Serono

Switzerland-based Serono SA, Europe's largest biotechnology group,posted disappointing first-quarter profits, largely as a result of milestone charges associated with its upcoming psoriasis drug Raptiva (efalizumab). Net profit for the quarter declined 13.4% to $60.2 million, compared to consensus forecasts of $62-$90 million, although total revenues increased 29.4% to $442.4 million. Product turnover was 30.1% higher at $407.8 million, with royalty and licensing revenues up 22.1% to $34.6 million.

R&D expenses reached $140.9 million, compared with $75.6 million in the first quarter of 2002, which the company says was anticipated, with the temporary increase reflecting primarily a $25 million milestone payment to Genentech as a result of the filing of Raptiva with the European Medicines Evaluation Agency. Other operating expenses for the reporting period increased from $19.4 million to $45.8 million, reflecting predetermined quarterly licensing fees to Amgen for marketing rights to the multiple sclerosis and oncology drug Novantrone (mitoxantrone).

"Our first-quarter performance has been very strong, with substantial top-line growth driven by sales in neurology and reproductive health," noted Serono's chief executive Ernesto Bertarelli, while chief financial officer Allan Shaw added: "we are confident of our ability to meet full-year revenue growth of 15%-20% and net income growth of 15%-20% on a reported basis." These financial targets, however, were called into question by Lehman Brothers' biotechnology analyst Sam Williams, and Denise Anderson at Julius Baer says they "could be challenging."