Nova Pharmaceutical Corp. has never earned a profit in its 8-year history, but the young Baltimore-based medical research and development company reported a historic first yesterday with the posting of its first revenues from product sales.
Nova, which was founded in 1982, rang up more than $9 million in third-quarter revenues from the sale of a line of psychiatric prescription drugs that it began marketing in July as a result of a restructuring of its business pact with SmithKline Beechman.
The $9.07 million in sales of the drugs used to treat psychosis and depression accounted for more than 70 percent of the company's total third-quarter revenues of $12.7 million.
Although revenues were up fourfold compared with the year-ago period, so were the costs of doing business. The company said total expenses for the quarter were up 141 percent, to $15.9 million compared with $6.6 million for the same period in 1989. For the first nine months of the year, expenses were up 57 percent, to $32.1 million.
Nova attributed the rise in expenses to the sale of the psychiatric products and to a $2.3 million in crease in proprietary research and development expenses for the first nine months of 1990.
"Expenses for the third quarter of this year were partially offset by more than $1 million of operating income generated from the sale of the psychiatric products," Hans Mueller, Nova president and chief executive officer, said. "These expenses reflect the continued expansion of our investment in proprietary research and development as projects move from the laboratory to the clinical development stage."
Michael J. Demchuk, Nova's vice president of administration, said the company anticipates $3 million to $4 million a year in profits eventually from the sale of the prescription drugs.
The injection of much-needed cash, he said, would help finance the company's research and development involving new drugs and drug delivery systems, with a primary focus on disorders of the central nervous system, and pain and inflammation.
The restructuring of Nova's 1988 partnership agreement with SmithKline in April eliminated a planned $24 million investment in Nova common shares by the British pharmaceutical company but gave Nova marketing rights to the prescription drugs.
Late last week, Nova announced the withdrawal of plans for a $25 million offering of preferred stock designed to raise about $15 million. Nova cited the volatility of the stock market in the wake of the Middle East crisis.
The market found little to get excited about Nova's big jump in third-quarter revenues. The stock closed yesterday at $2.25 a share, down 25 cents for the day. Over the past year, Nova shares have traded as high as $6.