CAMBRIDGE, Mass. -- Genetics Institute expects to break evenfor the last three quarters of fiscal 1991, ending Nov. 30, and tobecome profitable in 1992, Garen Bohlen, GI's executive vicepresident and chief financial officer, told BioWorld onWednesday.

GI's loss for this year should be $23.5 million, the same loss itis anticipating this quarter. This translates to a loss of $1.90 to$1.95 a share, Bohlen said. (In comparison, recent analystforecasts have ranged from a profit of 8 cents a share to a lossof 70 cents.)

In an interview with BioWorld, Bohlen talked about theevolution of the company's strategy and the challenges facingGI, and discussed the progress of GI's product portfolio.

As the company matures, Bohlen said, GI intends to retaingreater marketing rights for itself. While early marketingagreements granted global rights, the company is retaining atleast North American rights on its second tier of products.

The early strategy "gave us something to fall back on," saidBohlen. "For the future, we want to take more control of ourown destiny, at least for the North American market."

Nevertheless, in the near term, GI's fortunes still depend onroyalties and development agreements. This year it is countingon $20 million in royalties on sales of erythropoietin (EPO) inJapan and Europe, and at least $13 million as a result of itsbone morphogenic protein (BMP) development agreement withYamanouchi Pharmaceutical Corp.

GI also expects additional revenue from new licensingagreements for several of its early-stage products. WhileBohlen wouldn't specify which products are in negotiations,possible candidates include macrophage colony stimulatingfactor (M-CSF), fibroblast growth factor-4 (FGF-4) for woundhealing, and two interleukins in early-stage research to treatthe effects of chemotherapy.

GI's expectations of becoming profitable in 1992 are based onthe same revenue sources plus royalties from Factor VIII andgranulocyte macrophage stimulating factor (GM-CSF), both ofwhich are expected to receive Food and Drug Administrationmarketing approval late this year.

The product development strategy outlined by Bohlen is two-pronged: to focus resources on a few key sectors, avoiding thepitfall of becoming a research boutique; and to concentrate onthe production, clinical and regulatory issues required to bringproducts to market.

GI's major upcoming products are M-CSF and monoclonalantibodies tied to the M-CSF program, both of which GI isdeveloping on its own; bone morphogenic proteins, which GI isdeveloping in partnership with Yamanouchi; and blood cellgrowth factors such as IL-11.

One challenge for GI will be to shed the "me-too" image someWall Street analysts have of the company. They think GI haslagged in the development of EPO, t-PA (tissue plasminogenactivator) and colony stimulating factors.

Bohlen disagrees. "The only product we felt we weren't in frontof the pack with was t-PA," he said. The company felt it was ina strong position with EPO, and was surprised by its loss in thisweek's patent decision that shut it out of the U.S. market.

GI expects its partners Sandoz Ltd. and Schering-Plough Corp.to dominate the GM-CSF market as a result of GI's strong patentposition, Bohlen said.

GI'S REVENUE FORECAST FOR 1991-'92

Anticipated loss for the first quarter ended Feb. 28: $23.5million (includes one-time loss of $18.3 million, $11 million ofwhich stems from invalidation of GI's U.S. erythropoietinpatent).

Anticipated loss for the year ending Nov. 30: $23.5 million.

Anticipated loss per share for the year ending Nov. 30: $1.90 to$1.95.

Sources of 1991 revenues:$20 million in royalties on sales of EPO in Japan and Europe; atleast $13 million as a result of its bone morphogenic protein(BMP) development agreement with YamanouchiPharmaceutical Corp.; unspecified manufacturing revenues onFactor VIII; unspecified revenues from new licensingagreements being negotiated.

Sources of 1992 revenues:Same revenue sources as in 1991; royalties from Factor VIIIand GM-CSF.

-- Karen Bernstein BioWorld Staff

(c) 1997 American Health Consultants. All rights reserved.