##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended January 31, 2009
 or
 o
    
    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
  Delaware
    
    52-1399362(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 6480 Dobbin Road, Columbia, Maryland 21045
 (410) 740-0081
 
 
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



PART I FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    39Item 4. Submission of Matters to a Vote of Security Holders
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    39Signatures
    
    
    40Exhibit 31.01Exhibit 31.02Exhibit 32.01Exhibit 32.02
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 MARTEK BIOSCIENCES CORPORATION
  January 31,
    
    
    October 31,In thousands, except share and per share data
    
    2009
    
    
    2008(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    107,309
    
    
    $
    102,495Accounts receivable, net
    
    
    49,593
    
    
    
    40,438Inventories, net
    
    
    103,440
    
    
    
    99,553Deferred tax asset
    
    
    23,082
    
    
    
    24,821Other current assets
    
    
    5,174
    
    
    
    4,866Total current assets
    
    
    288,598
    
    
    
    272,173Property, plant and equipment, net
    
    
    262,631
    
    
    
    265,900Deferred tax asset
    
    
    9,879
    
    
    
    13,535Long-term investments
    
    
    11,310
    
    
    
    11,336Goodwill
    
    
    51,592
    
    
    
    51,592Other intangible assets, net
    
    
    30,863
    
    
    
    30,997Other assets, net
    
    
    412
    
    
    
    448Total assets
    
    $
    655,285
    
    
    $
    645,981Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    22,956
    
    
    $
    17,105Accrued liabilities
    
    
    20,814
    
    
    
    28,819Current portion of notes payable and other long-term obligations
    
    
    412
    
    
    
    374Current portion of deferred revenue
    
    
    1,453
    
    
    
    1,044Total current liabilities
    
    
    45,635
    
    
    
    47,342Notes payable and other long-term obligations
    
    
    711
    
    
    
    793Long-term portion of deferred revenue
    
    
    8,833
    
    
    
    9,263Total liabilities
    
    
    55,179
    
    
    
    57,398CommitmentsStockholders equityPreferred stock, $.01 par value, 4,700,000 shares
authorized; none issued or outstanding
    
    
    
    
    
    
    Series B junior participating preferred stock,
$.01 par value; 300,000 shares authorized; none issued or outstanding
    
    
    
    
    
    
    Common stock, $.10 par value; 100,000,000 shares
authorized; 33,154,575 and 33,147,360 shares issued and
outstanding, respectively
    
    
    3,315
    
    
    
    3,315Additional paid-in capital
    
    
    554,781
    
    
    
    553,871Accumulated other comprehensive loss
    
    
    (2,978
    )
    
    
    (3,985
    )Retained earnings
    
    
    44,988
    
    
    
    35,382Total stockholders equity
    
    
    600,106
    
    
    
    588,583Total liabilities and stockholders equity
    
    $
    655,285
    
    
    $
    645,981
 See accompanying notes.
  3




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##### Table of Contents



MARTEK BIOSCIENCES CORPORATION
  Three months ended January 31,Unaudited  In thousands, except per share data
    
    2009
    
    
    2008Revenues:Product sales
    
    $
    84,022
    
    
    $
    78,609Contract manufacturing sales
    
    
    3,341
    
    
    
    4,272Total revenues
    
    
    87,363
    
    
    
    82,881Cost of revenues:Cost of product sales
    
    
    46,909
    
    
    
    45,097Cost of contract manufacturing sales
    
    
    3,409
    
    
    
    3,688Total cost of revenues
    
    
    50,318
    
    
    
    48,785Gross margin
    
    
    37,045
    
    
    
    34,096Operating expenses:Research and development
    
    
    6,749
    
    
    
    5,981Selling, general and administrative
    
    
    13,097
    
    
    
    12,981Amortization of intangible assets
    
    
    1,781
    
    
    
    1,679Other operating expenses
    
    
    153
    
    
    
    153Total operating expenses
    
    
    21,780
    
    
    
    20,794Income from operations
    
    
    15,265
    
    
    
    13,302Interest and other income, net
    
    
    255
    
    
    
    373Interest expense
    
    
    (95
    )
    
    
    (156
    )Income before income tax provision
    
    
    15,425
    
    
    
    13,519Income tax provision
    
    
    5,819
    
    
    
    4,850Net income
    
    $
    9,606
    
    
    $
    8,669Net income per shareBasic
    
    $
    0.29
    
    
    $
    0.26Diluted
    
    $
    0.29
    
    
    $
    0.26Weighted average common shares outstandingBasic
    
    
    33,150
    
    
    
    32,745Diluted
    
    
    33,399
    
    
    
    33,130
 See accompanying notes.
  4




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MARTEK BIOSCIENCES CORPORATION
  AccumulatedAdditional
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    RetainedUnaudited  In thousands, except share data
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income(Loss)
    
    
    Earnings
    
    
    TotalBalance at October 31, 2008
    
    
    33,147,360
    
    
    $
    3,315
    
    
    $
    553,871
    
    
    $
    (3,985
    )
    
    $
    35,382
    
    
    $
    588,583Issuance of common stock under employee stock
plans
    
    
    7,215
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    828
    
    
    
    
    
    
    
    
    
    
    
    828Tax benefit of exercise of non-qualified stock
options and vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    30Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,606
    
    
    
    9,606Other comprehensive income (loss):Reclassification of available-for-sale securities,
net of tax of $383
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    646
    
    
    
    
    
    
    
    646Unrealized loss on available-for-sale securities,
net of tax of $(344)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (582
    )
    
    
    
    
    
    
    (582
    )Realized loss on exchange rate forward
contracts, net of tax of $436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    735
    
    
    
    
    
    
    
    735Unrealized gain on exchange rate forward
contracts, net of tax of $48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    208
    
    
    
    
    
    
    
    208Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,613Balance at January 31, 2009
    
    
    33,154,575
    
    
    $
    3,315
    
    
    $
    554,781
    
    
    $
    (2,978
    )
    
    $
    44,988
    
    
    $
    600,106
 See accompanying notes.
  5




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MARTEK BIOSCIENCES CORPORATION
  Three months ended January 31,Unaudited  In thousands
    
    2009
    
    
    2008Operating activitiesNet income
    
    $
    9,606
    
    
    $
    8,669Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    7,046
    
    
    
    6,981Deferred tax provision
    
    
    4,768
    
    
    
    4,665Equity-based compensation expense
    
    
    836
    
    
    
    613Incremental tax benefit from exercise of non-qualified stock options and vesting of restricted
stock units
    
    
    (30
    )
    
    
    (575
    )Loss on
asset disposals and impairment of long-term investments, net
    
    
    340
    
    
    
    221Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,155
    )
    
    
    539Inventories
    
    
    (3,895
    )
    
    
    1,874Other assets
    
    
    57
    
    
    
    (1,171
    )Accounts payable
    
    
    6,175
    
    
    
    (4,093
    )Accrued liabilities
    
    
    (7,110
    )
    
    
    (1,988
    )Deferred revenue and other liabilities
    
    
    (37
    )
    
    
    (619
    )Net cash provided by operating activities
    
    
    8,601
    
    
    
    15,116Investing activitiesPurchases of investments, marketable securities and long-term investments
    
    
    
    
    
    
    (15,475
    )Sales and maturities of investments, marketable securities and long-term investments
    
    
    
    
    
    
    4,325Expenditures for property, plant and equipment
    
    
    (2,531
    )
    
    
    (1,866
    )Capitalization of intangible assets
    
    
    (1,309
    )
    
    
    (799
    )Net cash used in investing activities
    
    
    (3,840
    )
    
    
    (13,815
    )Financing activitiesRepayments of notes payable and other long-term obligations
    
    
    (29
    )
    
    
    (252
    )Proceeds from the issuance of common stock under employee stock plans
    
    
    52
    
    
    
    3,548Incremental tax benefit from exercise of non-qualified stock options and vesting of restricted
stock units
    
    
    30
    
    
    
    575Net cash provided by financing activities
    
    
    53
    
    
    
    3,871Net increase in cash and cash equivalents
    
    
    4,814
    
    
    
    5,172Cash and cash equivalents, beginning of period
    
    
    102,495
    
    
    
    16,973Cash and cash equivalents, end of period
    
    $
    107,309
    
    
    $
    22,145Supplemental cash flow disclosures:Interest paid
    
    $
    50
    
    
    $
    159Income taxes paid
    
    $
    337
    
    
    $
    185Issuance of shares related to OmegaTech contingent purchase price
    
    $
    
    
    
    $
    10,164
 See accompanying notes.
  6




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
 Consolidation
 Use of Estimates
 Segment Information
 Revenue Recognition
   Shipping Income and Costs
 Foreign Currency Transactions and Hedging Activities
   7




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Research and Development
 Advertising
 Other Operating Expenses
 Deferred Income Taxes
   Equity-Based Compensation
 Net Income Per Share
 Comprehensive Income
 Cash and Cash Equivalents
 Investments and Marketable Securities
  8




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Fair Value of Financial Instruments
 Trade Receivables
 Inventories
 Property, Plant and Equipment
 Asset Description
    
    Useful Life (years)Building
    
    
    15  30Fermentation equipment
    
    
    10  20Oil processing equipment
    
    
    10  20Other machinery and equipment
    
    
    5   10Furniture and fixtures
    
    
    5   7Computer hardware and software
    
    
    3   7
  Patent Costs
  9




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Goodwill
and Other Intangible Assets
 Impairment of Long-Lived Assets
 2. DSM SUPPLY AND LICENSE AGREEMENT
   3. INVESTMENTS
    10




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4. FAIR VALUE MEASUREMENTS
        11




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As of January 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    BalanceAssetsAvailable-for-sale securities (1)
    
    $
    
    
    
    $
    
    
    
    $
    3,889
    
    
    $
    3,889Trading securities (1)
    
    
    
    
    
    
    
    
    
    
    5,833
    
    
    
    5,833Put Agreement(1)
    
    
    
    
    
    
    
    
    
    
    1,588
    
    
    
    1,588Investments in money market funds (2)
    
    
    93,381
    
    
    
    
    
    
    
    
    
    
    
    93,381Total Assets
    
    $
    93,381
    
    
    $
    
    
    
    $
    11,310
    
    
    $
    104,691LiabilitiesExchange rate forward contracts (3)
    
    
    
    
    
    
    2,776
    
    
    
    
    
    
    
    2,776Total Liabilities
    
    $
    
    
    
    $
    2,776
    
    
    $
    
    
    
    $
    2,776
 (1)
    
    Included in long-term investments in the accompanying consolidated balance sheets.(2)
    
    Included in cash and cash equivalents in the accompanying consolidated balance sheets.(3)
    
    Included in accrued liabilities in the accompanying consolidated balance sheets.  Auction RateSecurities
    
    
    Put Agreement
    
    
    TotalBalance on November 1, 2008
    
    $
    11,336
    
    
    $
    
    
    
    $
    11,336Transfers to/(from) Level 3
    
    
    
    
    
    
    
    
    
    
    Total gains (losses) (realized or unrealized): (1)Included in earnings
    
    
    (1,717
    )
    
    
    1,588
    
    
    
    (129
    )Included in other comprehensive income
    
    
    103
    
    
    
    
    
    
    
    103Purchases, sales, issuances and settlements, net
    
    
    
    
    
    
    
    
    
    
    Balance on January 31, 2009
    
    $
    9,722
    
    
    $
    1,588
    
    
    $
    11,310
 (1)
    
    See Note 3 for discussion of Auction Rate Securities and related Put Agreement.   12




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##### Table of Contents



5. INVENTORIES
  January 31,
    
    
    October 31,2009
    
    
    2008Finished goods
    
    $
    54,389
    
    
    $
    45,871Work in process
    
    
    44,751
    
    
    
    49,042Raw materials
    
    
    4,300
    
    
    
    4,640Inventories, net
    
    $
    103,440
    
    
    $
    99,553
  6. PROPERTY, PLANT AND EQUIPMENT
  January 31,
    
    
    October 31,2009
    
    
    2008Land
    
    $
    2,320
    
    
    $
    2,320Building and improvements
    
    
    64,981
    
    
    
    64,731Machinery and equipment
    
    
    263,591
    
    
    
    262,831Furniture and fixtures
    
    
    3,056
    
    
    
    2,963Computer hardware and software
    
    
    16,585
    
    
    
    16,119350,533
    
    
    
    348,964Less: accumulated depreciation and amortization
    
    
    (96,742
    )
    
    
    (91,268
    )253,791
    
    
    
    257,696Construction in progress
    
    
    8,840
    
    
    
    8,204Property, plant and equipment, net
    
    $
    262,631
    
    
    $
    265,900
  7. GOODWILL AND OTHER INTANGIBLE ASSETS
  January 31, 2009
    
    
    October 31, 2008Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedIntangible Asset
    
    Gross
    
    
    Amortization
    
    
    Net
    
    
    Gross
    
    
    Amortization
    
    
    NetTrademarks
    
    $
    2,159
    
    
    $
    (890
    )
    
    $
    1,269
    
    
    $
    2,153
    
    
    $
    (850
    )
    
    $
    1,303Patents
    
    
    23,800
    
    
    
    (8,625
    )
    
    
    15,175
    
    
    
    22,533
    
    
    
    (7,795
    )
    
    
    14,738Core technology
    
    
    1,708
    
    
    
    (712
    )
    
    
    996
    
    
    
    1,708
    
    
    
    (683
    )
    
    
    1,025Current products
    
    
    10,676
    
    
    
    (4,829
    )
    
    
    5,847
    
    
    
    10,676
    
    
    
    (4,652
    )
    
    
    6,024Licenses
    
    
    11,097
    
    
    
    (3,521
    )
    
    
    7,576
    
    
    
    11,968
    
    
    
    (4,061
    )
    
    
    7,90749,440
    
    
    
    (18,577
    )
    
    
    30,863
    
    
    
    49,038
    
    
    
    (18,041
    )
    
    
    30,997Goodwill
    
    
    51,592
    
    
    
    
    
    
    
    51,592
    
    
    
    51,592
    
    
    
    
    
    
    
    51,592$
    101,032
    
    
    $
    (18,577
    )
    
    $
    82,455
    
    
    $
    100,630
    
    
    $
    (18,041
    )
    
    $
    82,589
  13




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##### Table of Contents



lifesDHA.
  8. NOTES PAYABLE AND LONG-TERM DEBT
    9. COMMITMENTS AND CONTINGENCIES
 Scientific Research Collaborations
  Patent Infringement Litigation
  14




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Other
 10. STOCKHOLDERS EQUITY
     11. NET INCOME PER SHARE
   Three months ended January 31,2009
    
    
    2008Net income
    
    $
    9,606
    
    
    $
    8,669Weighted average shares outstanding, basic
    
    
    33,150
    
    
    
    32,745Effect of dilutive potential common shares:Stock options
    
    
    152
    
    
    
    295Restricted stock units
    
    
    97
    
    
    
    90Total dilutive potential common shares
    
    
    249
    
    
    
    385Weighted average shares outstanding, diluted
    
    
    33,399
    
    
    
    33,130Net income per share, basic
    
    $
    0.29
    
    
    $
    0.26Net income per share, diluted
    
    $
    0.29
    
    
    $
    0.26
   15




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##### Table of Contents



12. COMPREHENSIVE INCOME
  Three months ended January 31,2009
    
    
    2008Net income, as reported
    
    $
    9,606
    
    
    $
    8,669Other comprehensive income (loss):Reclassification of available-for-sale securities,
net of tax of $383 and $, respectively
    
    
    646
    
    
    
    Unrealized loss on available-for-sale securities,
net of tax of $(344) and $, respectively
    
    
    (582
    )
    
    
    Realized
loss (gain) on  exchange rate forward contracts,
net of tax of $436 and $(116), respectively
    
    
    735
    
    
    
    (203
    )Unrealized gain on exchange rate forward contracts,
net of tax of $48 and $33, respectively
    
    
    208
    
    
    
    59Comprehensive income
    
    $
    10,613
    
    
    $
    8,525
  16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This Managements Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements concerning our business and operations, including, among other things,
statements concerning the following:
 
    
    expectations regarding future revenue, revenue growth, gross margin, operating cash
flow and profitability;
 
    
    expectations regarding product introductions and growth in nutritional product sales;
 
    
    expectations regarding potential collaborations and acquisitions;
 
    
    expectations regarding demand for products with our nutritional oils;
 
    
    expectations regarding sales to and by our infant formula licensees and supplemented
infant formula market penetration levels;
 
    
    expectations regarding marketing of our oils by our infant formula licensees;
 
    
    expectations regarding future agreements with, and revenues from, companies in the
food and beverage, pregnancy and nursing, nutritional supplement, and animal feed
markets;
 
    
    expectations regarding future revenues from contract manufacturing customers;
 
    
    expectations regarding growing consumer recognition of the key health benefits of DHA
and ARA;
 
    
    expectations regarding competitive products;
 
    
    expectations regarding future efficiencies and improvements in manufacturing
processes and the cost of production of our nutritional oils;
 
    
    expectations regarding future purchase volumes and costs of third-party manufactured
oils;
 
    
    expectations regarding the amount of production capacity and our ability to meet
future demands for our nutritional oils;
 
    
    expectations regarding the amount of inventory held by us or our customers;
 
    
    expectations regarding production capacity utilization and the effects of excess
production capacity;
 
    
    expectations regarding future selling, general and administrative and research and
development costs;
 
    
    expectations regarding future capital expenditures;
 
    
    expectations regarding levels of consumption through governmental programs of infant
formula products containing our nutritional oils; and
 
    
    expectations regarding our ability to maintain and protect our intellectual property.
 Forward-looking statements include those statements containing words such as the following:
 
    
    will,
 
    
    should,
 
    
    could,
 
    
    anticipate,
 
    
    believe,
 
    
    plan,
 
    
    estimate,
 
    
    expect,
 
    
    intend, and other similar expressions.
 All of these forward-looking statements involve risks and uncertainties. They and other
forward-looking statements in this Form 10-Q are all made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. We wish to caution you that our actual
results may differ significantly from the results we discuss in our forward-looking statements. We
discuss some of the risks that could cause such differences in Part II, Item 1A. Risk Factors in
this report on Form 10-Q and in our various other filings with the Securities and Exchange
Commission. Our forward-looking statements speak only as of the date of this document, and we do
not intend to update these statements to reflect events or circumstances that occur after that
date.
 GENERAL
 lifesDHA lifesARA lifesDHA ® ® ® lifesARA
  17




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##### Table of Contents



lifesDHA
  
    
    the timing of international infant formula market introductions by our customers;
    
    the timing of our customers ordering patterns;
    
    the timing and extent of stocking and destocking of inventory by our customers;
    
    the timing and extent of our customers production campaigns and plant maintenance
shutdowns;
    
    the timing and extent of introductions of DHA into various child and/or adult
applications and the marketplace success of such applications;
    
    the levels of inclusion of our oils in infant formula;
    
    the continued acceptance, and extent thereof, of products containing our oils under WIC
programs in the U.S.;
    
    the continued acceptance of these products by consumers and continued demand by our
customers;
    
    the ability of our customers to incorporate our oils into various foods and beverages;
    
    our ability to protect against competitive products through our patents;
    
    competition from alternative sources of DHA and ARA; and
    
    agreements with other future third-party collaborators to market our products or develop
new products.
  RECENT HIGHLIGHTS
 New Product Launches lifesDHA
 
    
    Food and Beverage Products
 
    
    U.S. Launches  Advanced Food Products Jelly Belly Pudding®; Rich and Wholesome
Foods Nogurt non-soy, non-dairy yogurt; Shamrock Farms® Essentials milk;
Healthy Cultures Healthy 10 Kefir
 
    
    International Launches  Biostime infant cereal (China); Vecchia Malga
mozzarella cheese (Italy); Good Bread Ltd.s Slice of Health Omega-3 bread
(India); Cormans Balade Light Butter and Balade Fresh Cheeses (Belgium)
  18




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
    
    U.S. and International Launches  Celebrate Life Nutritions Celebrate
Chocolate Classics and Celebrate Chocolate Creations (U.S. and Japan)
 
    
    Pregnancy and Nursing Products Upsher-Smith Laboratories PreNexa all-in-one
with 265 mg lifesDHA; Azur Pharma Ltd.s Gesticare® DHA with 250 mg lifesDHA;
Mission® Pharmacals CitraNatal® Assure with 300 mg lifesDHA(All in U.S.)
 
    
    Nutritional Supplement Products Barleans Total Omega Vegan Swirl (U.S. and
China); Rujian International Trading Ltd.s Neuromins® DHA (China); Beijing Babycares
Nutrimed® Brain Support DHA (China); and ElleMommys DHA (China)
 New Microencapsulation Technology In-licensed for Certain Food Applications  lifesDHA
 New Data Published on
Benefits of DHA
 
    
    A study published in the Journal of the American Medical Association(January 2009)
evaluated the effects of providing a higher than usual level of DHA to 657 very premature
infants (33 weeks or less) during the early weeks of life in order to achieve the DHA
levels equal to those of a term infant. The results of a preplanned analysis by gender
found that premature girls on the high DHA diet scored five points higher on the Bayley
Mental Development Index than did the girls receiving the standard DHA diet. This
resulted in a 55% reduction in mild mental delay and an 80% reduction in significant
mental delay. These were statistically significant improvements versus the control. The
benefits were not significant in males. Marteks lifesDHAas well as DHA derived from
fish oil was used in the study.
    
    The results of a study published online (January 2009) and which will appear in an
upcoming issue of The Journal of Nutritionevaluated the effect of DHA on several
indicators of inflammation in 34 hypertriglyceridemic men. As a result of DHA
supplementation, several indicators of inflammation were improved, including: the number
of circulating neutrophils; the concentrations of C-reactive protein (CRP);
interleukin-6; and granulocyte monocyte-colony stimulating factor. There was a
corresponding increase in the concentration of anti-inflammatory matrix
metalloproteinase. The authors noted that the reduction of CRP was similar to that seen
with statins. Overall, the authors concluded that supplemental DHA may lessen the
inflammatory response. Marteks lifesDHAwas used in this study.
 MANAGEMENT OUTLOOK
   PRODUCTION
   19




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CRITICAL ACCOUNTING POLICIES AND
THE USE OF ESTIMATES
  Fair Value Measurements
  20




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##### Table of Contents



RESULTS OF OPERATIONS
 Revenues
 Three months ended January 31,2009
    
    
    2008Product sales
    
    $
    84,022
    
    
    $
    78,609Contract manufacturing sales
    
    
    3,341
    
    
    
    4,272Total revenues
    
    $
    87,363
    
    
    $
    82,881
  Three months ended January 31,2009
    
    
    2008Infant formula market
    
    $
    74,591
    
    
    $
    70,278Food and beverage market
    
    
    2,618
    
    
    
    2,095Pregnancy and nursing, nutritional
supplements and animal feeds
    
    
    5,664
    
    
    
    5,292Non-nutritional products
    
    
    1,149
    
    
    
    944Total product sales
    
    $
    84,022
    
    
    $
    78,609
 lifesDHA .
      21




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##### Table of Contents



Cost of Revenues
 Three months ended January 31,2009
    
    
    2008Cost of product sales
    
    $
    46,909
    
    
    $
    45,097Cost of contract manufacturing sales
    
    
    3,409
    
    
    
    3,688Total cost of revenues
    
    $
    50,318
    
    
    $
    48,785
    Operating Expenses
  Three months ended January 31,2009
    
    
    2008Research and development
    
    $
    6,749
    
    
    $
    5,981Selling, general and administrative
    
    
    13,097
    
    
    
    12,981Amortization of intangible assets
    
    
    1,781
    
    
    
    1,679Other operating expenses
    
    
    153
    
    
    
    153Total operating expenses
    
    $
    21,780
    
    
    $
    20,794
 Research and Development lifesDHA
 Selling, General and Administrative
 Amortization of Intangible Assets
 Other Operating Expenses
 Interest and Other Income, Net
   22




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Interest Expense
  Income Tax Provision
   Net Income
  LIQUIDITY AND CAPITAL RESOURCES
  
    
    cash generated from operations;
 
    
    cash received from the exercise of stock options; and
 
    
    debt financing.
    Less than
    
    
    13
    
    
    35
    
    
    More thanIn thousands
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsNotes payable (1)
    
    $
    703
    
    
    $
    137
    
    
    $
    140
    
    
    $
    77
    
    
    $
    349Operating lease obligations
    
    
    3,066
    
    
    
    1,319
    
    
    
    1,384
    
    
    
    112
    
    
    
    251Unconditional purchase obligations (2), (3)
    
    
    64,269
    
    
    
    63,869
    
    
    
    400
    
    
    
    
    
    
    
    Total contractual cash obligations (4)
    
    $
    68,038
    
    
    $
    65,325
    
    
    $
    1,924
    
    
    $
    189
    
    
    $
    600
 (1)
    
    Minimum payments include interest and principal due under these notes.(2)
    
    Primarily includes future inventory purchases from DSM pursuant to minimum purchase
commitment (see Note 2 to the consolidated financial statements).(3)
    
    Excludes $5.6 million of financial commitments associated with a research collaboration
that are contingent upon the successful completion of identified milestones (see Note 9 to
the consolidated financial statements).(4)
    
    The table does not include uncertain tax payments of $1.9 million, the timing of which
is also uncertain. The table also does not include $1.0 million payment for the license of
certain patented technology due upon execution of agreement in February 2009 nor additional
fees included in this agreement that are subject to the successful completion by the
licensor of certain development goals and total up to $5.0 million (see Note 7 to the
consolidated financial statements).  23




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##### Table of Contents




    
    our ability to operate profitably and generate positive cash flow;
 
    
    growth in our infant formula, food and beverage and other nutritional product sales;
 
    
    the extent and progress of our research and development programs;
 
    
    the progress of pre-clinical and clinical studies;
 
    
    the time and costs of obtaining and maintaining regulatory clearances for our products
that are subject to such clearances;
 
    
    the costs involved in filing, protecting and enforcing patent claims;
 
    
    competing technological and market developments;
 
    
    the development or acquisition of new products;
 
    
    the cost of acquiring additional and/or operating and expanding existing manufacturing
facilities for our various products and potential products (depending on which products we
decide to manufacture and continue to manufacture ourselves);
 
    
    the costs associated with our internal build-up of inventory levels;
 
    
    the costs associated with litigation to which we are a party;
 
    
    the costs of, and any capital requirements related to, merger and acquisition activity;
and
 
    
    the costs of marketing and commercializing our products.
   24




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     
 Item 4. Controls and Procedures.
 a)
    
    Evaluation of Disclosure Controls and Procedures.We, under the supervision and with
the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, have evaluated the effectiveness of our disclosure controls and
procedures pursuant to Exchange Act rules 13a-15(e) and 15d-15(e) and based on this
evaluation our Chief Executive Officer and Chief Financial Officer have concluded that, as
of the end of the period covered by this report, the disclosure controls and procedures
were effective.
 b)
    
    Internal Control Over Financial Reporting.There was no change in our internal control
over financial reporting in connection with the evaluation required by paragraph (d) of
Rules 13a-15 or 15d-15 under the Exchange Act that occurred during Marteks quarter ended
January 31, 2009 that materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
  25




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    Thraustochytrium Schizochytrium
     26




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27




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##### Table of Contents



Item 1A. Risk Factors.
  Current economic and market conditions could adversely affect our revenue and profitability.
  A substantial portion of our nutritional oil products sales is made to five of our existing
customers under agreements with no minimum purchase requirements. If demand by these customers
for our nutritional oil products decreases, our revenues may materially decline.
    We are aware of several products that are currently available, and products under development,
that may present a serious competitive threat to our products. If we are unable to maintain a
competitive differentiation from these products, our revenues may be adversely affected.
   
    
    Abbott Nutritionals (then known as the Ross Products Division of Abbott Laboratories), a
significant Martek licensee and customer, filed a generally recognized as safe notification
on January 2, 2002 seeking Food and Drug Administration (FDA) concurrence that its tuna
oil source of DHA and its fungal source of ARA, as manufactured by Suntory Limited, are
generally recognized as safe when used as ingredients in infant formula. In April 2006, the
FDA notified Ross Products that it had no questions at that time regarding Ross conclusion
that DHA-rich oil from tuna and ARA-rich oil from Mortierella alpinaare safe as sources of
DHA and ARA in term and post-
discharge preterm infant formulas. While Abbott Nutritionals has not announced any
introduction of such oils into infant formula in the U.S. and has agreed to purchase its
total needs for DHA and ARA from us through at least 2011, and while we are not aware of any
plans by our other licensees to do so, the GRAS notification removes a significant regulatory
hurdle to the introduction of competitive products in the U.S.
  28




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##### Table of Contents




    
    GlaxoSmithKline is currently selling LOVAZA, a prescription DHA/ EPA ethyl ester for
treatment of hyperlipidemia. LOVAZA is a lipid-regulating agent which includes both EPA
and DHA from fish oil. GlaxoSmithKline has recently filed an application with the FDA for
an indication that will expand the use of LOVAZA. Other pharmaceutical companies offering
other applications using omega-3 fatty acids may be expected.
 
    
    Suntory Limited, Cargill Inc., through a joint venture with a company in China, and
other independent Chinese manufacturers are producing or attempting to produce and
distributing a fungal source of ARA. In addition, we are aware that there may be
manufacturers in China and India attempting to produce an algal source of DHA, but we are
uncertain of the overall status and commercial potential of these efforts.
 
    
    Some infant formulas now on the market outside the United States, including those
marketed by certain of Marteks licensees, use DHA derived from other sources, such as fish
oil or eggs.
 
    
    In December 2005, Lonza Group LTD, a Swiss chemical and biotechnology group, acquired
from Nutrinova Nutrition Specialties & Food Ingredients GmbH, a wholly-owned subsidiary of
Celanese Corporation, Nutrinovas business having as its product a DHA-rich microalgal oil.
Since the acquisition, Lonza has actively marketed its DHA oil to the food, beverage and
dietary supplement market in Europe and Asia, and was actively marketing in the United
States. Nutrinova and Lonza are defendants in patent infringement actions involving our
DHA patents that we have brought in both the United States and Germany. One of Nutrinovas
customers is also a defendant in these actions in Germany. These lawsuits are further
described below in the risk factor regarding patent protection and in Item 3 of Part I of
this Form 10-K, Legal Proceedings.
 
    
    Other companies, several with greater financial resources than ours, are developing
plant-based DHA or other plant-based oils that may compete with us and other companies may
be developing chemically synthesized DHA.
 
    
    Several large companies, including BASF AG, DSM and Ocean Nutrition, and a number of
smaller companies, manufacture microencapsulated fish oil products. Although
microencapsulation of the oil resolves many of the odor, stability and taste issues found
with fish oil, a microencapsulated product currently is more costly than regular fish oil.
Fish oil-based products (i) are used as a DHA source by some infant formula companies, (ii)
currently dominate the adult DHA supplement market and (iii) are included in certain foods
on the market in various parts of the world. Because fish oil is generally less costly than
our DHA oil, even when microencapsulated, and continues to improve in quality and gain
general market acceptance, fish oil presents a substantial competitive threat.
 Experts differ in their opinions on the importance of DHA and/or ARA in infant formula and the
levels of DHA and/or ARA required to achieve health benefits for babies. Some experts feel that
they are not necessary ingredients for infant development. If clinical trials do not continue
to yield positive results, certain favorable regulatory guidelines are not enacted or current
favorable regulatory guidelines are amended, our future revenues in the infant formula market
may be limited.
    29




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##### Table of Contents



If we are unable to obtain or maintain patent protection or if our patents do not provide
protection against competitive products, our results of operations may be adversely affected.
     
    
    Aventis S.A. and Nagase & Co. Ltd. are challenging our European patent covering our
DHA-containing oils. At a hearing in October 2000, the Opposition Division of the European
Patent Office (EPO) revoked our patent on the grounds that it was not novel. We
immediately appealed this ruling, and in July 2002 we received a positive ruling from an
Appeal Board of the EPO, setting aside the prior decision to revoke this patent. The patent
was returned to the Opposition Division for a determination as to whether it has met the
legal requirement of inventive step. A hearing in August 2005 resulted in a ruling by the
Opposition Division that this requirement had been met and the validity of the patent was
upheld. Aventis appealed the decision to the Appeal Board of the EPO. Martek filed its
answer to Aventis grounds for appeal in July 2006. The appeal hearing has been scheduled
for March 2009. Claim 1 of this patent is the basis of the patent infringement suit
against Nutrinova and Lonza in Germany, discussed below. In the event Martek were to lose
this appeal, this DHA patent would be revoked. The revocation of this patent would result
in the dismissal of the patent infringement suit against Nutrinova and Lonza in Germany,
discussed below, and patent protection for Marteks DHA-containing oils for use in infant
formula would be compromised in Europe. Currently, annual sales of Marteks DHA for use in
infant formula in Europe to companies other than those with whom Martek has or expects to
have an exclusive supply agreement are less than $1 million. Such exclusive agreements
generally run through 2011. An adverse decision would not impact Marteks ARA patent
position in Europe. Moreover, the outcome of this appeal will not affect the patent
infringement lawsuit against Lonza in the U.S., as the U.S. lawsuit is based on a different
family of patents.
 
    
    In April 2007, the EPO granted another patent to Martek for ARA oil made from Marteks
microbial source for use in infant formula. This divisional ARA patent strengthens
Marteks intellectual property position by providing commercially significant protection
through the expiration date of the original patent, January 22, 2012. Suntory, N.V.
Nutricia and Cargill filed oppositions against this divisional ARA patent. N.V. Nutricia
has withdrawn from the opposition. The Opposition Division hearing has been scheduled for
June 2009.
 
    
    Prior to our purchase of OmegaTech, Aventis Research and Technologies GmbH & Co. KG, and
Nagase Limited challenged OmegaTechs European patent covering its DHA-containing oils. At
a hearing in December 2000, the Opposition Division of the EPO upheld some of the claims
and revoked other claims. OmegaTech immediately appealed this ruling, as did Aventis. At
an appeal hearing in May 2005, we received a favorable decision from the Appeal Board of
the EPO, which overturned the decision of the Opposition Division and returned the case to
the Opposition Division for review on the merits of the patent claims. In a November 2007
hearing, the Opposition Division upheld claims that are narrower than the claims originally
granted but broader than the claims that were previously upheld in the December 2000
Opposition Division hearing. Martek and Aventis have appealed. The appeal process is not
expected to be completed before 2009, during which time the patent will remain in full
force and effect.
  30




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##### Table of Contents




    
    An EPO Opposition Division hearing was held on November 15, 2005, with respect to a
European DHA patent acquired by Martek as part of the OmegaTech purchase. The patent was
upheld in modified form. Nutrinova Nutrition Specialties & Food Ingredients GmbH is the
only opponent, and they appealed. The appeal hearing was held in October 2008 and the
patent was upheld in modified form. The modified patent claims are directed to processes
for fermenting Thraustochytriumand Schizochytriumin a medium containing sodium sulfate
and less than 120 milligrams per liter of chloride.
 
    
    In September 2003, we filed a patent infringement lawsuit in the U.S. District Court in
Delaware against Nutrinova Inc., Nutrinova Nutrition Specialties & Food Ingredients GmbH,
Celanese Ventures GmbH, and Celanese AG. Celanese Ventures GmbH and Celanese AG were
dropped from the lawsuit. Lonza Ltd. was added to the lawsuit. In October 2006, after an
almost two week trial in Wilmington, Delaware, the jury returned a favorable verdict to
Martek, deciding that all three of the asserted Martek DHA patents were valid and
infringed, and that one was willfully infringed. In October 2007, the judge upheld the
October 2006 jury verdict that the defendants infringed all of the asserted claims of U.S.
Patent Nos. 5,340,594 and 6,410,281 and that these patents were not invalid. The judge has
granted a permanent injunction against the defendants with respect to those two patents.
The judge also upheld the jury verdict that the defendants had acted willfully in their
infringement of U.S. Patent No. 6,410,281. Regarding the third patent involved in the
case, U.S. Patent No. 6,451,567, the judge reversed the jury verdict and found that the
asserted claims of this patent were invalid. Marteks request to the judge to reconsider
his ruling on the third patent was denied. Martek and the defendants have appealed aspects
of the judges final decision. The appeal hearing before the U.S. Court of Appeals for the
Federal Circuit is scheduled for April 2009. The two patents where the infringement was
upheld, U.S. Patent Nos. 5,340,594 and 6,410,281, are scheduled to expire in July 2009 and
August 2011, respectively.
 
    
    We also filed a patent infringement suit involving Nutrinova Nutrition Specialties &
Food Ingredients GmbH and Celanese Ventures GmbH in Germany in January 2004. Lonza Ltd.
and a customer of Nutrinova have also been added to this lawsuit. The complaint alleges
infringement of our European patent relating to DHA-containing oils. A hearing was held
in a district court in Dusseldorf in September 2007 and the court issued its decision in
October 2007, ruling that Marteks patent was infringed by the defendants. The defendants
have appealed, and an appeal hearing was scheduled for February 2009. Martek and the
defendants requested that the appeal hearing be delayed until the Appeal Board of the EPO
decides whether to uphold Marteks European patent covering our DHA-containing oils. As
discussed above, this EPO Appeal Board hearing is scheduled for March 2009. In December
2008, Martek requested that the court expand the appeal to include Lonzas production of
DHA in Germany, based on evidence discovered in October 2008.
 
    
    We filed a patent infringement suit involving Lonza Ltd AG and Capsugel France in France
in November 2008. The complaint alleges infringement of our European patent relating to
DHA-containing oils.
 
    
    With respect to our ARA patent in South Korea, Suntory has filed an opposition. A
hearing on the matter was held in late January 2006 and the Korean Intellectual Property
Office Examiners ruled against Martek. Martek appealed. The appeal brief was filed in
February 2007 and Suntory responded in August 2007. The Korean Intellectual Property
Office ruled against Martek in September 2007, and we appealed to the Patent Court in
October 2007. The Patent Court held hearings in August 2008 and September 2008. The Patent
Court ruled against Martek in November 2008, and we appealed to the Korean Supreme Court in
December 2008. The Korean Supreme Court issued a summary dismissal of our appeal in
February 2009, resulting in this Korean ARA patent being finally revoked.
 
    
    Suntory also initiated an invalidation case against one of our blended oil patents in
South Korea. Our response to Suntory was filed in February 2005, Suntory responded in
March 2006 and Martek filed further submissions in May 2006. A hearing was held in July
2006. A ruling against Martek was issued in February 2007. Martek appealed to the Patent
Court in April 2007. The Patent Court ruled against Martek, and we appealed to the Korean
Supreme Court in August 2008. The Korean Supreme Court issued a summary dismissal of our
appeal in December 2008, resulting in this Korean blended oil patent being finally revoked.
The revoked patent covered a blend of fish oil DHA and microbial oil
ARA. Sales of our oils during fiscal 2008 to licensees in South Korea
with whom we do not have a sole source supply arrangement were less
than $1.0 million.
 
    
    Martek is opposing two of Suntorys low sterol ARA oil patents in Europe and one in
Australia. The patents are generally directed to processes for producing microbial ARA oil
having a low ratio of certain sterols, the resulting oil and its use in infant formula.
Martek believes that the patents are invalid for a number of reasons, including prior art
that anticipates the claims relevant to Martek. An Opposition Division hearing on the
first European patent was held in April 2008, and the Opposition Division revoked the
Suntory patent. Suntory has appealed, during which time the patent will remain in full
force and effect. Hearings on the other European patent and on the Australian patent are
expected in 2009.
 
    
    Third parties have filed Requests for Reexamination (Requests) of eleven of Marteks U.S. patents.  Eight of
these Requests were filed by Lonza with respect to eight of Marteks DHA patents which are not relevant to
Marteks infant formula business. Three of these patents have now expired and another is likely to expire
before the initial Reexamination process is complete. Additionally, an anonymous party filed the other three
Requests with respect to two of Marteks blended oils patents and one ARA patent.  The U.S. Patent Office has
granted all eleven of the Requests to initiate a Reexamination process.  As a result of these Reexaminations,
the claims of the subject patents may be upheld in their current form, narrowed, abandoned, or revoked, or the
term of a patent may be shortened. Not all of the claims of the patents are subject to Reexamination.  With
respect to the ARA patent, which is scheduled to expire in 2014, and the non-infant formula DHA patents, we
have received initial adverse office actions from the patent examiner, which is standard if a Request is
granted, to which we have responded. We anticipate further proceedings with the patent examiner and if
unfavorable decisions are received, we plan to appeal. The ARA patent as well as those DHA patents that have
not expired will remain in full force and effect during the appeal process. Additionally, we have received
second adverse office actions from the patent examiner for the two
blended oils patents which are scheduled to
expire in 2011. If we are unable to overcome these office actions, we plan to appeal within the U.S Patent
and Trademark Office, and in the event of a negative outcome, we will have an opportunity to further appeal to
the federal courts. These patents will remain in full force and effect during the appeal process, which is
likely to extend beyond the 2011 term of these patents. However, if the appeals are not successful or are not
pursued, some claims of these patents could be revoked or the patents, including the ARA patent with the 2014 expiration date, could have their terms shortened from
their original expiration dates.
 
    
    There are additional intellectual property proceedings pending against Martek or that
Martek has pending against third parties that are not considered material.
  31




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##### Table of Contents



If our non-infant formula customers do not introduce products containing our nutritional oils on
a broad scale into the marketplace and consumers do not purchase such products, our sales to
these markets will be limited.
  Our oils are very sensitive to oxidation and may not be very compatible with many liquid or dry
foods that are currently on the market. If economical methods are not developed to successfully
incorporate our oils into various food and beverage applications, we may never be able to gain
large-scale entry into the food and beverage and nutritional supplements markets.
   32




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##### Table of Contents



If clinical trials do not continue to yield positive results on the benefits of DHA on cognitive
function, cardiovascular health or other health applications, our future revenues may be limited
in the food and beverage and the dietary supplement markets.
  If our oils are unable to be used in organic food and beverage products, the opportunity for
sales of our oils into the food and beverage market will be limited to non-organic products.
   Because food and beverage pricing is very competitive, the premium that our oils adds to the
cost of a food or beverage may never allow it to be priced at levels that will allow acceptance
by consumers.
  If we are unable to gain broad regulatory approvals for the incorporation of our oils into foods
and beverages worldwide, our future revenues in the food and beverage market may be limited.
  If it is determined that large amounts of eicosapentaenoic acid (EPA) must accompany DHA in
order to achieve optimal health benefits, we may never be able to gain large-scale entry into
the food and beverage and dietary supplements markets.
   33




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##### Table of Contents



If the FDA finalizes its proposed rule to prohibit nutrient content claims for DHA and EPA, our
penetration of the food and beverage and dietary supplements markets may be limited.
  If the FDA narrowly interprets certain sections of the Food and Drug Administration Amendments
Act of 2007, such an interpretation could have a material adverse effect on our business and
financial condition.
  If we or our customers fail to secure authorized nutrition and health claims within the European
Union, future revenues from sales within the European Union could be adversely affected.
  We have a single third-party supplier of our ARA with whom we have a contractual relationship.
If this supplier of our ARA is unable to supply us with our required amounts of ARA or if an
over-capacity situation by our supplier leads to higher cost ARA, our results of operations
and/or financial position may be adversely affected.
  Market fluctuations in the availability and cost of raw materials and energy are beyond our
control and may adversely impact our business.
   34




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##### Table of Contents



If customer demand for our nutritional oils requires us or our major suppliers to increase
production beyond current levels, we may experience certain risks associated with the ramp-up of
commercial manufacturing that could have a material adverse effect on our business, financial
condition, and/or results of operations.
   
    
    we may experience problems processing, handling and shipping the higher quantities of
oil produced from our expanded facilities;
 
    
    the costs of expanding, operating and maintaining our production facilities may exceed
our expectations;
 
    
    product defects may result;
 
    
    lower than anticipated fermentation success rates may result;
 
    
    lower downstream processing yields may result;
 
    
    environmental and safety problems may result from our production process; and
 
    
    regulatory issues relating to the scale-up and operations regarding our production
processes may arise.
  We have significantly increased our manufacturing capacity and have incurred substantial costs
in doing so. If we are unable to increase our revenues from our nutritional oils produced at
these facilities, we may continue to experience excess production capacity and we may be unable
to recover these plant expansion costs, which could result in a write-down of certain production
assets.
  Failure to effectively manage our growth could disrupt our operations and prevent us from
generating the revenues and gross profit margins we expect.
  Our opportunity in the U.S. infant formula market may be limited by the renewal rate of
supplemented formulas into the Women, Infants and Children program or if the eligibility
requirements for participating in the program are made more restrictive or if the amount of
infant formula offered to participants is reduced.
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Our business would be harmed if we fail to comply with applicable good manufacturing practices
as required by the FDA.
  Our manufacturing process involves the handling of hazardous materials and emission of regulated
pollutants. If we fail to properly handle these hazardous materials and/or emissions,
substantial costs and harm to our business could result.
  Our corporate compliance program cannot guarantee that we are in compliance with all potentially
applicable federal and state regulations.
  Our business exposes us to potential product liability claims and recalls, which could adversely
impact our financial condition and performance.
  Concerns with the safety and quality of our nutritional oils could cause customers to avoid our
products.
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We may need additional capital in the future to continue our research and development efforts,
to conduct product testing, including preclinical and clinical trials, and to market our
products. We may also need additional capital to expand our production capacity if market
demand for our products continues to grow.
   The market price of our common stock may experience a high level of volatility due to factors
such as the volatility in the market for biotechnology stocks generally, and the short-term
effect of a number of possible events.
  
    
    announcements of technical innovations, new commercial products and product launches by
us or our competitors;
 
    
    announcements of use of competitors DHA and/or ARA products by our customers;
 
    
    arrangements or strategic partnerships by us or our competitors;
 
    
    announcements of license agreements, acquisitions or strategic alliances by us or our
competitors;
 
    
    announcements of sales by us or our competitors
 
    
    announcements of results of clinical trials by us, our competitors or others;
 
    
    patent or other intellectual property achievements or adverse developments;
 
    
    quarterly fluctuations in our revenues and results of operations;
 
    
    failure to enter into favorable third-party manufacturing agreements;
 
    
    regulatory decisions (approvals or disapprovals) or changes concerning our products and
our competitors products;
 
    
    events related to threatened, new or existing litigation, or the results thereof;
 
    
    changes in our estimates of financial performance or changes in recommendations by
securities analysts; and
 
    
    general market conditions for growth companies and bioscience companies.
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If significant shares eligible for future sales are sold, the result may depress our stock price
by increasing the supply of our shares in the market at a time when demand may be limited.
  Changes in foreign currency exchange rates or interest rates could reduce profitability.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 31.01
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).*31.02
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).*32.01
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *32.02
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 *
    
    Filed or furnished herewith.  39




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SIGNATURES
  MARTEK BIOSCIENCES CORPORATION
(Registrant)Date:  March 12, 2009
    /s/ Peter L. BuzyPeter L. BuzyChief Financial Officer, Treasurer and Executive Vice
President for Finance and Administration
(Principal Financial and Accounting Officer)  40




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EXHIBIT INDEX
 31.01
    
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).*31.02
    
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).*32.01
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *32.02
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 *
    
    Filed or furnished herewith.  41