PIDDLY ! Labs loss widens, 2002 losses seen...oops! ;-)
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By Deena Beasley
LOS ANGELES, Feb 28 (Reuters) - Biotechnology company Protein Design Labs Inc. (NasdaqNM:PDLI - news) said on Thursday that higher costs widened its fourth-quarter loss and it expects losses in 2002 as spending needs mount and interest income drops.
Fremont, California-based Protein Design, which develops antibodies to treat diseases, said it had a net loss of $5.3 million, or 6 cents a diluted share, compared with a net loss of $100,000, or nil per share, a year ago.
Wall Street analysts on average expected the company to post a loss of 6 cents a share, with estimates ranging from 4 cents to 7 cents, according to Thomson Financial/First Call.
For 2002, Protein Design said it expects a net loss of $15-23 million, or 17-26 cents a share, far short of First Call's estimate for a profit of 4 cents a share. The company cited an expected 12-18 percent cost increase tied to expansion of clinical trials and manufacturing infrastructure and a $10-million drop in interest income for the loss projection.
``The fact that they will have higher losses next year is actually not that big of a deal. It's not because of operations, it's because of lower interest rates on all that cash they are sitting on,'' said Ivonne Marondell, an analyst at Gerard Klauer Mattison & Co.
At the end of 2001, the company had cash, cash equivalents and marketable securities totaling $650.3 million.
Protein Design said its 2002 royalty revenue will increase, but lower interest rates will reduce total revenue by 10 to 15 percent from 2001's $79.5 million.
Fourth-quarter revenue fell to $15 million from $17.6 million in the same 2000 quarter. Total costs and expenses rose to $20.4 million, compared with $17.6 million a year earlier.
SHARES LOWER AFTER HOURS
``The future of PDL clearly depends on the future of our products,'' Robert Kirkman, the company's vice president of business development, told Reuters. ``Our investors didn't give their money to us to earn low-single-digit returns. They gave it to us to invest in our products.''
The company's shares, which fell 30 cents to close at $15.87 on Nasdaq, traded as low as $14.40 after-hours on Instinet. The shares have lost more than half their value so far this year, compared with a 17 percent drop in the American Stock Exchange biotech index over the same period.
Kirkman said the 2002 revenue outlook mainly reflects lower interest rates and there has been no change in either the company's drug development pipeline or that of its licensees. PDL is not expected to launch its own commercial product before 2004.
Protein Design currently collects royalty revenues on sales of drugs that use its patented antibodies, including Genentech Inc.'s (NYSE:DNA - news) breast cancer drug Herceptin and American Home Products Corp.'s (NYSE:AHP - news) leukemia drug Mylotarg. Two other Genentech products, Xolair for asthma and Xanelim for psoriasis, are also expected to generate royalties for PDL, but regulatory review has lagged and they are not expected to reach the market before next year.
In December, Protein Design said its experimental drug for non-Hodgkin's lymphoma, Remitogen, was not significantly effective in stopping the cancer from spreading and in future tests the dosing schedule would be changed.
The company also said late last year that Zamyl, its experimental leukemia drug, boosts patient response to chemotherapy but doesn't significantly affect remission rates.
Kirkman said the company plans to announce in late March results from a trial of its psoriasis drug Zenapax and will present additional trial data on Zamyl at a cancer conference in mid-May. Also expected in mid-May are results from a trial of the company's experimental treatment for Crohn's disease.
During a conference call, Laurence Korn, Protein Design's chief executive, said the data on Zenapax is still blinded, but the company will be looking to see whether or not the disease recurs while patients are on the drug and, at nine months out, at least some of them have not relapsed.
Zenapax, developed by Protein Design, is currently sold by Roche Holding AG for preventing organ rejection in kidney-transplant patients.
``Their proprietary pipeline is moving along well. With the stock down, this is an attractive buying opportunity,'' said Matt Geller, an analyst at CIBC World markets. |
