In line with a warning issued last month, Lion Bioscience last week reported a significant drop in revenues for the quarter ended September 30, 2002, as well as a net loss that swelled to €92.7 million from €10.3 million in the year-ago period.
Revenues for the second quarter of Lion’s 2002/2003 fiscal year fell to €5.2 million from €10.2 million one year ago. The company attributed the drop-off to a “sustained decline in industry spending” in combination with the discontinuation of its drug discovery business and a deferred milestone payment from Bayer for an informatics project to develop a customized bioinformatics and cheminformatics platform.
Lion began the informatics project in October 2000, in collaboration with Tripos, which aimed to integrate biological and chemical data and applications to analyze high-throughput screening and structural activity data. The goal, according to Lion CEO Friedrich von Bohlen, is to “allow Bayer researchers to predict biological function from chemical structure.”
Von Bohlen said that the system was delivered to Bayer in October, but there were slight problems with two subsystems. While Bayer had the right to terminate the agreement, it instead opted to defer the $2 million milestone payment — a positive sign that the project is on the right track despite the delay, according to von Bohlen.
“They understand that it’s a challenging project, but if it succeeds — and I’m very much convinced that it will — they will have something in hand no one else has, and they will continue to go for it,” he said.
A new delivery date has been scheduled for early next year, von Bohlen said.
In addition to the decline in revenues, Lion’s total expenses in the second quarter grew to €23.8 million from €19.3 million in the second quarter of 2001. R&D spending increased by €2 million and general and administrative costs increased by €1.5 million, due primarily to the company’s acquisition of NetGenics in January.
The NetGenics acquisition also contributed to the surge in Lion’s net losses for the quarter. The company wrote off €62.1 million in impaired goodwill and intangible assets from the acquisitions of NetGenics and Trega Biosciences and completely wrote off the €8.5 million equity investment in GeneProt it made in March 2002.
Lion said it had a cash position of €88.1 million as of September 30, of which €23.7 million was in cash and cash equivalents.