Human Genome Sciences Inc. said yesterday that its fourth-quarter loss increased as revenue dropped while drug-development and manufacturing costs rose.
The Rockville company reported a net loss of $32.9 million, or 26 cents per share. That compares with a net loss of $6 million, or 5 cents a share in the 2000 fourth quarter.
The results exclude a one-time, noncash charge of $22.3 million, or 17 cents a share, related to the write-down of stock received from Transgene S.A. in 1998 at the beginning of a drug-collaboration agreement. Including that charge, the quarterly loss was $55.2 million, or 43 cents a share.
Revenue was $642,000, down from $5.3 million. The decrease largely was related to the expiration in June 2001 of agreements under which five large pharmaceutical companies paid Human Genome Sciences for the exclusive use of its gene databases to hunt for new medicines.
Excluding the charge, the results beat analysts expectations of a loss of 27 cents a share, according to the average estimate of 18 analysts surveyed by Thomson Financial/First Call. But Human Genome said expenses related to administration and drug development would increase this year over last. The company also is likely to get less in interest income. The combination prompted some analysts to widen loss estimates for the coming year.
The company's shares fell $2.54, or more than 9 percent, to $25.31 on the Nasdaq stock market. More than 4.9 million shares traded hands, exceeding the daily average volume of 2.98 million shares over the last six months.
Human Genome Sciences has seven drugs in clinical trials and an eighth awaiting Food and Drug Administration approval to begin one. Another 20 or so are in animal testing, giving the company what Robertson Stephens analyst Edward Tenthoff calls "one of the richest preclinical pipelines in the pharmaceutical industry."
But Tenthoff, who yesterday reiterated his "strong buy" recommendation on the stock, acknowledged that investor confidence has been hurt by recent clinical trial results for its drug Repifermin. Human Genome reported in December that the drug showed no signs of effectiveness against either mucositis - a condition characterized by debilitating mouth, throat and gastrointestinal sores - or ulcerative colitis. The drug, however, has shown some effectiveness in helping to heal lower leg wounds caused by poor circulation.
Jonathan Aschoff, an analyst with Friedman, Bilings, went further, saying, "It is my belief most of the current clinical pipeline is unlikely to succeed."
Aschoff's has an "underperform" rating on the stock, a recommendation one step short of "sell."