Guilford Pharmaceuticals Inc. yesterday completed a $19.5 million stock offering that sold 40 percent more shares than the company had planned, a result that analysts said reflected the strong market for biotech shares and the likelihood that the Baltimore company could gain federal approval for its first product by next year.
The company said in July it planned to sell 1.8 million shares of stock, but instead sold 3 million at $6.50 apiece after encountering much stronger-than-expected demand for shares from institutional investors. Guilford plans to plow the money into product research.
"Biotech is the best sector in the market right now," said Evan Sturza, who runs Sturza's Medical Investment Letter, based in New York. "The company is on track, they are going to get [federal product approval] relatively quickly, and not many biotech companies can say that."
Guilford has said it plans to file a final product approval application this year with the U.S. Food and Drug Administration for Gliadel, a drug delivery system used to treat brain tumors. Unlike traditional chemotherapy, Gliadel allows chemotherapy drugs to be applied directly to the site of a brain tumor, which the company believes will help the drugs more effectively kill cancer cells remaining after surgery. Gliadel may also allow doctors to use more powerful drugs on brain tumor patients by reducing side effects.
Guilford was spun off by Scios Nova Inc., a California company that acquired the old Nova Pharmaceutical Corp. of Baltimore in 1993. Yesterday's offering reduced Scios' stake in Guilford to 19.7 percent from 29.1 percent, Guilford spokesman John Dalton said.
Like most biotech start-ups, it has been unprofitable so far because its key products are not yet on the market. Analysts have projected $50 million to $75 million in Gliadel sales by 1998, enough to push the company into the black.