Martek Biosciences Corp. said yesterday that it plans to spend more than $30 million expanding manufacturing capacity to keep up with demand for its infant formula supplement, which gained U.S. approval last year.
Chief Financial Officer Peter L. Buzy said the latest expansion, to begin this year and be up and running next year or in 2005, most likely will be located in Winchester, Ky., home of its current plant.
The company hasn't ruled out other options, Buzy said, though none is in Maryland.
Columbia-based Martek plans to pay for the expansion using some proceeds from the $100 million in debt, stock or warrants it filed Monday with the Securities and Exchange Commission to issue from time to time.
"The product is doing extremely well for our licensees," Buzy said of the blend of nutritional oils Martek sells to baby formula manufacturers.
The supplement is a blend of two nutrients, known as DHA and ARA, that are found in human breast milk. Both are fatty acids found in the brain and, in DHA's case, the eye's retina. Studies have shown the supplements may help babies' mental development and vision.
About a half-dozen U.S.-sold infant formulas include the Martek supplement, Buzy said. The Ross Products Division of Abbott Laboratories and Mead Johnson Nutritionals were the first to announce early last year that they would launch such products. Most recently, Wal-Mart Stores Inc. introduced a formula known as Parent's Choice that is enriched with it.
Martek already has spent more than $25 million over the last 18 months doubling the capacity of its Winchester plant and building a separate packaging and administrative building. That work is expected to be completed in the next couple of months, giving Martek and its contract manufacturers the capacity to make enough supplement to bring the company $120 million to $160 million in annual revenue.
The company reported $46.1 million in revenue for the fiscal year that ended Oct. 31.
Despite the fact that Martek filed to sell up to $100 million worth of securities, analyst Scott Van Winkle of Adams, Harkness & Hill said he thinks the company likely will end up raising only about half that amount.
Martek has said it will use the proceeds for general corporate purposes, including the manufacturing expansion.