The stock of Martek Biosciences Corp. fell slightly yesterday jTC after it briefly hit a 12-month high on the strength of an announcement Monday that the Columbia biotechnology company expects its infant formula additive to be approved next year for the U.S. market.
In very heavy trading of nearly 69,000 shares, Martek's stock closed yesterday at $20 per share, down 37.5 cents from Monday's close.
After the company's announcement, Martek's share price briefly hit a 12-month high of $21.25.
Martek's stock has had a 142 percent return during the past year, a performance unmatched by many biotech industry giants, such as Amgen and Biogen.
If Martek's prediction comes true, Martek would be one of the first Maryland biotechnology companies to get a product approved for the U.S. market. Several other companies are gunning for that goal.
Meirav Chovav, an analyst with Salomon Brothers in New York who follows Martek, said she also expects Martek's Formulaid product to gain U.S. Food and Drug Administration approval in 1996 -- but not until late in the year.
The company, which is doing research on uses for microalgae, already has approvals to market Formulaid in several European countries and has licensed the product to five major infant formula makers. The formula makers are the ones that actually are seeking government approval to market the additive in the United States.
Martek says the additive improves infant formula's nutritional benefits by providing key fatty acids, similar to those in mother's milk, that are needed for brain and other organ development.
Chief Financial Officer Steve Dubin said Martek would like to capture 3 percent of the $2 billion annual U.S. market for infant formula, which would result in revenues of $60 million annually.
Ms. Chovav estimates that Martek, a 10-year-old company that had a $4.2 million loss during the first six months of this year and has never turned a profit, should be able to gain 3 percent of the $5 billion world market for infant formula. That would mean about $150 million annually in royalty revenues for the company.
Such a cash stream, she said, "would easily push the company into the black."