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Celltech records first profit
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September 12, 2000: 5:34 a.m. ET
New drugs, merger savings mean 1st-half profit for UK biotech, but stock drops
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LONDON (CNNfn) - Britain's biggest biotechnology firm Celltech Group Plc on Tuesday reported its first half-year profit, boosted by the sale of new drugs and cost savings from its merger last year with fellow pharmaceutical company Medeva.
Post-tax profit for the six months ended June 30 amounted to £10.1 million ($14.1 million) before one-time costs, compared with a loss of £5.8 million a year earlier. Analysts polled by Reuters had expected profit to be between £7 million and £10 million.
But the results failed to cheer investors. Celltech dropped 3.9 percent in early London trading, making it the biggest decliner on the benchmark FTSE 100 index.
After exceptional items, including restructuring costs and goodwill, the firm reported a net loss of £382.6 million. The main one-time cost was a £348 million item described as "impairment of goodwill" relating to the company's purchase of Medeva. That represented the increase in the price that Celltech paid for its rival as a result of a leap in Medeva's stock after Celltech announced its intention to take it over.
Celtech said half-year turnover rose to £99.7 million from £26.4 million a year earlier, driven by the acquisition.
Celltech (CCH) said that the merger with Medeva had resulted in savings of £8 million in the first half of 2000, with more savings expected in the second half.
The launch of new products also helped pull the company out of the red. Celltch said. Sales of Mylotarg, a drug to treat leukemia, reached £3.8 million in the first month following its U.S. launch on June 1.
Biotechnology companies typically lose money for years, depending on finance from investors to pay for research and development while they bring products to a stage at which they can be sold commercially or licensed to a larger company.
Celltech, founded in 1980 and floated on the London exchange in 1993, became the U.K.'s largest biotech company via its mergers with first Chiroscience and then Medeva.
The company's development of drugs to treat cancer and rheumatoid arthritis has attracted investors' interest. The company said it expects to enter co-marketing arrangements for CDP 870, a drugs for rheumatoid arthritis.
Chief Executive Peter Fellner told Reuters the company was interested in making some significant pharmaceutical acquisitions, but didn't elaborate. 
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Celltech
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