Martek plans initial public offering Up to 3.1 million shares to be sold

Martek Biosciences Corp., a Columbia-based biotechnology company that is researching a formula additive made from algae that it says makes babies smarter, has announced it plans to go public.

In a filing with the Securities and Exchange Commission, Martek said it would make an initial public offering of between 2.7 million and 3.1 million shares, for no more than $12 a share.


The 55-employee company has not set a date or price for the offering.

In its prospectus, the company said it may sell several million more shares in coming months.


The company said it planned to spend $13 million on clinical trials of its formula additive and other new products.

Another $3 million would go to general research. And $5 million would go for new capital expenditures. The rest, if any, would be used for acquisitions or working capital.

The company said the first offering was expected to supply the company with enough capital to last at least two years.

The offering is being underwritten by Hambrecht & Quist Inc., Bear Stearns & Co. Inc. and Salomon Brothers Inc.

Martek has lost money every year since it was started in 1985. It reported losing $1.2 million in 1992, and $1.5 million in the nine months that ended July 31. And Martek said it "expects such losses to increase in the near term" because of growing research demands.

But Martek's revenues have increased dramatically since 1988, when it had no sales and survived on $750,000 in grants. Last year, it notched $1.6 million in sales and licensing fees last year, on top of another $1.6 million in research grants.

Besides continuing clinical trials of Formulaid, Martek's additive for infant formula, the company is also developing algae-based products that can serve as breath tests for diseases such as gastrointestinal disorder, and growth media for researchers studying human proteins.

The company says it has entered into licensing contracts with some large formula makers to test Formulaid. If the tests are successful, Formulaid could be sold commercially by next year, the company said.


Formulaid is made from a strain of marine microalgae that produces an oil normally found in mothers' milk.

The oil, known as docosahexaenoic acid or DHA, is associated with brain and eye development but is missing from most commercial formulas.

The company said competitors have figured out ways to derive the oil from the eye sockets of tuna fish, and some fungi.