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Biotech / Medical : HuMAB companies -- Ignore unavailable to you. Want to Upgrade?

To: nigel bates who wrote (133)	3/19/2001 2:14:11 PM
From: keokalani'nui	Read Replies (1) \| Respond to of 1022

Monday March 19, 1:18 pm Eastern Time Morphosys disappoints on results (UPDATE: Updates with management comment) By Sarah Knight FRANKFURT, March 19 (Reuters) - German biotech firm Morphosys AG on Monday posted a wider-than-expected net loss and reiterated it wasn't likely to produce new drugs before 2006, disappointing investors' hopes it would move the date forward. The company, which synthetically manufactures human antibodies for research and therapeutic purposes, said its net loss widened to 9.2 million euros ($8.3 million) from 3.8 million euros after it took a charge of 3.2 million euros to comply with changes to U.S. GAAP accounting standards. Morphosys reiterated the 2006 date at a press conference. Later, on a conference call, however, it told analysts it was reviewing its strategy to try to bring drugs on the market sooner than that, an analyst said. The firm is partnering with larger companies, which are funding the lion's share of the investment to use its unique antibody technology to develop therapeutic drugs and which are set to take most of the profit. Analysts said Morphosys needs to raise capital to fund more development itself and claim a greater share in the potential rewards. ``Morphosys has a business plan which doesn't maximise the value of the company,'' said Christina Dienhart, an analyst from HypoVereinsbank in London ``If they changed it, the stock would be quite interesting.'' She has an ``underperform'' rating on the stock. SHARES PLUMMET Its shares fell 8.9 percent to 75.60 euros. By comparison, the Neuer Markt biotech index (^NMPA - news) dropped 3.0 percent after the Nasdaq biotech index (^NBI - news) fell six percent on Friday. Morphosys is collaborating with companies such as GPC Biotech AG, ProChon Biotech in Israel and Hoffmann-La-Roche AG. Some of its partners are hoping to roll out drugs to clinical trials by mid-2002, Morphosys said. The company, which now receives milestone payments while drugs are under development, would have only a single-digit percentage share of the royalties once these drugs go on sale. Analysts said Morphosys's business model contrasts with that of rival Medarex Inc. (NasdaqNM:MEDX - news), which has $500 million in cash to fund its own development. By comparison, Morphosys has 18 million euros in cash, and Chief Executive Simon Maroney said it isn't likely to offer shares soon because of market conditions and because it has enough cash to last until 2002. ``We don't need to go back to the market quickly,'' he said. Morphosys has seen its shares fall from closing heights of 360 euros last year. Still, they are about triple their intial public offering price of 25 euros two years ago. The share has performed better than 14 of the 20 listed companies on the German biotech index, which are trading below the issue price. HIGHER SALES IN 2001 Martinsried, Germany-based Morphosys sees sales rising to between 15 and 18 million euros this year, from 8.4 million last year, as it expects to secure six to seven new contracts. User fees for its so-called HuCAL technology and funding from partners will help it generate revenue and fund its own research and development in the short-term. The company reiterated its breakeven target of 2002. In 2000, revenue rose 54 percent as Morphosys won six new partners, eight new collaboration agreements and reached six commercial milestones, the company said. The most important was a five-year deal with Johson & Johson's (NYSE:JNJ - news) Centocor worth at least 22 million euros, Maroney said. Operating costs rose to 15.3 million euros, from 9 million euros a year earlier, as the company invested in research and development and established a marketing subisidiary in the United States. Dave Lemus, Morphosys' chief financial officer, said costs will probably rise to between 19 and 22 million euros in 2001. ``The business looks good, and they had a successful year, but the accounting changes make the figures look worse than expected,'' said Thomas Hoeger, an analyst at DG Bank in Frankfurt. Hoeger said he is considering changing his rating to ``reduce'' from ``accumulate.'' ``Morphosys has an enterprise valuation, over sales in 2002 of 11, which is the same as Genmab and Protein Design Labs Inc. (NasdaqNM:PDLI - news)'', said Hoeger. ``Still these companies have products in Phase I and II, while Morphosys has none in the pipeline,'' he added.