Lion Bioscience laid out its financial goals for fiscal year 2003/2004 last week, reiterating its target of break-even by its fourth fiscal quarter despite a projected overall loss of around €20 million (US$23.1 million) for the year.
In an analyst meeting to discuss the financial results for its 2002/2003 fiscal year, Lion CFO Martin Hollenhorst said the company plans to break even for the quarter ending March 31, 2004, albeit on an EBITDA (earnings before interest, taxes, depreciation, and amortization) basis — a proviso that makes the prediction “a bit more conservative” than previous estimates, Hollenhorst admitted. The company is projecting total revenues of €40 million for the year, but expects a maximum of €60 million in costs. Further, Hollenhorst said, Lion’s cash holdings — at €72.9 million as of March 31, 2003 — will be depleted to around €30 million by the end of the business year. This is a slight improvement over the company’s earlier projection of a cash balance of only €20 million by that time.
Revenues are expected to remain flat in the first two quarters of the fiscal year, but company officials said they expect the on-time roll-out of several new products — including last week’s launch of its Target Engine discovery platform (see p. 2) — to lead to an uptick in revenues in the third and fourth quarters. Lion estimates that 42.5 percent of its total revenues will come from its new products: Lion Discovery Center, Lion Target Engine, and the upcoming Lion Lead Engine. In a slight setback, Lead Engine, a computational platform for small-molecule chemistry that was originally scheduled for release in the third quarter, will launch in the fourth quarter of the fiscal year. On the bright side, however, Lion has already signed Siena Biotech as the first customer for Target Engine, and Lion CEO Friedrich von Bohlen said that three other pharmaceutical companies are currently evaluating the platform.
Lion reported a total of €30 million in revenues for the 2002/2003 fiscal year, a 25 percent decline from the €39.3 million reported for 2001/2002. Von Bohlen attributed the drop to a delay in a milestone delivery in its partnership with Bayer [BioInform 11-11-02] , a decrease in revenues from the discontinued ID3 unit, and the weakened US dollar. New software license fees declined only slightly from €15.1 million to €14.1 million as licenses for SRS partially offset the loss of revenues from discontinued products.
Net loss for the year was €152.5 million, compared to €54.7 million for the previous year. Lion attributed the widened loss to a one-time write-off of impaired goodwill and intangible assets of €62.9 million, a €13.6 million loss on marketable securities, €7.8 million in restructuring costs, and €4.4 million in costs for the waiver of the employees’ stock option program.
Lion expects to wrap up its restructuring effort by the end of July, bringing its total staff to 310, compared to 590 as of March 31, 2002 (see table, above).