- The Washington Times - Monday, November 10, 2003

Gene Logic Inc. said yesterday it entered into an agreement with an Australian biotechnology firm to develop a database of genetic information from horses.

The Gaithersburg company, which specializes in collecting and analyzing genetic information for researchers, said it would partner with Genetraks, a private firm working to develop ways to improve the performance of Thoroughbred racehorses.

“This agreement illustrates the ways in which Gene Logic’s core competencies … can be adapted to meet particular needs and add significant value to the [research and development] efforts of an emerging biotechnology company like Genetraks,” said Larry Tiffany, a vice president with Gene Logic, in a press release.

Terms of the agreement were not disclosed, but analysts said the deal was unlikely to give the company’s earnings or stock price a major boost.

“They already have about 20 to 30 such partnerships,” said Eric Schmidt, an analyst with SG Cowen, who does not own shares. “I would think the impact of this is probably relatively small.”

Shares of Gene Logic fell 19 cents yesterday to close at $5.02 on the Nasdaq Composite Index.

Investors have not flocked to the company like they did during the technology boom. The company has continued to fall short of profitability, and actually increased its net loss to $10.1 million, or 33 cents per share, in the third quarter compared with $7 million, or 26 cents per share, in the third quarter of 2002.

Meanwhile, Gene Logic reported an increase in revenue from $14.2 million in the third quarter of 2002 to $17.2 million this year. But revenue from contract-study services, its second-largest business, fell 10 percent to $5.5 million.

Analysts said they weren’t particularly concerned about the company’s losses because few biotechnology firms have posted big gains in recent months.

“The biotech space is fundamentally depressed,” said William Baker an analyst with GARP Research in Baltimore, who does not own shares.

Mr. Schmidt, of SG Cowen, said he was still unsure how Gene Logic planned to reduce its quarterly losses.

“The company still lacks visibility on how it’s going to become profitable,” he said.

Analysts said there was some room for optimism, however. Mr. Baker said Gene Logic’s recent purchase of TherImmune Research, a Gaithersburg drug-testing company, could give the Gene Logic a boost.

Mr. Baker said there could be an increase in the amount of biotech drugs undergoing later-stage testing, prompting his firm to be bullish on the prospects of Contract Research Organizations such as TherImmune.

But he said the resignation of Steve Trevisan, TherImmune’s former chief executive officer, was a minor blow to the company. Mr. Trevisan, one of the company’s biggest shareholders, had been named a senior vice president and director of Gene Logic, and Mr. Baker said he had a reputation for “helping companies reach their potential.” Mr. Trevisan resigned this month, but will continue in an advisory capacity.


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