Brain Drug Yet to Prove That Stock's a Smart Play

Article excerpt

How much is intelligence worth?

Martek Biosciences Inc. of Columbia, Md., reportedly has the technology to make you smarter but has done nothing but lose money - nearly $30 million - since 1990. Analysts are mixed on whether to buy the speculative stock.

"This is not a stock you would mortgage your house on," said Meirav Chovav, the head biotech analyst for Salomon Brothers in New York City. "This is a good

stock that could double in price" but is highly volatile. Still, Ms. Chovav rates Martek a "buy," the company's second-highest rating.

Martin Marietta spun off Martek (symbol MATK, trading on the Nasdaq market) in 1985.

Martek began its fledgling research career as a National Aeronautics and Space Administration contractor trying to grow algae without sunlight. NASA wanted to use the algae to generate oxygen for astronauts on extended spaceflights. NASA shelved the project before too long, and Martek scientists began trying to find a use and market for the technology they had developed.

The technology involved docosahexaenoic acid, or DHA, the primary structural fatty acid in the brain and retina. It's considered essential to infants' development: Preliminary studies have shown that infants whose mothers take DHA supplements or who are fed formula with extra DHA develop faster mentally and have a higher intelligence capacity as well as better vision.

Studies have suggested similar results in adults.

So why is this tiny company with this patented wonder drug still in the red? Martek is on the verge of grabbing a strong foothold on a number of markets, company officials say, but isn't quite there yet.

The company's DHA infant formula supplement, Formulaid, awaits federal approval and just went on sale in several European countries last year. Worldwide infant formula sales top $5 billion a year, and Martek has contracts to supply its supplement to companies holding about 40 percent of that market. …