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Lion Posts Dwindling Q2 Revenue, Greater Costs, and a Widened Loss

NEW YORK, Nov. 6 - Lion Bioscience today said that dwindling revenues and bloated expenses in its fiscal second quarter fueled a substantial increase in net loss.


A "sustained decline" in industry spending together with Lion's retreat from its drug-discovery business caused totals revenue in the second quarter 2002 to fall to €5.2 million, or $5.2 million, from €10.2 million one year ago, Lion said.


Receipts shrank across the board. The biggest slide in the second quarter came from the iD3 drug-discovery unit, which contributed €239,000 in revenue compared with €1.7 million it reported in the second quarter 2001. Lion said it plans to shut down the business by the end of the current calendar year, a move that will shutter a pair of facilities in San Diego and Heidelberg, Germany, and cost at least 70 staffers their jobs.


Revenue from licenses fell to €2.1 million in this year's second quarter from €3.6 million one year ago, Lion said. In addition, second-quarter receipts from professional services receded by nearly €2 million year over year, and revenue from maintenance and support services decreased by €255,000, the company said.


However, Lion reiterated its goal of breaking even in the fiscal fourth quarter next year. The firm said the launch of its Discovery Center modular-integration platform in the third quarter next year will help it achieve that goal.


Total expenses in the second quarter, meantime, jumped to €23.8 million from €19.3 million in the same period in 2001. Driving that increase were increases in R&D spending, which grew by €2million, and general and administrative costs, which increased by €1.5 million, Lion said. The company stressed that the increase was due primarily to its acquisition of NetGenics in January.


As a result, net loss for the period ended Sept. 30 ballooned to €92.7 million, or €4.67, from €10.3 million, or €.55, one year ago. Lion blamed the surge on €70.6 million in non-cash amortization expenses related to its acquisition of NetGenics and Trega Biosciences, together with investment losses totaling €8.5 million.


Lion said it had roughly €23.7 million cash and cash equivalents as of Sept. 30.


"We are not managing the company on a quarterly basis but for the long term, based on a validated assessment of the industry's needs," Lion CEO Friedrich von Bohlen said in a statement this morning.


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