Martek Biosciences Corp., a Columbia biotechnology company, raised almost $14 million in an initial public offering yesterday, far less than the company had originally hoped.
It was a victory nonetheless for a company with no earnings and a stock market tepid toward the biotech industry in general, according to analysts and industry executives.
"The fact that they got it done is pretty good," said Prudential Securities analyst Joseph Edelman.
"Actually we're quite pleased," said Martek Chief Financial Officer Steve Dubin. "You know, it's a very tough biotech market."
Martek, which makes several products from microalgae -- including a drug that, when added to infant formulas, might make babies smarter -- lost $5 million between 1989 and 1992 and an additional $1.6 million in the nine months that ended July 31.
The company had hoped to sell between 2.7 million and 3.1 million shares, priced between $10 and $12 a share, according to a registration statement filed with the Securities and Exchange Commission a month ago. The expected price was later dropped to a range of $8.50 to $10.
But after waiting several days to go to market, yesterday's offering was priced at $7 a share by the lead underwriter, Hambrecht & Quist Inc., and 2 million shares were sold.
Martek now has 7.75 million shares outstanding, most held by company insiders and venture capital firms. Yesterday's public sale of stock amounted to nearly 26 percent of the company, not including stock options and placed a market value of $54.25 million for Martek. The stock traded as high as $7.75 a share early in the day, but closed back down at $7.
"We knew it was a tough market," Mr. Dubin said. "We came out better than almost anybody has in the last six to nine months."
In fact, A San Francisco company called Arris Pharmaceutical Corp. sold 2.5 million shares last week at $7 each, or $5 a share less than the company originally planned. Arris, which is working on an asthma drug, also has no reported profits. And in August, a Cambridge, Mass., gene therapy company called Transkaryotic Therapies Inc. canceled its initial public offering because it felt the market wasn't strong enough.
Still, some analysts said the biotech industry has shown a muted resurgence in the past few months.
But "this is still a market that is jittery about biotechnology stocks," said analyst David S. Webber of Alex. Brown, which was part of the syndicate that placed Martek's offering.
Some Maryland economic development officials view Martek, an year-old company with 58 employees, as one of the strongest local prospects in an industry that has produced few winners in this region.
Martek has developed a chemical it calls Celtone M, which could help researchers develop new drugs by allowing them to determine the three-dimensional structures of some proteins.
This year, it signed a licensing agreement with three large makers of baby formula for Martek's Formulaid supplement, which studies have indicated might help in the development of brain and retina tissue.