Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Pathogenesis(pgns) -- Ignore unavailable to you. Want to Upgrade?

To: Dave Twibell who wrote (155)	3/23/1999 4:39:00 PM
From: John J. Frawley	Respond to of 228

PathoGenesis Investors Exhale at $12 The Motley Fool - March 23, 1999 12:47 March 23, 1999/FOOLWIRE/ -- Investors in PathoGenesis (Nasdaq: PGNS) are still waiting to exhale, as the inhaled antibiotic company's shares continue to slide this morning, dropping $22 3/4 to $12. The firm began marketing its cystic fibrosis drug "TOBI" (tobramycin solution for inhalation) in the U.S. in January of 1998 -- kicking off the effort with $14.5 million in sales. Now, a year later the firm announced that it expects TOBI sales of $10 million in the first quarter of 1999. As a consequence, PathoGenesis expects to report a net loss of $4.9 million, or a loss of $0.30 per share in the first quarter (compared with estimates of $0.20). Full year 1999 results are also expected to suffer, with the company's estimate for a net loss in 1999 of about $3.3 million to $4.1 million, or a loss of $0.20 to $0.25 cents per share (compared with estimates for $1.48). The firm attributed the ugly first quarter comparisons to the fact that "some first quarter 1999 sales were accelerated into the fourth quarter of 1998 as patients and wholesalers increased their normal orders." Re-assessing an upward growth trajectory for one quarter is unsettling enough, but what about the balance of the year? Here is a portrait of the evolving story. (AOL users, expand window to view table.) 1997 1998 1999E New 1999E Sales -- $60,684 $100,167 $62,000 Cost Of Goods Sold -- 9,555 16,500 Gross Profit -- 51,129 83,667 R&D 28,018 28,993 33,000 SG&A 10,582 20,074 28,000 Operating Profit (38,600) 2,062 22,667 Net Income ($33,038) 5,883 22,667 ($4,100) *Numbers in 000s of dollars. Former 1999 Estimates from IBES. PathoGenesis is unique among the small drug companies in that it chose to go it alone with its sales efforts instead of partnering with a large pharmaceutical company. If persuading doctors to prescribe TOBI is the key barrier to acceptance (as the company states), then the firm's announcement that it added 7 people to its 24 person sales force sounds a little weak. In its fourth quarter conference call, management stated that it had past its goal of 7,000 active TOBI patients in the U.S. at year-end, and that it had given a new target for 1999 in the 9,000-10,000 patient range. Considering that there are only about 32,000 cystic fibrosis patients in the U.S., and the fact that news about effective drug treatments travels fast in such small communities, perhaps PathoGenesis is just seeing a natural slowing of penetration (it already has 20% of the market). Overall, the company's drug has shown a high degree of effectiveness, and interested investors should take a closer look to see whether or not management is purposely issuing conservative guidance for the rest of the year. -- by Alex Schay