- The Washington Times - Monday, December 18, 2000

Martek Biosciences Corp. has more success selling its product than its stock.

The Columbia, Md., developer of an infant formula and products made from lab-grown microalgae has seen its revenues jump 74 percent in its fourth quarter from just one year ago.

Meanwhile, Wall Street let the company's stock linger in the high teens, reaching no higher than the $22-per-share mark all quarter.

In fact, while the biotechnology sector is booming, the value of this stock hinges on the success of its two-year plan to capture the U.S. market, and create a household name for itself, analysts say.

"I think Wall Street is still unsure about the market potential for their product and technology as a whole," says Alex Zisson, analyst for Chase Hambrecht & Quist in New York.

The stock closed Friday on the Nasdaq at $14.25 per share.

In March, the National Institutes of Health in Bethesda released a report showing children who drink breast milk with a high concentration of microalgae have higher IQs than children fed regular formula after birth.

So Martek created infant formula with microalgae. "We've been able to match the fatty acids in breast milk with infant formula, so you're getting stronger more intelligent children with the formula," says Martek's chief financial officer, Pete Buzy.

The low birth weight formula is sold in 70 countries, while a formula for full-term babies is sold in 13 countries. The company wants FDA approval before it markets the product in the United States. Martek's goal is to capture the U.S. market within a year and a half and continue multiplying its revenue base.

The formula, Mr. Buzy concedes, is more expensive, costing parents about $80 to $100 more per year. But, parents seem willing to pay it. That additional cost for parents, Mr. Buzy says, will translate into as much as $300 million in revenues for Martek if the company captures the entire U.S. market.

Sushant Kumar, senior biotechnology analyst for Mehta Partners in New York, says capturing the entire U.S. market, catching the attention of Wall Street investors, and reveling in higher valuation, is "wishful thinking."

"I wouldn't go and buy this," he says. "The share price is stable, but this would not be the one that I would be spending my time on."

Mr. Kumar says the average daily trading volume of Martek is low probably because of a lack of interest.

Mr. Zisson doesn't suggest going out and buying the stock, but holding onto it instead, with crossed fingers as it enters the U.S. market in about a year and a half.

The company's revenues come primarily from Europe and Asia. So, Mr. Zisson says, for the company's stock price to increase in the near term, partners like Abbott Laboratories and American Home Products Corp. need to beef up marketing overseas.

"They haven't yet launched in a major market, so that's really what Wall Street is waiting for," Mr. Zisson says.

He says New Zealand, Singapore and Brazil are the three largest countries using the formula.

Mr. Kumar agrees. "If they have some big boys involved, and there is a marketing effort on their part, direct to consumer, and there are some dollars spent, then it will help the products and their average daily volume."

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