Higher Biotech Earnings But Investors Stay Cool

While some newer biotechnology companies saw their earnings move up inthe first quarter of 1997, some investors are still cool towards these stocks - because of concerns about continued growth.

Even though Centocor, with its gpIIb/IIIa blocker ReoPro (abciximab), the Canadian company BioChem Pharma, with its anti-AIDS agent Epivir/3TC (lamivudine), and Biogen, with its treatment for multiple sclerosis Avonex (interferon beta-1a), all had continuing sales success and predictable earnings growth, skittish investors and analysts have turned on some of the firms.

Centocor achieved first-quarter net profits of $3.3 million (Marketletter May 5), which was below analysts' expectations. ReoPro's sales to Eli Lilly, Centocor's marketing partner for the product, were $35.5 million. Centocor's share price lost a quarter of its value prior to first-quarter results being announced because Lilly spoke cautiously about ReoPro's sales potential. Furthermore, Merck & Co expects to file for approval of its competitor product Aggrastat (tirofiban) later this year. The product has been shown to cut mortality in unstable angina patients (Marketletter March 31).