Gene Logic's loss widens despite increased revenue

Soured investment affects fourth quarter

February 20, 2002|By Julie Bell | Julie Bell,SUN STAFF

Gene Logic Inc. said yesterday that its fourth-quarter loss grew, despite a 49 percent increase in revenue, because of a soured investment and declining interest income.

The Gaithersburg company reported a net loss of $6 million, or 22 cents a share, on revenue of $14 million. That compares with a loss of $5.4 million, or 21 cents per share, on revenue of $9.4 million in the fourth quarter of 2000.

The loss nonetheless beat analysts' expectations. They had projected a loss of 24 cents a share, according to the average estimate of six analysts surveyed by Thomson Financial/First Call.

Gene Logic's fourth-quarter loss was padded by declines in interest income of $2.4 million compared with the 2000 fourth quarter, because of lower interest rates. In addition, the company wrote off $2.5 million of its investment in Neuralstem Inc. That private company, also based in Gaithersburg, is a developer of regenerative therapies for the nervous system.

The company did not declare the write-down an extraordinary or one-time item, a move one analyst said was a reflection of heightened sensitivity to accounting practices in the wake of the Enron scandal. The analyst, Punk Ziegel & Co.'s James D. Ackerman, said Gene Logic's operating loss amounted to 13 cents per share - ahead of expectations "by far."

"In today's Enron world, no one wants to talk about pro forma," he said, referring to a means of stating earnings that excludes one-time expenses.

Shares of Gene Logic lost 86 cents yesterday, or more than 5 percent, to close at $15.45 on the Nasdaq stock market. Ackerman attributed the decline to an overall dip in the stock market, in part because of concern over companies' accounting practices.

The Nasdaq Biotechnology Index fell 29 percent yesterday to close at 742.50.

Gene Logic said its record revenue was in some measure the result of additional subscriptions to its databases of genes and proteins by biotechnology and pharmaceutical companies.

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