Firm Cites Costs of Testing Pre-AIDS Drug : Newport Pharmaceuticals Loses $1 Million in Quarter

Citing the extensive costs of testing a drug for the treatment of pre-AIDS conditions, Newport Pharmaceuticals International said Tuesday that it lost $1 million in the second quarter.

The Newport Beach company reported revenues of $7.3 million for the three months. For the second quarter of 1987, Newport Pharmaceuticals posted revenues of $5.7 million and a loss of $1.3 million.

For the first six months of 1988, revenues were $15.9 million, compared to $9.9 million a year earlier. The company lost $1.2 million in the first half, compared to a $2.1-million loss the first six months of 1987.

Janice Bandeen, a spokeswoman for Newport Pharmaceuticals, said the company expects to post a loss for the year.

Bandeen said Newport is funding extensive research on its primary drug, Isoprinosine, for the treatment of AIDS-related complex, often a precursor to acquired immune deficiency syndrome. Newport is testing the drug on 2,000 people.

The Food and Drug Administration has rejected three previous applications from Newport for approval to market the drug in the United States.

“The loss certainly wasn’t unexpected,” remarked Steven Gerber, a securities analyst with L.H. Friend Inc., a Los Angeles brokerage.

“The testing and research that Newport Pharmaceuticals is undertaking is extensive. . . . Obviously, research on a scale that large is expensive,” Gerber said.

America’s Pharmacy, a mail-order prescription firm acquired by Newport in early 1987, generated $5.2 million in revenues and a loss of $30,000 in the second quarter, the company said.

The mail-order operation faces the loss of a major client, the company disclosed.

Empire Blue Cross-Blue Shield of New York has decided to end its contract with America’s Pharmacy on Dec. 31.