Biospherics Inc. of Rockville yesterday reported substantial progress in developing a low-cost, noncaloric sugar substitute but emphasized that production and marketing are still years away.

Gilbert V. Levin, Biospherics' president and inventor of Lev-O-cal, the sugar substitute, said that steps in its development over the past several months have reduced its cost from hundreds of dollars a pound to as low as $2 a pound. Levin said work will continue to reduce costs further.

"We're looking at an enormous market once economic and safety hurdles are crossed," Levin said in an interview yesterday. Until those hurdles are cleared, however, Biospherics has a "tiger by the tail," he said.

Founded in 1967, Biospherics has grown from a small environmental management firm into a diversified company with emphasis on research and development in environmental and health economies. It expects to gross slightly less than $7 million this year.

About 15 years ago, Levin began the research that led to the development of the sugar substitutes. The more intensive part of that research began about six months ago, and Biospherics announced its patent on the use of the substitutes last April.

The company hopes that its research will lead to an acceptable substitute with a molecular structure that is the opposite of natural sugars. Biospherics has synthesized two "left-handed," or L-sugars (named for their molecular configuration, which contrasts with that of natural, or "right-handed" sugars assimilated by most organisms) for use in food and beverages.

Bringing these substitutes to the marketplace could have a major impact on sugar production and consumption.

"If Lev-O-cal could be used in soft drinks without ill effect, for example, manufacturers wouldn't need to bottle two kinds of soda," said Levin, emphasizing the potential for eliminating noncaloric sweeteners in soft drinks.

"The potential market size is staggering," Levin insisted. "We're looking at the sugar substitutes not merely as a sweetener but at the commodities market."

The Biospheric sugar substitute is far superior to other sweeteners for several reasons, Levin claims. Because it is noncaloric, he said, Lev-O-cal would control weight.

Among its other claims, Lev-O-cal would not cause tooth decay because bacteria in the mouth won't assimilate it. Spoilage attributed to sugar in other products would be eliminated, and the product can be used for baking.

Artificial sweeteners that are currently in use retard browning, Levin explained.

Considerable work must be done before mass production can be attempted. Essentially, Biospherics is confronted by two problems--developing a cheaper product and meeting Food and Drug Administration standards. FDA testing alone will cost millions of dollars, Levin said.

An estimated $4 million to $5 million annually for the next four years would be required to develop the sugar substitute fully. Until now, the program has been supported by in-house research funds but Levin hopes to get backing from other companies or some outside financial underwriters.

Development of the product for production in large quantities will "take a lot of organization and capital," Levin conceded. Biospherics probably would license another company to manufacture it, he added.