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Lion Attributes Significant Jump in R&D to Ballooning Net Loss in Q3

NEW YORK, Feb. 6 - Lion Bioscience on Wednesday reported that a significant jump in R&D spending in the face of strong revenue growth in its fiscal third quarter caused the company to post a widened net loss.


For the three months ended Dec. 31, Lion reported total revenues of €10.3 million, or roughly $9 million, compared with €7.7 million in the year-ago period. The total was based on an increase in licensing fees to €5.9 million in the current quarter from €3 million one year ago, and a dip in R&D fees, which fell to €4.4 million this period from €4.7 million last year, the company reported.


A surge in R&D spending, which reached €12.9 million in the current third quarter compared with €8.5 million one year ago, pushed Lion to post €21 million in total expenditure for the quarter. By comparison, the company spent €12 million in the same period last year.


"This significant increase in R&D expense is primarily attributable to salaries as a result of hiring new personnel for our R&D activities, start-up costs for our pharmacophore informatics arrangement with Bayer, and product development activities surrounding projects with ... partners [like] IBM, Paradigm Genetics, and ACE Bioscience," Lion reported.


As a result, net loss in the third quarter of fiscal 2002 ballooned to €9.8 million, or €.52 per share, from €2.2 million, or €.15 per share, year over year.


Looking ahead, Lion said it expects R&D spending to increase "at a proportionally lower rate than revenues in order to enable us to generate a corresponding profit margin in the long term."


Shares in the German bioinformatics company were up $.82, or more than 7 percent, to $12 in mid-morning Nasdaq trading.

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