<PAGE>   1

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                               AMENDMENT NO. 1 TO

                                   FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                    FOR THE QUARTERLY PERIOD ENDED JULY 31, 2000

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM                TO

                         COMMISSION FILE NUMBER 0-22354

                            ------------------------

                         MARTEK BIOSCIENCES CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      52-1399362
           (STATE OF INCORPORATION)                 (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>

                   6480 DOBBIN ROAD, COLUMBIA, MARYLAND 21045
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (410)740-0081
              (REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)

                                      NONE
   (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
                                    REPORT)

                            ------------------------

                            COMMON STOCK, PAR VALUE
                                 $.10 PER SHARE
                               17,800,059 SHARES
                     (OUTSTANDING AS OF SEPTEMBER 6, 2000)

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<PAGE>   2

                                    PART I.
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                         MARTEK BIOSCIENCES CORPORATION

                                 BALANCE SHEETS
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                JULY 31,        OCTOBER 31,
                                                                  2000              1999
                                                              -------------   ----------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
                                           ASSETS:
Current assets
     Cash and cash equivalents..............................    $  4,631          $  1,180
     Short-term investments and marketable securities.......      19,451            15,178
     Accounts receivable....................................       1,437             1,116
     Inventories (Note 3)...................................       4,383             5,216
     Other current assets...................................       1,981             1,013
                                                                --------          --------
          Total current assets..............................      31,883            23,703
Property, plant and equipment, net..........................      15,716            15,469
                                                                --------          --------
          Total assets......................................    $ 47,599          $ 39,172
                                                                ========          ========

                            LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities
     Accounts payable.......................................    $  1,430          $    693
     Accrued liabilities....................................       1,559             1,329
     Current portion of notes payable.......................         747             1,479
     Current portion of unearned revenue (Note 6)...........       2,143                --
                                                                --------          --------
          Total current liabilities.........................       5,879             3,501
Long-term portion of notes payable (Note 2).................          --               472
Long-term portion of unearned revenue (Note 6)..............       2,451                --
Commitments (Note 2)
Stockholders' equity
  Preferred stock, $.01 par value, 4,700,000 shares
     authorized; none issued or outstanding.................          --                --
  Series A junior participating preferred stock, $.01 par
     value, 300,000 shares authorized; none issued or
     outstanding............................................          --                --
  Common stock, $.10 par value; 30,000,000 shares
     authorized; 17,793,759 and 16,492,229 shares issued and
     outstanding at July 31, 2000 and October 31, 1999,
     respectively...........................................       1,779             1,649
  Additional paid-in capital................................     123,059           107,447
  Accumulated deficit.......................................     (85,569)          (73,897)
                                                                --------          --------
          Total stockholders' equity........................      39,269            35,199
                                                                --------          --------
          Total liabilities and stockholders' equity........    $ 47,599          $ 39,172
                                                                ========          ========
</TABLE>

                            See accompanying notes.

                                        2
<PAGE>   3

                         MARTEK BIOSCIENCES CORPORATION

                            STATEMENTS OF OPERATIONS
            (UNAUDITED -- $ IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED           NINE MONTHS ENDED
                                                    JULY 31,                    JULY 31,
                                            -------------------------   -------------------------
                                               2000          1999          2000          1999
                                            -----------   -----------   -----------   -----------
<S>                                         <C>           <C>           <C>           <C>
Revenues:
  Product sales:
     Nutritional product sales............  $     1,858   $       677   $     3,921   $     2,092
     Stable isotope and other product
       sales..............................          338           484         1,495         1,748
                                            -----------   -----------   -----------   -----------
          Total product sales.............        2,196         1,161         5,416         3,841
  License fees and related revenues.......           34             6            45             6
  Royalties...............................          110            79           308           245
  Research and development revenue........          109            71           838           278
                                            -----------   -----------   -----------   -----------
          Total revenues..................        2,449         1,317         6,607         4,371
Costs and expenses:
  Cost of product sales...................        2,005           853         4,507         2,934
  Research and development................        2,789         2,602         9,201         7,325
  Selling, general and administrative.....        1,804         1,586         5,357         5,202
                                            -----------   -----------   -----------   -----------
          Total costs and expenses........        6,598         5,040        19,065        15,460
                                            -----------   -----------   -----------   -----------
Loss from operations......................       (4,149)       (3,723)      (12,458)      (11,090)
Other income, net.........................          360           103           786           226
                                            -----------   -----------   -----------   -----------
Net loss..................................  ($    3,789)  ($    3,620)  ($   11,672)  ($   10,864)
Net loss per share, basic and diluted.....  ($     0.21)  ($     0.23)  ($     0.68)  ($     0.71)
                                            -----------   -----------   -----------   -----------
Weighted average common shares
  outstanding.............................   17,641,407    15,971,019    17,165,319    15,273,640
                                            -----------   -----------   -----------   -----------
</TABLE>

                            See accompanying notes.

                                        3
<PAGE>   4

                         MARTEK BIOSCIENCES CORPORATION
                            STATEMENTS OF CASH FLOWS
                         (UNAUDITED -- $ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                   JULY 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Operating activities:
  Net loss..................................................  ($11,672)  ($10,864)
  Adjustments to reconcile net loss to net cash used in
     operating activities:
     Depreciation and amortization..........................     1,144      1,087
     Other non-cash items...................................        --        348
     Changes in assets and liabilities:
       Accounts receivable..................................      (321)      (173)
       Inventories..........................................       833       (993)
       Other current assets.................................      (968)       144
       Accounts payable.....................................       737        292
       Accrued liabilities..................................       230       (506)
       Unearned revenue.....................................     4,594         19
                                                              --------   --------
          Net cash used in operating activities.............    (5,423)   (10,646)
Investing activities:
  Purchase of short-term investments and marketable
     securities.............................................   (22,023)   (18,593)
  Proceeds from sale of short-term investments and
     marketable securities..................................    17,750     15,124
  Purchase of property, plant and equipment.................    (1,391)      (352)
                                                              --------   --------
          Net cash used in investing activities.............    (5,664)    (3,821)
Financing activities:
  Proceeds from the issuance of common stock in private
     placement..............................................    10,249     13,770
  Proceeds from the exercise of warrants and options........     5,493        672
  Repayment of notes payable................................    (1,204)      (994)
                                                              --------   --------
          Net cash provided by financing activities.........    14,538     13,448
                                                              --------   --------
Net increase (decrease) in cash and cash equivalents........     3,451     (1,019)
Cash and cash equivalents at beginning of year..............     1,180      4,498
                                                              --------   --------
Cash and cash equivalents at end of period..................  $  4,631   $  3,479
                                                              ========   ========
</TABLE>

                            See accompanying notes.

                                        4
<PAGE>   5

                         MARTEK BIOSCIENCES CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                         (UNAUDITED -- $ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  ADDITIONAL
                                              COMMON     STOCK     PAID-IN     ACCUMULATED
                                              SHARES     AMOUNT    CAPITAL       DEFICIT      TOTAL
                                            ----------   ------   ----------   -----------   -------
<S>                                         <C>          <C>      <C>          <C>           <C>
Balance at October 31, 1999...............  16,492,229   $1,649    $107,447     ($ 73,897)   $35,199
                                            ----------   ------    --------     ---------    -------
Issuance of common stock
  in private placement....................     845,652       85      10,164            --     10,249
Exercise of warrants, stock options and
  other...................................     455,878       45       5,448            --      5,493
Net loss..................................          --       --          --       (11,672)   (11,672)
                                            ----------   ------    --------     ---------    -------
Balance at July 31, 2000..................  17,793,759   $1,779    $123,059     ($ 85,569)   $39,269
</TABLE>

                            See accompanying notes.

                                        5
<PAGE>   6

                   NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES

     Basis of Presentation.  The accompanying unaudited financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the quarter ended July
31, 2000 are not necessarily indicative of the results that may be expected for
the year ended October 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in Martek Biosciences Corporation's
annual report on Form 10-K for the year ended October 31, 1999.

     Revenue Recognition.  Revenues on cost reimbursement and fixed price
contracts are generally recognized on the percentage of completion method of
accounting as costs are incurred. Revenue is recognized on product sales when
goods are shipped. Revenue from licensing agreements is recognized in general
over the term of the agreement, or in certain circumstances, when milestones are
met. Revenue recognized in the accompanying Statements of Operations is not
subject to repayment. Revenue received that is related to future performance
under such contracts is deferred and recognized as revenue when earned.

     Foreign Currency Transactions.  Foreign currency transactions are
translated into U.S. dollars at prevailing rates. Gains or losses resulting from
foreign currency transactions are included in current period income or loss as
incurred. Currently, all material transactions of the Company are denominated in
U.S. dollars, and the Company has not entered into any material transactions
that are denominated in foreign currencies.

     Inventories.  Inventories are stated at the lower of cost or market
including appropriate elements of material, labor and indirect costs and are
valued using the average cost method. Inventories include products and materials
held for sale as well as products and materials that can alternatively be used
in the Company's research and development activities. Inventories identified for
development activities are expensed in the period in which such inventories are
designated for such use.

     Impairment of Long Lived Assets and Long Lived Assets to be Disposed Of.
The Company reviews long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be generated by the asset. For
purposes of estimating undiscounted cash flows, the Company does not group cash
flows on different levels as only one significant line of business is
identified. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of assets
exceed the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell. In the past,
the Company has not incurred any impairment expense.

     Segment Information.  The Company currently operates in one business
segment, that being the development and commercialization of novel products from
microalgae. The Company is managed and operated as one business. The entire
business is comprehensively managed by a single management team that reports to
the Chief Executive Officer. The Company does not operate separate lines of
business or separate business entities with respect to its products or product
candidates. Accordingly, the Company does not accumulate discrete financial
information with respect to separate product areas and does not have separately
reportable segments as defined by SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information."

     Short-term Investments and Marketable Securities.  The Company has
classified all debt securities as available-for-sale. Available-for-sale
securities are carried at specific identification cost and consist of U.S.
government obligations with average maturities of less than six months. Realized
gains and losses and declines

                                        6
<PAGE>   7
            NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

1.  BASIS OF PRESENTATION AND ACCOUNTING POLICIES -- (CONTINUED)
in value judged to be other than temporary are included in other income, with
material unrealized gains and losses reported as a separate component of
stockholders' equity.

     Reclassification.  Certain amounts in the prior period's financial
statements have been reclassified to conform to the current period presentation.

2.  NOTES PAYABLE AND COMMITMENTS

     The Company had commitments at July 31, 2000 to fund up to $1.5 million of
Phase III Small Business Innovation Research ("SBIR") technology
commercialization expenses, provided the technology under existing Phase II SBIR
grants yields commercial opportunities favorable to the Company.

     Costs under U.S. Government contracts are subject to audit by the
appropriate U.S. Government agency. Management believes that cost disallowances,
if any, arising from such audits of costs charged to government contracts
through July 31, 2000, would not have a material effect on the financial
statements.

     The Company has entered into various collaborative research and license
agreements. Under the agreements, the Company is required to fund research or to
collaborate on the development of potential products. Certain of these
agreements also commit the Company to pay royalties upon the sale of certain
products resulting from such collaborations.

     Martek currently contracts with a third party supplier to produce its
arachidonic acid oil. At July 31, 2000, the Company had outstanding inventory
purchase commitments to this supplier totalling approximately $3 million.

     The Company is required to meet certain covenants in relation to its
outstanding term loan, which had an outstanding balance of $747,000 at July 31,
2000. These covenants outline minimum cash, current ratio and net worth
requirements. The Company was in compliance with all of these covenants at July
31, 2000.

3.  INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                        JULY 31,    OCTOBER 31,
                                                          2000         1999
                                                       ----------   -----------
<S>                                                    <C>          <C>
Finished Products....................................  $3,206,758   $2,206,051
Work in Process......................................     779,250    2,683,477
Raw Materials........................................     397,353      326,737
                                                       ----------   ----------
                                                       $4,383,361   $5,216,265
                                                       ==========   ==========
</TABLE>

4.  INCOME TAXES

     At July 31, 2000, the Company has net operating loss carryforwards of
approximately $99,945,000 for income tax purposes that expire in years 2000
through 2020.

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's total net
deferred tax assets, which resulted primarily from net operating losses, were
$39,978,000 and $34,235,000 at July 31, 2000 and 1999, respectively. Because it
is more likely than not that some portion or all of these deferred tax assets
will not be realized, they were fully reserved for by a valuation allowance at
July 31, 2000 and 1999.

                                        7
<PAGE>   8
            NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

5.  PRIVATE PLACEMENT OF COMMON STOCK

     On June 1, 1999, 1,528,935 shares of the Company's common stock and
warrants to purchase 458,679 shares of common stock were issued in a private
placement resulting in net proceeds to the Company of approximately $13.8
million. The stock was issued at a thirty day average trading price of $9.03 per
share. The warrants are exercisable for a period of three years from date of
issuance at $10.84 per share.

     On February 8, 2000, the Company exercised its option to close a $10.25
million private financing in which 845,652 shares of the Company's common stock
and warrants to purchase 253,695 shares of common stock were issued to a group
of accredited investors pursuant to a 1998 private placement funding commitment.
The stock was issued at a thirty day average trading price of $12.12 per share.
The warrants are exercisable for a period of three years from date of issuance
at $14.55 per share.

6.  UNEARNED REVENUE

     On March 31, 2000, Martek entered into a worldwide non-exclusive license
agreement with Abbott Laboratories relating to the use of the Company's
proprietary long-chain polyunsaturated fatty acids in infant formulas. The total
consideration received by the Company of $4.5 million, which represents license
fees and royalty prepayments, has been recorded as unearned revenue as of July
31, 2000. Of this amount, $500,000 may be credited against on-going royalties or
Abbott's purchase from the Company of its products. The license fees are
non-refundable and will be recognized as revenue on a straight-line basis over
the twenty-five year term of the agreement. The non-refundable royalty
prepayment, as well as potential on-going royalties, will be recognized as
revenue as products are introduced by the licensee in accordance with the terms
of the agreement. The license agreement may be terminated by the licensee upon
proper notification subsequent to the first anniversary of the date upon which
the licensee has made all payments to the Company in accordance with the
agreement. The Company recognized approximately $33,000 in license fee revenue
and no royalty revenues from this agreement during the three month period ended
July 31, 2000.

                                        8
<PAGE>   9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

     This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements concerning Martek's
business and operations, including among other things, statements concerning:
(1) expectations regarding future revenue growth, product introductions,
distribution, sales, applications and potential marketing partnerships, (2)
expectations regarding sales and royalties by and from formula licensees, (3)
expectations regarding Martek's GRAS Notification with the FDA and potential
approval of the Company's licensees to market DHA and ARA oils in U.S. infant
formula, (4) expectations regarding future efficiencies in manufacturing
processes and the cost of production of Martek's nutritional oils, (5)
expectations regarding future research and development costs, and (6)
expectations regarding additional capital expenditures needed in relation to
fermentation and oil processing activities. Forward-looking statements include
those statements containing such words as "will," "should," "could,"
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions. Such statements involve risks and uncertainties and actual
results may differ materially due to a variety of risk factors set forth from
time to time in Martek's filings with the Securities and Exchange Commission.

     Martek, founded in 1985, is a leader in the development and
commercialization of high value products derived from microalgae, including
nutritional products, pharmaceutical research and development tools and
diagnostics. Martek develops, manufactures and sells products from microalgae.
Martek's products include: (1) specialty, nutritional oils for infant formula,
nutritional supplements and food ingredients that may play a beneficial role in
promoting mental and cardiovascular health, and in the development of the eyes
and central nervous system in newborns, (2) stable isotope products and
technologies to visualize molecular interactions for drug discovery and
development, and (3) new, powerful fluorescent markers for diagnostics, rapid
miniaturized screening and gene and protein detection. In 1989, Martek began to
realize revenues from sales of its stable isotope products. In 1992, Martek
realized its first revenues from license fees related to its nutritional oils
containing docosahexaenoic acid ("DHA") and arachidonic acid ("ARA") and sales
of sample quantities of these oils. In 1995, Martek recognized its first product
and royalty revenues from sales of infant formula containing these oils, and in
1996, Martek began to realize revenues from the sale of Neuromins(R), a DHA
dietary supplement.

     Martek has incurred losses in each year since its inception. At July 31,
2000, Martek's accumulated deficit was $85,569,000. Martek expects to continue
its development, production optimization and product marketing activities and as
a result, expects losses to continue for at least the next year, or until
significant sales of its nutritional oils and/or Neuromins(R) DHA products
occur. In addition, Martek expects to continue to experience quarter-to-quarter
and year-to-year fluctuations in revenues, expenses and losses, some of which
may be significant. The timing and extent of such fluctuations will depend, in
part, on the timing and receipt of oils-related revenues. Because the extent and
timing of future oils-related revenues are largely dependent upon Martek's
licensees and/or other future third-party collaborators, the timing or
likelihood of future profitability is largely dependent on factors over which
the Company has no control.

MANAGEMENT OUTLOOK AND REGULATORY ISSUES

     Management believes that while quarterly results may show fluctuations in
product sales, the outlook for future revenue growth remains positive and that
fiscal 2000 sales will surpass prior year levels. Specifically, management
believes that for fiscal 2000 as a whole, term infant formula containing
Martek's oils will be introduced in additional countries and sales and royalties
related to Martek's nutritional oils will continue to grow.

     Management believes that recent scientific evidence further supports the
contention that humans throughout life will benefit from DHA supplementation.
This could represent a far larger market for DHA than the market for infants. To
realize this market, Martek is pursuing long-term marketing partnerships with
large nutritional products and/or pharmaceutical companies to promote Martek's
non-infant formula nutritional oil products. Because of this objective, certain
shorter-term marketing arrangements of lesser scope have not been entered into,
thus modestly sacrificing short-term product sales. On March 31, 2000, Martek

                                        9
<PAGE>   10

entered into a worldwide non-exclusive license agreement with Abbott
Laboratories relating to use of the Company's proprietary long-chain
polyunsaturated fatty acids in infant formulas. The total consideration received
by the Company of $4.5 million, which represents license fees and royalty
prepayments, has been recorded as unearned revenue as of July 31, 2000. Of this
amount, $500,000 may be credited against on-going royalties or Abbott's purchase
from the Company of its products. The license fees are non-refundable and will
be recognized as revenue on a straight-line basis over the twenty-five year term
of the agreement. The non-refundable royalty prepayment, as well as potential
ongoing royalties, will be recognized as revenue as products are introduced by
the licensee in accordance with the terms of the agreement. The license
agreement may be terminated by the licensee upon proper notification subsequent
to the first anniversary of the date upon which the licensee has made all
payments to the Company in accordance with the agreement. The Company recognized
approximately $33,000 in license fee revenue and no royalty revenues from this
agreement during the three month period ended July 31, 2000. Martek now has
license agreements with manufacturers making approximately 85% of U.S. and 60%
of worldwide infant formula. Management believes that broad introductions of
infant formula containing Martek's nutritional oils and/or a strategic alliance
with a large scale nutritional products and/or pharmaceutical company will occur
in the future. However, management is unable to accurately predict when such
events will occur.

     Four of Martek's infant formula licensees have obtained the regulatory
approval, where required, to sell infant formula supplemented with the Company's
oils in over 60 countries for term or pre-term infant formula products. Martek
and its licensees are in the process of responding to certain questions raised
by the FDA in connection with evaluating the Company's oils for inclusion in
U.S. infant formula. Additionally, during February 2000, Martek filed a
Generally Recognized As Safe ("GRAS") Notification with the FDA for the use of
its DHA and ARA in infant formula. Management believes that the data establish
that its sources of ARA and DHA are GRAS when used in infant formula. Management
also believes that the FDA review of the GRAS notification will have a favorable
outcome. In the event that the FDA review results in a favorable outcome, each
licensee will still need to obtain a separate FDA authorization before marketing
an infant formula with the Company's sources of DHA and ARA in the U.S.
Management believes that this regulatory process will take a minimum of three to
six additional months. There can be no assurance that the FDA will have a
favorable review of the GRAS notification, that a licensee will pursue the
regulatory authorization to market an infant formula containing Martek's DHA and
ARA in the U.S., that the FDA will authorize the marketing of such an infant
formula, or that the regulatory process will not involve significantly longer
delays that may materially and adversely affect the timing and introduction of
infant formula's containing Martek's products. Nevertheless, management
anticipates that during the next twelve months, new infant formula products
containing Martek's oils will continue to be introduced in various countries
around the world and overall product sales, including sales from infant formula
related products, will increase over the prior year.

RESULTS OF OPERATIONS -- COMPARISON OF QUARTERS AND NINE MONTHS ENDED JULY 31,
2000 AND 1999

     Revenues for the quarter ended July 31, 2000 were $2,449,000, an 86%
increase from revenues of $1,318,000 for the same period in 1999. Revenues for
the nine-month period ended July 31, 2000 were $6,607,000, an increase of
$2,237,000 or 51%, from the same period in 1999, primarily due to increased
nutritional product sales. Total product sales during the quarter ended July 31,
2000 increased by $1,034,000 or 89% from the same period in 1999, and increased
by $1,575,000 or 41% for the nine-month period ended July 31, 2000 from the same
period in 1999. Sales of nutritional products increased by $1,181,000 or 174%
for the quarter ended July 31, 2000 over the quarter ended July 31, 1999 and
increased $1,829,000 or 87% for the nine-month period ended July 31, 2000 when
compared to the same period in 1999. The majority of the increase in nutritional
product sales is due to sales of oil to an infant formula licensee under an
existing royalty agreement. A smaller portion of the increase, 19%, resulted
from product sales to a licensee under an all-inclusive flat pricing
arrangement. This contrasted to the Company's traditional sales to licensees
where an initial transfer price is charged and a trailing royalty is received
six to nine months later. The Company is in the process of offering all of its
infant formula licensees an all-inclusive flat price for bulk oil, which would
incorporate a slightly discounted royalty up-front into the sales price of the
Company's oils. If the traditional

                                       10
<PAGE>   11

transfer price had been billed for all bulk oil sales during the quarter ended
July 31, 2000, total nutritional product sales would have been $228,000 lower,
and would have increased only 141% compared to the quarter ended July 31, 1999.

     Sales of products for drug discovery and diagnostics decreased 30% for the
quarter ended July 31, 2000 and decreased by 15% for the nine months ended July
31, 2000, when compared to the same periods in 1999. These decreases are
primarily due to a focus on higher margin isotope sales and a de-emphasis on the
sale of low margin reagent products. Royalty revenues increased by 39% for the
quarter ended July 31, 2000 compared to the same quarter in 1999 and 26% for the
nine months ended July 31, 2000 compared to the first nine months of fiscal year
1999. Management anticipates that royalty revenues may decline in the future if
Martek increases sales of bulk oil to infant formula licensees under
all-inclusive pricing arrangements. Revenues from research and development work
increased by $38,000 in the quarter ended July 31, 2000 when compared to the
same quarter in 1999 and increased $560,000 for the nine months ended July 31,
2000 from the same period in 1999, mainly due to a third-party development
project completed during the second and third quarters of 2000 at Martek's
Winchester plant.

     Cost of product sales increased to 91% of revenues from product sales for
the quarter ended July 31, 2000, up from 73% for the same period in 1999. For
the nine-month period ended July 31, 2000 cost of product sales increased to 83%
of revenues from product sales, up from 76% for the nine-month period ended July
31, 1999. The majority of the increase for the quarter and the nine-month period
ended July 31, 2000 relates to a significant increase in the sales of bulk oil
to infant formula licensees under a royalty-bearing arrangement. Cost of sales
will continue to fluctuate on a quarter-to-quarter basis based on the mix of
sales, with lower margins experienced when the mix includes higher volumes of
sales to infant formula manufacturers under Martek's existing royalty-bearing
arrangements. Martek is in the process of offering all of its infant formula
licensees an all-inclusive flat price for bulk oil, which would incorporate a
slightly discounted royalty up-front into the sales price of the Company's oils.
The overall economics of an all-inclusive price closely match those of Martek's
existing royalty bearing arrangements, however, the all-inclusive flat price
positively impacts the Company's margins at the time of initial sale. For those
licensees who continue to purchase oil under a royalty arrangement rather than
pay an all-inclusive initial price, a transfer price is paid to Martek for the
oil at the time of purchase and a trailing royalty is earned at the time of the
final product sale by the licensee. Under this arrangement, there is an
approximate six to nine month delay after the initial sale of oil by Martek
until royalties are received and recognized as revenue, creating a significantly
higher cost of goods sold as a percentage of revenues than would be the case if
royalties were incorporated into the product price and recognized as revenue at
the time of the product sale. For the quarter ended July 31, 2000, approximately
two-thirds of Martek's oil sales to licensees were made under existing royalty
agreements. Had all sales to licensees been made using all inclusive pricing,
cost of product sales for the quarter would have been approximately 75% of
revenues from product sales.

     The high cost of sales incurred in 2000 reflects the cost of inventory when
certain production efficiencies had not yet been realized due to the low volume
of production and because the production process had not been optimized.
Management believes that in the future, as sales volumes increase and
manufacturing efficiencies are realized, the cost of production of nutritional
oils products will decrease, resulting in a positive impact on gross profit
margins.

     Research and development costs increased by $188,000, or 7%, in the quarter
ended July 31, 2000 as compared to the same period in 1999. For the nine-month
period ended July 31, 2000, research and development costs increased $1,877,000
or 26% when compared to the same period in 1999. The majority of the increase
for the quarter ended July 31, 2000 relates to the continued refinement of
Martek's fermentation and oil extraction processes and other R&D efforts related
to production of the Company's oils at the Winchester plant. Research and
development costs for the nine-month period ending July 31, 2000 were impacted
by expenses incurred relating to a third-party development project at the
Company's Winchester Plant. Management believes that as sales volumes increase
and production optimization occurs, development costs related to Martek's
Winchester plant will decrease, reducing the Company's overall R&D expenditures.

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     Selling, general and administrative expenses increased by $218,000, or 14%,
during the quarter ended July 31, 2000 and increased by $155,000 or 3%, in the
nine months ended July 31, 2000 over the third quarter and nine months ended
July 31, 1999, respectively. This increase in the quarter ended July 31, 2000 is
mainly due to the timing of various corporate administration expenditures.

     As a result of the foregoing, net loss for the quarter ended July 31, 2000
was $3,789,000, or $.21 per share, compared to a net loss of $3,620,000, or $.23
per share for the same period in 1999. Net loss for the nine months ended July
31, 2000, was $11,672,000 or $.68 per share, compared to a net loss of
$10,864,000 or $.71 per share for the same period in 1999.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires companies to recognize all
derivative financial instruments as either assets or liabilities on the balance
sheet and measure those instruments at fair value. This Statement is effective
for fiscal years beginning after June 15, 2000. Adoption of this standard is not
expected to have a significant impact on the Company's financial position,
results of operations, cash flows, or the presentation of its disclosures.

LIQUIDITY AND CAPITAL RESOURCES

     Martek has financed its operations primarily from the issuance and sale of
equity securities, debt financing, revenues received under research and
development contracts and grants, product sales and receipt of license fees.
Since its inception, Martek has raised approximately $125 million from public
and private sales of its equity securities, as well as option and warrant
exercises, including approximately $13.8 million from a private placement of
stock in May, 1999 and $10.25 million in February, 2000 related to a 1998
funding commitment.

     Through July 31, 2000, Martek has incurred an accumulated deficit of
$85,569,000. Martek's balance of cash and cash equivalents at July 31, 2000 was
$4,631,000. In addition, at July 31, 2000, Martek had $19,451,000 in short-term
investments and marketable securities. These investments and securities, which
consist of U.S. Government securities with average maturities of less than six
months, are available to meet the future cash needs of the Company. Cash, cash
equivalents, short-term investments and marketable securities increased
$7,724,000 during the first nine months of 2000, primarily due to the funds
received from the private placement of Martek's common stock and warrants in
February, 2000.

     Martek will require substantial additional funds to continue its research
and development programs, to conduct pre-clinical and clinical studies, to
maintain compliance with its loan covenants, and to commercialize its
nutritional oils, Neuromins(R) DHA, and its other products under development.
The ultimate levels of funding required will depend, in part, on whether Martek
seeks independently, or with other parties through collaborative agreements, to
develop, manufacture and market its products. The capital requirements of Martek
will depend, among other things, on one or more of the following factors: growth
in the Company's infant formula and nutritional product sales; the extent and
progress of its research and development programs; the progress of pre-clinical
and clinical studies; the time and costs of obtaining regulatory clearances for
those products subject to such clearances; the costs involved in filing,
protecting and enforcing patent claims; competing technological and market
developments; the cost of capital expenditures at Martek's manufacturing
facilities; the cost of acquiring additional and/or operating existing
manufacturing facilities for its various products and potential products
(depending on which products Martek decides to manufacture and continues to
manufacture itself); and the costs of marketing and commercializing Martek's
products. The continued development and optimization of Martek's production
facility has had, and will continue to have, a material effect upon the
Company's liquidity and capital resources. Additional plant modifications
costing at least $500,000 are expected in fiscal 2000. Plant expenditures beyond
2000 will depend in part on production capacity needs, and the extent of
development and implementation of process improvements.

     Management believes that its existing capital resources will provide
adequate capital for at least the next 18 months. However, Management believes
that additional funds will be needed in the longer term to continue
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Martek's research and development, manufacturing and marketing efforts.
Management intends to seek additional funding through commercial and government
research and development contracts and grants, product sales and license fee
arrangements, asset-based borrowing, equity issuances, additional lease
financing and/or collaborative arrangements with partners if such methods are
available to Martek and on favorable terms. There can be no assurance that such
funds will be available to Martek on acceptable terms, if at all.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibit 99.1: Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995.

     (b) Reports on Form 8-K: None

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                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: December 8, 2000                        MARTEK BIOSCIENCES CORPORATION
                                                       (Registrant)

                                                   /s/ PETER L. BUZY

                                          --------------------------------------
                                                      Peter L. Buzy
                                          Chief Financial and Accounting Officer

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