CAMBRIDGE, Mass. -- Genetics Institute announced on Tuesdaythat it will take a one-time loss of $18.3 million in its 1991first-quarter earnings. Of the write-off, $11 million is the resultof the U.S. Court of Appeals ruling last week that blocks GIfrom selling erythropoietin (EPO) in the United States.
GI also said it will petition next week for a rehearing andreconsideration of the court's decision to invalidate thecompanyLs EPO patent.
Gabriel Schmergel, GI's president and chief executive officer,told BioWorld that the EPO case is Ia bump in the road." He saidGILs multiproduct strategy will enable a rapid recovery.
He likened GILs product pipeline to a family of 50 children,three of which are EPO-U.S., EPO-Japan and EPO-Europe. He saidthat "although EPO-U.S. has died in a car accident, both EPO-Japan and EPO-Europe are healthy and growing."
Including the one-time charge of about $1.20 a share, GIexpects to report a net loss of about $23.5 million on revenuesof about $12 million for the quarter ended Feb. 28. GI reporteda net loss of almost $7 million on revenues of $8.5 million inthe same period last year.
The announcement was made after the market closed. GI'sstock (NASDAQ:GENI) closed at $39.88 Tuesday, up 88 cents.
The loss includes $11 million to cover the estimated costs toconclude the legal issues and the cost of lost EPO inventories. GIcannot sell EPO produced in the United States in Japan orEurope.
The other $7.3 million is an accounting change to recognize aloss related to GILs 4.9 percent equity investment in Seattle-based NeoRx Corp. (NASDAQ:NERX). The loss is the differencebetween GI's purchase price of $10 to $12 per share andNeoRxLs current price of about $1, said Schmergel.
GI invested in NeoRx's anti-cancer therapeutics program in1987 and has obtained products that it is testing in pre-clinicaland clinical trials.
-- Carol Talkington Verser, Ph.D. Special to BioWorld
(c) 1997 American Health Consultants. All rights reserved.