TO ALL: WSJ highlight on the fantastic results for FY97 and calendar 97 Q3 plus some analyst views:
The Wall Street Journal Interactive Edition -- December 24, 1997
Interneuron Posts 4th-Quarter Loss
On Withdrawal of Diet Drug Redux
By MARK MAREMONT
Staff Reporter of THE WALL STREET JOURNAL
Hurt by the withdrawal of the diet drug Redux, Interneuron Pharmaceuticals Inc. reported a net loss for its fiscal fourth quarter of $37.3 million, or 91 cents per share, on revenue of $13 million.
The Lexington, Mass., company said it took a special charge of $27.8 million in the quarter, of which $10.8 million reflected the costs of the Redux withdrawal on Sept. 15, following data that showed that 32% of 291 people taking Redux or a chemically related diet drug called Pondimin, had heart-valve leaks. The bulk of the rest of the charge related to a license payment to Astra Merck, a joint venture between Merck & Co. and Astra AB of Sweden, and write-offs connected with an acquisition.
But the financial impact of the diet-pill withdrawal on Interneuron remains uncertain. Although the company said the special charge includes all costs related to removing Redux from the market, it didn't include any provision for liabilities arising from Redux-related lawsuits, because such costs "are not currently determinable." Hundreds of lawsuits have been filed on behalf of diet-pill users, many of them naming Interneuron as a defendant.
Redux sales and royalties accounted for 98% of Interneuron's $56.8 million in product sales for the fiscal year ended Sept. 30, the company said. For the fiscal year, the company had a net loss of $55.3 million, or $1.35 per share, on $67.9 million in revenue. Interneuron also derives revenue from contract and license fees.
Viren Mehta, an analyst with Mehta & Isaly in New York, said it was impossible to predict the company's liability for Redux, which he said would be a "shadow" lingering over Interneuron for some time.
Mr. Mehta said Interneuron's $140 million of cash on hand should be sufficient to run normal operations for another 12 to 24 months. He said Interneuron is relying on speedy approval by the Food and Drug Administration of a drug to treat stroke victims, called CerAxon, or citicoline. Mr. Mehta said he expected FDA approval sometime in 1998, but said prospects for the drug were uncertain.
At the request of the FDA, Redux, or dexfenfluramine, was withdrawn from the U.S. market, along with Pondimin, or fenfluramine. Redux was developed by Interneuron and marketed in the U.S. by American Home Products Corp., Madison, N.J. American Home also sold Pondimin.
Earlier this month, the numerous lawsuits against American Home and Interneuron were consolidated and assigned to a senior judge in Philadelphia. In a statement, Glenn L. Cooper, Interneuron's chief executive, said the company was "vigorously defending" the Redux lawsuits.
Interneuron stock fell 6.25 cents to close at $9.4375 in Nasdaq Stock Market trading, down 71% from its 52-week high of $32.625.
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