LION 2Q suggests continued recovery
the focus away from the drug development sector seems to be gaining
momentum as second quarter net losses were reduced to €3.4million
compared to €6.5 million in Q2 2003. The result was in line with
interim projections.
However LION's revenues fell by almost a half from €2.6 million compared with €5.0 million in the same period last year. Operating expenses for the quarter decreased from €10.9 million to €6 million, helped by a dramatic (two-thirds) reduction in headcount.
LION have not been exempt from the current problematic financing situation affecting the biotech sector and the slow investments from the life science industry. The company stated however that customer activity had increased particularly in North America and Asia Pacific.
The recovery of these markets was expected soon where a rising order volume in the coming months is expected to achieve higher revenues in the next fiscal year. As of September 30, 2004, the order backlog for all service and license contracts was €4.7 m, down by €1.2 m compared to the end of Q1 of 2004/2005.
During the second quarter, LION launched its new product for chemical compound lead identification and optimization, LeadNavigator, based on the Bayer collaboration and has already received the first customer order.
In the fourth quarter of last year, LION signed agreements with two new commercial life sciences customers in North America for its SRS package for handling bioinformatics data, and one leading non-profit medical institution. In Asia, LION signed new agreements for LION Target Engine - introduced last June and used for target identification and validation - and for SRS.
In Q2 2004/2005, LION also received two new SRS orders in North America. In addition, the first customer order for the SRS Gateway for Oracle.
There were suggestions that LION, like other companies supplying drug discovery tools to the pharmaceutical and biotechnology sector, may be seeing some signs of recovery. For 2005/2006, this could certainly be the case as LION expects to see a double-digit revenue growth rate based on the expansion of its bioinformatics products into new markets, such as the clinical research market, and to new products in cheminformatics.
On a strategic level, LION has modified its bioinformatics products by expanding functionality, allowing for the inclusion of clinical data. The company's products have seen a shift towards a modular structure, allowing customers to select specific elements of the software suite that satisfy exact requirements.
The company's Lead Engine - used for handling data from in silico screening, lead optimisation and ADME-Tox (absorption, distribution, metabolism, excretion and toxicology) - has been available on the market since the summer.
