Study boosts Martek stock DHA oil for babies has fatty acid similar to that in breast milk

Long-term benefits found

Howard firm's shares rise more than 10% after medical report

Biotechnology

January 07, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Shares in Martek Biosciences Inc. jumped more than 10 percent yesterday on news that a study published in a leading medical journal suggests that babies who are breast-fed perform better in school, score higher on standardized math and reading tests, and are more likely to graduate from high school.

One of the Columbia-based company's key products, docosahexaenoic acid, or DHA oil, contains a key fatty acid found in breast milk. Martek's product is derived from micro-algae.

The study, said Alex Zisson, a biotechnology analyst with Hambrecht & Quist, "is one more arrow in the quiver for those who believe DHA should be included in infant formulas."

Shares in Martek rose $1.125 yesterday to close at $11 on the Nasdaq stock exchange.

At least five manufacturers have licensed the oil for use in infant formulas sold overseas.

While no manufacturer has sought regulatory permission to use it in regular infant formulas sold in the United States, Bristol Myers Squibb Co.'s subsidiary Mead Johnson & Co. has filed for permission to use DHA in its formula for premature babies.

Zisson said he expects the other major U.S. infant formula maker, Abbott Laboratories' Ross Products division, to seek clearance for a nutritional additive in pre-term formula this year.

The opening of the U.S. formula market for Martek's oils should help the company become profitable either this year or next, Zisson said.

The United States and Canada account for about $2 billion in infant formula sales, or about 40 percent of the $5 billion world market.

Zisson said he expects more countries overseas to clear formulas with DHA for sale, further boosting Martek's revenue picture. For its 1997 fiscal year, Martek lost $15.4 million on $4.4 million in revenue.

Martek hopes the growing evidence of the oils' benefits for babies encourages infant formula makers to seek Food and Drug Administration approval to include the oil in products sold in the United States for full-term babies, which represent more than 90 percent of the market.

Steve Dubin, chief financial officer for Martek, said the company was encouraged by the findings of the most recent study because the authors followed participants over a long period of time.

"This study shows that the benefits of breast milk are not short-term, but carry through over a long period of time, affecting school performance and even high school graduation," Dubin said.

"The authors are saying there is something fundamental in breast milk that is important to brain development. The authors -- and we at Martek -- believe that is DHA."

Martek, he said, did not have any involvement in the study and had no financial or other connection to the authors.

The authors of the most recent study, Professors David M. Fergusson and L. John Horwood of Christchurch School of Medicine in New Zealand, subscribe to the theory that fatty acids present in breast milk promote lasting brain development.

Their findings are published in the January issue of Pediatrics, the journal of the American Academy of Pediatrics.

The authors looked at the correlation between breast feeding and later cognitive and academic performance, and adjusted the study for family income and other factors.

Other studies have concluded that breast milk provides benefits for neurological development in infants, and is important to infant development.

But Fergusson and Horwood are among the first to look for long-term benefits. Their 18-year study tracked 1,000 children.

Its chief conclusion: Children breast-fed as infants had better intelligence and greater academic achievement than those who were fed traditional infant formulas.

lTC Pub Date: 1/07/98

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