sed formatting

I am pulling my hair trying to understand how to make the below sed
command to format the body message with a new line and not only the 
'> 'character  separating the lines.

BODY=`formail -I "" | sed 's/^/> /' `

This is my output when receiving the email:
>  first line  > second line  > third line
Any suggestions?

Tomas Karlsson
webmaster(_at_)iimagers(_dot_)com