Celera's loss declines in quarter amid spending cuts

Company now focusing on production of drugs

April 24, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Celera Genomics Group said yesterday that it posted a smaller fiscal third-quarter loss than a year earlier as the Rockville-based company began to see the results of reduced spending.

Celera reported a net loss of $26.7 million, or 37 cents per share, for the quarter that ended March 31.

The net loss was $49.5 million, or 72 cents a share, in the year-earlier quarter.

The results included a $15.1 million noncash charge associated with Celera's investment in Discovery Partners International Inc., a drug company in San Diego. Celera said the charge increased its net loss by 13 cents per share.

Revenue in the quarter decreased to $20.3 million from $30.5 million.

The decline in revenue resulted largely from Celera's decision not to pursue more business sequencing genomes for others. The company, best known for sequencing the human genome, has shifted its strategy to becoming a drug developer.

Although Celera hasn't produced much new revenue, it cut spending to reduce its losses.

"We've eliminated expenses, especially as a consequence of the restructuring that occurred last year," said Robert Bennett, Celera director of investor relations and communications.

Analysts have said that Celera's online information business and its diagnostic business are its most promising revenue generators.

The online information component reported third-quarter revenue $16.4 million, compared with $18.5 million in last year's quarter.

Operating income for that business was $5.2 million, compared with $4.6 million in the corresponding period a year ago.

The diagnostics program posted fiscal third-quarter revenue of $4.3 million, compared with $2.7 million.

The pharmaceutical side, or the drug development arm, has taken longer to prosper, said Winton Gibbons, a biotechnology analyst with William Blair & Co.

"But that's what you would expect from an early-stage biotech study," Gibbons.

Celera officials said yesterday that they have canceled a study of an asthma inhibitor the company purchased from Bayer AG in October.

"It was disappointing because it seemed to be in the later stages of the clinical pipeline," Gibbons said.

"They do have some backup compounds, so it's not as dire as some might think, but it's still a disappointment."

Bennett said Celera has other promising trials under way. Celera has expanded a study that identifies proteins on tumor cells that may be associated with cancer.

It has already looked at the proteins in pancreatic cancer and now plans to identify them in colon and lung cancer as well.

The company has also hired several new senior managers as part of its plan to expand its preclinical and clinical development.

Last week, Celera appointed Stephen M. Ruben to the newly created position of vice president of protein therapeutics.

Celera's shares gained 13 cents to $9.08 on the New York Stock Exchange yesterday.

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