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Martek Biosciences CEO Steve Dubin: Q&A

Martek Biosciences CEO Steve Dubin talks to <I>TheStreet's</I> Debra Borchardt about the company's deal with BP, its efforts in China, and new products in the pipeline.

NEW YORK (

TheStreet

) --

Martek Biosciences

(MATK)

is probably wishing it were further along in its work with

BP

(BP) - Get Report

in developing bio-diesel fuel.

Columbia, Md.-based Martek is best known for developing and commercializing DHA, an omega-3 fatty acid commonly associated with fish oil. DHA is predominantly associated with infant formula and dietary supplements for vegetarians needing fish oil in their diets. But the company also signed a multi-year agreement with BP last year to partner on the creation of an alternative fuel, and it's no doubt hoping the Gulf of Mexico oil spill won't impede progress.

Martek also recently made news this past May after a study published in

Alzheimer & Dementia: The Journal of the Alzheimer's Association

suggested DHA improved the memory of patients over the age of 55, although the study's conclusions were mixed. Ultimately, while there was a correlation with memory improvement and DHA, it wasn't shown conclusively to help patients with Alzheimer's. Martek continues to support studies to find evidence that DHA helps this patient population.

In the meantime, Martek has also signed a five-year agreement with Mengniu Dairy calling for production of the first DHA-enhanced milk in the Chinese market. Mengnui is a leader in the Chinese dairy market, commanding a 35% share. Milk currently accounts for 60% of the dairy market in China.

TheStreet

caught up with Martek BioSciences CEO Steve Dubin to get the latest on the BP work as well as an update on future DHA products.

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TheStreet: So what is the status on the BP deal?

Dubin:

The status is there's a five-year project to develop some alternative fuels instead of using fossil fuel to get fuels from micro-organisms. We started the project about a year ago and we think we're making good progress. We met the first milestones in the deal and we're hoping in four years or so, we'll actually have a product. And the key is to get production, to be cost-competitive, with fossil fuels. You can make oil out of algae today or other micro-organisms. In fact, we're the leading producer of oil from algae in the world today. That's how we make more nutritional products. But you have to get it down to a very inexpensive cost to compete with gasoline, and that's the challenge.

Let's talk about the deal with Mengniu. You recently, just in the last few months, signed a deal with them. What is the plan with that?

Well, the plan is, the product was actually launched a couple weeks ago. We had a team that was working with Mengniu in China. And our group was there during the product launch and press interviews. It was a very exciting time. I wasn't there personally. I wish I was. But we had four or five people there. It was a very exciting project, and it's a great company and they launched a line of children's drinks, UHT, little boxes of children's milk.

Let's talk about the DHA and some of the marketing you've done around Alzheimer's.

NIH did a study, about a year or so concluded. It was a three-year study of people with mild to moderate Alzheimer's disease. For the global population of that study, there wasn't a positive or negative effect of DHA. There was no effect. But for a sub-group, people without the ApoE4 gene, there was actually some improvement in that sub-group. Our challenge now is to determine how ... Is that an important difference or not an important difference? So we're working very hard to follow-up on that and determine whether we should do an additional study with that sub-set to see if we can really make a difference because it's a disease ... It's really not treatable today. And if we can make a difference, it would be huge. But we're really in the early stages and it's going to take a number of years to make it to the finish line on that one if we can.

There has been some criticism that the independent studies are kind of iffy on any correlation. And some of the studies have shown that you have to take it early on in your age, whether you know you're going to get Alzheimer's or not.

Well there are a lot of people who believe that a lot of the things you do early in life protect you later in life against certain diseases, not only Alzheimer's but cardiovascular disease and other things. It's harder to treat it once you have it. If you can prevent it, I think that's the key thing. We'll see what the role is for DHA, but it's going to take some years to determine that.

What are the newer products will contain DHA?

We're broadening our ability to put DHA in various types of foods. If you look at a few years ago, we were just in very short shelf-life refrigerated products. But now we're in products such as tortillas, cheeses, all kinds of drinks, breads. And the biggest products that's been out lately has been cooking oils that are now enhanced with DHA. We have big programs in place for Martek to continue to broaden the ability to put DHA in a wide variety of products, such as dried cereals and shelf-stable beverages and things like that. So you'll see a growth in both the types of products and our ability to put our product in more and more long shelf-like foods.

So it sounds like more items on the shelf are going to contain DHA.

We're working on other products, new products. There's one that we hope to have out and market in the year of so that will be the first non-fish fish oil. So we'll have EPA and DHA from one string of algae and it'll be a very unique product. I think for people who don't want to worry about the fishing supplies and things like that, it'll be a very great alternative to fish oil.

Edited for length and clarity.

--

Written by Debra Borchardt in New York.