- The Washington Times - Monday, June 11, 2001

Henry "Pete" Linsert Jr., is betting on algae — the greenish-brown, slimy stuff that floats in water — to bring wealth to the company he runs.
Martek Bioscience Corp., of Columbia, Md., develops, manufacturers and markets products derived from algae. Its main product is a an oil of docosahexaenoic acid (DHA), which according to the company, helps in mental development and visual acuity of newborn babies.
During a recent interview with The Washington Times, Mr. Linsert, 60, talked about the product, samples of which he has displayed in test tubes on the window sill of his office overlooking a park.
"It grows like pea soup. You dry it, extract it, and these are added to the formula," he says of the amber-colored liquid. "The key is that our oils are now recognized as safe [by the Food and Drug Administration] … so that's a green light for manufacturers to put them in infant formula in the United States."
The FDA gave Martek's oil a GRAS approval (generally recognized as safe) last month. This means the product can be safely used in foods. But now it's up to infant formula manufacturers to approach to FDA about using Martek's additive in their products.
The company is talking to infant formula makers and hoping that its oil will be introduced domestically within a year, Mr. Linsert says.
Meanwhile, 60 nations around the world have been selling formula containing the additive since the early 1990s, when foreign governments approved the product.
As Martek's additive began selling overseas, the company's sales climbed progressively, closing the decade at $6.13 million. Last year sales rose 58 percent to $9.68 million, and Mr. Linsert expects that figure to grow to about $18 million this year.
For its second fiscal quarter ended April 30 Martek's sales rose 72 percent to $4.01 million from $2.37 million the year before. Meanwhile, net losses dropped to $3.24 million (17 cents per diluted shares) from $4.10 million (24 cents). Diluted shares reflect the value of options, warrants and other securities convertible into common stock.
Mead Johnson, an Indiana infant formula maker, has successfully been selling products containing Martek's oils in Europe and Asia for several years, says Pete Paradossi, a spokesman for Mead Johnson.
"We've added it to our products in those markets where the local government has approved the use of that additive," he says, adding that the product has been well-accepted by foreign consumers. "In the studies that have been done with the additive we've seen positive results."
Baby formula is considered to be less nutritious than breast milk. But Mr. Linsert says Martek's product will make baby formula just as healthy.
The additive was first developed as part of NASA's efforts to find ways to produce oxygen during space travel. NASA tapped defense contractor Martin Marietta to begin working on a solution.
When Lockheed bought Martin Marietta in 1983, it became Lockheed Martin and dropped out of scientific research. The scientific arm that had been working on the algae product then became Martek.
The company was acquired by a local venture fund, where Mr. Linsert was head investor. He started as acting chief executive of Martek and eventually took the post permanently.
"I think we're doing some neat things for people and can make some money at it," says Mr. Linsert, who has also worked as an economist and mathematician.
Martek, with additional offices in Kentucky and Pennsylvania, has been based out of Columbia, Md., since 1989. The 35,000 square-foot space houses research and administration. It also stores one of the world's largest algae collections and databases.
The labs are crammed with large canisters and fish tank-like containers filed with saltwater where algae grows.
"This stuff is real," says Mr. Linsert of the oils. "It works, and it's going to make better kids, better adults."
Analysts speculate that Market's product within five years will be a part of baby formula made by two-thirds of the manufacturers in the industry.
"We think there's a $300 million plus market opportunity," says Scott Van Winkle, an analyst with Adams, Harkness & Hill in Boston. "I'd expect next year we'd see an infant formula with Martek's [product] sold in the United States."
"And over the next three, four, five year we'd see this company mature from a $29 million company to a $300 million company, talking about sales."
Although the oils are Martek's first product, the company is looking into other algae-derived products as well. One of those is fluorescent markers that could be used in diagnostics and in gene and protein detection.
The markers are derived from a protein that is about 100 times stronger than fluorescence. Mr. Linsert says the markers could be very useful to biotechnology companies around the world during experiments.
"It could be used to know if something happened or not," he says. "This could become key with genetic testing … we can see things we haven't see before."
Shares of Martek rose in late May when the FDA said the company's oils were safe, reaching a high of $25 on NASDAQ. The stock, which had been as low as $12 in the last year, close at $24.55 Friday.

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