Genetics Institute Inc. on Monday reported its first profitablequarter, earning $4.3 million, or 21 cents per share, onrevenues of $28.3 million for the third quarter ended Aug. 31.
Earnings far exceeded the Street consensus of 4 cents a share,but was not necessarily surprising, said Cowen & Co. analystDavid Stone. Because GI is in the research and developmentphase, revenues tend to be lumpy, depending on when thecompany books R&D payments.
"What's interesting is that the stock had not moved the lasttime I looked," Stone said, "which means that it doesn't reallymatter." The stock's valuation is now pegged to GI's mergerwith American Home Products Corp., announced in September.GI stock (NASDAQ:GENI) closed at $37.75, up 25 cents, onMonday.
For the comparable quarter last year, GI had a net loss of $5.8million, or 48 cents a share, on revenues of $9.4 million.
Much of the improvement in the third quarter was due to $11million in collaborative R&D revenue as a result of anagreement made in July with Schering-Plough Corp.Collaborative R&D revenues were $23.8 million for the quarter,compared with $6.5 million for the same period in 1990.
Under the agreement between GI and a Schering affiliate, EsexChemie AG, Schering will register and market GI's macrophagecolony stimulating factor and interleukin-11 in Europe, Africaand Latin America.
Additional R&D revenues came from YamanouchiPharmaceutical Co. Ltd. and SciGenics Inc. SciGenics is a shellcompany set up by GI to develop M-CSF in North America andembryonic growth and regulatory proteins (EGRP factors)worldwide. The Yamanouchi deal is for development of bonemorphogenetic proteins.
GI, based in Cambridge, Mass., anticipates a profitable fourthquarter, although earnings in the second half of the year won'toffset losses in the first half. Loss per share for the first ninemonths is $1.40. -- Karen Bernstein
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