God has chosen throughout the ages, Sam would appear to

the 'world' to be an unlikely candidate for that role, " she wrote. " He never

finished college, he never had experience in the world's financial community,

and he was raised without the benefits of status, wealth or connections. But for

as long as I've known him, Sam's had an unbelievable 'feel' for how to bring new

technology to market. "

Sam Caster has indeed followed an unusual route to the top of a major

corporation, although not every step has been beatific.

A native of the Oak Cliff section of Dallas, Caster left on High School to

finish his education while performing with Up With People, the musical troupe

known for touring military bases and appearing in football halftime shows in the

1960s and '70s.

He said he spent 3 1/2 years with the organization before leaving to form a

bluegrass band.

In the 1980s, he started his first direct-selling venture, Eagle Shield Inc., a

Grand Prairie-based company that sold home insulation and, at one point, a pest

control device known as the ElectraCat.

Eagle Shield went out of business after twice being sued by the attorney

general, who claimed Caster and the company used deceptive practices in selling

both products.

Citing research conducted by entomologists at Texas A & M, the attorney general

asserted that the ElectraCat was " no more effective in eradicating pests than a

standard incandescent light bulb. "

After Eagle Shield's demise, Caster hooked up with C. Fioretti, a

businessman who had studied biochemistry.

Taking advantage of the supplement act and the avenue it created to bring

products to market, Caster and Fioretti started Emprise International Inc., the

company that eventually became Mannatech.

At the time of the company's founding, Fioretti was seven years removed from

federal prison, where he spent three years after pleading guilty to charges

stemming from his involvement in two marijuana-trafficking conspiracies.

The two cases, one in Florida and the other in South Carolina, involved charges

that he and others sought to obtain thousands of pounds of marijuana with intent

to distribute, according to court records.

Fioretti was Mannatech's chief science officer and a member of its board of

directors before leaving in November 1997, a little more than a year before it

went public, according to the company's initial public offering.

Caster said he was aware of Fioretti's criminal history when they became

partners and didn't consider it troubling.

" I may have a lot more grace for those type of things than some people, " he

said. " But I felt like he [Fioretti] was a very good guy, a very bright guy, and

I thought it [having him as a partner] was appropriate. "

Attempts to interview Fioretti, currently the president of a biotech company

based in Baton Rouge, La., were unsuccessful.

'They literally have a sugar pill'

Mannatech initially sold Manapol, an aloe vera extract developed by a laboratory

in Irving, before developing its own product, Ambrotose.

The main ingredient in Ambrotose is arabinogalactan, a substance derived from

the wood of the larch pine.

The product's other ingredients are Manapol and two other plant extracts, gum

tragacanth and gum ghatti.

The company believes Ambrotose and its offshoots are a source of eight sugars

missing from modern diets, largely because of processed foods.

The theory, according to the company, is that these sugars are required to

promote better communication between the body's cells, which in turn supports

the immune system.

Mannatech executives and science personnel routinely associate the company's

work with glycobiology, an emerging science that deals with the function of

sugar molecules in biology and medicine.

But several of glycobiology's leading scientists have become openly hostile

toward the company.

" We have no connection [to Mannatech] and really feel that in fact they are

ruining the reputation of our field, " said Freeze, the glycobiology professor.

In interviews and e-mails to the Star-Telegram, these scientists described

themselves as alarmed by e-mails they received from seemingly desperate people

asking whether Ambrotose can be used to treat cancer and other diseases.

They expressed concern that consumers are forgoing traditional therapies to use

a supplement that has not been subjected to clinical trials and, in their view,

has little or no therapeutic value.

" The one good thing I can say is I think they literally have a sugar pill, " said

Schnaar, a professor of pharmacology in the s Hopkins School of

Medicine and a past president of the Society for Glycobiology. " In other words,

it's not going to hurt anybody. You're not going to hear people say, 'I took

this and got worse.'

" But people can get worse by choosing that product over another therapy that in

fact might have helped. "

The scientists question whether Ambrotose can be properly digested and whether

it provides anything beyond what can be obtained through a normal diet.

" Absent a few dozen people who have devastating birth-defect illnesses, we make

the eight sugars, " Schnaar said.

In an expression of their frustration, some made it known that they would not

participate in a glycobiology symposium scheduled for later this month as long

as it was sponsored by Mannatech. It was canceled after the company dropped its

sponsorship.

'I do believe in the products'

Caster and others affiliated with the company note that there are studies

indicating that glyconutrients were helpful for patients affected by certain

diseases.

Two studies in particular, one involving cystic fibrosis and the other the

neuromuscular disease myasthenia gravis, are frequently cited. In both, doctors

said individuals showed improvements as a result of taking glyconutrients.

Company representatives also point to the anecdotal evidence of so many who have

used the products and claimed them to be beneficial.

" If you hear any testimonials, really good ones, there's a spectrum of people,

from A to Z, " said Murray, a professor emeritus of biochemistry at the

University of Toronto who serves as a consultant for Mannatech. " Initially, I

found that kind of bewildering. But if you think of glyconutrients as a

foodstuff, helping to build up the molecules involved in repairing tissue after

disease, you can understand it. "

Mannatech has a powerful ally in the medical field in Carson, the

director of pediatric neurosurgery at s Hopkins.

Carson, known for performing complex surgery on conjoined twins, began using the

company's products after he was diagnosed with prostate cancer in 2002 and has

since become an advocate, speaking at company functions.

Carson said that his urinary-tract problems disappeared after using

glyconutrients, but he cautioned that his experience should not be interpreted

as an absolute.

" I do believe in the products, " he said. " But, as a scientist, I cannot and will

not make scientific claims about them until the science has been proven. "

The photos

In the Down syndrome community, Mannatech's presence has been defined by the

photos.

Thorpe, a teacher in Phoenix, Ore., whose son has Down syndrome, recalled

a meeting she attended at a church several years ago at the invitation of a

pastor who was also a Mannatech associate.

The featured speaker, she said, was a doctor introduced as having been involved

in the development of Ambrotose.

As part of the presentation, she said, the doctor described testimonials and

illustrated them with slides, highlighting the photos of .

" It was emphasized that the Ambrotose had actually changed her physical features

and she no longer 'looked' like she has Down syndrome, " Thorpe wrote in an

e-mail to the Star-Telegram.

's story also was part of the printed material made available at the

meeting, she said.

Thorpe, an officer in the Down Syndrome Association of Southern Oregon, said she

expressed doubts about the sales pitch and was chastised by one of the women

present for not wanting a " normal " appearance for her son.

" I walked into the meeting with a healthy skepticism and left feeling majorly

creeped out, " she wrote. " The hard sell, coupled with the misinformation and

guilt, was enough to keep me away from the product and the people involved. "

In response to questions about glyconutrients and vitamin therapies, the

National Down Syndrome Society has issued a statement noting that such products

have not been shown through clinical trials to be beneficial and that the

rationale advanced for using them is unproven.

Len Leshin, a Corpus Christi pediatrician who has a son with Down syndrome and

serves on the National Down Syndrome Society's clinical advisory board, said it

isn't unusual for the facial features of Down syndrome children to change as

they mature.

" This is speculation that's not based on anything in particular, " he said of the

photos. " But it's being stated as fact to sell a product.

" When you use speculation to sell a product, that's misleading. And when you're

doing that to the parents of children with handicaps, it's distasteful. "

Caster said he has read the pamphlet written by 's mother and has no

problem with its assertions.

" She is not making the claim that her daughter has been cured of Down syndrome,

because it [Ambrotose] doesn't cure Down syndrome, " he said. " If you read the

document ... what [the mother] basically quantifies is all the quality-of-life

improvements that have come as a result of the intervention of glyconutrients. "

If there is a problem, Caster said, it lies with those who fail to understand

the company and its products, not the company and the products themselves.

" It is a very, very difficult environment out there, " he said. " I mean,

honestly, we're not in the treatment, cure or mitigation business. We're in the

[business of] improvement of quality of life through better nutrition.

" We think we've found an incredible complex that makes a big difference in the

quality of life of people struggling for any kind of adequate existence. And it

is difficult. It is difficult. "

In the know

Mannatech Inc.

Founded: 1994

Location: Coppell

Location: Coppell

Products: Dietary supplements said to promote wellness

Flagship product: Ambrotose

How sold: Direct sales through network of independent associates

Where sold: United States, Canada, Australia, United Kingdom, Japan, New

Zealand, South Korea, Taiwan, Denmark

Number of sales associates: More than 500,000

2005 net sales: $389 million ($259 million of that in the U.S.)

Sales growth: 32.2 percent in 2005, 54.2 percent in 2004, 35.5 percent in 2003

Publicly traded: Since 1999 (ticker: MTEX)

SOURCES: 2005 company annual report, company officials, published reports,

analysts' report prepared by Avondale Partners LLC.

In the know

Debate over glyconutrients

What Mannatech Inc. says ...

" Glyconutrients are plant saccharides that provide support for the immune

system. Saccharides are necessary for the body's creation of glycoforms, the

structures on cell surfaces used to 'talk' to other cells. "

What others say ...

MayoClinic.com: " Although animal studies suggest possible benefits from

glyconutrient supplementation, there is very little research to support any of

these health claims in humans. This makes it difficult to assess the potential

risks and benefits of glyconutrient supplementation. "

The Society for Glycobiology: " The society does not endorse use of these or

other nutritional supplements and is not associated with any manufacturer or

supplier of 'glyconutrients.' The society urges persons having questions

regarding nutritional supplements to consult a physician before initiating use

of any nutritional supplement claiming to enhance health or treat disease. "

The Cystic Fibrosis Foundation Care Center Committee*: " The committee found no

scientific evidence to support the claims of benefit of glyconutrient therapy in

CF. The committee believes that these unsupported claims may mislead CF patients

and result in the adoption of an unproven therapy and possible replacement of

proven therapies. ... As patient advocates, the Care Center Committee strongly

suggests that individuals with CF not adopt glyconutrient therapies without

scientific evidence supporting their use. "

* The committee is composed of physicians who provide care for people with

cystic fibrosis and set accreditation standards for care centers.

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