Entremed to use stock offering to finance new drug development

But analyst warns 2 million-share plan could devalue shares

Prices fell yesterday

Biotechnology

March 31, 2000|By Ted Shelsby | Ted Shelsby,SUN STAFF

EntreMed Inc., a Rockville-based biotechnology company, announced yesterday that it plans a secondary common stock offering of 2 million shares to help pay for drug development.

The underwriters also have the option to purchase an additional 300,000 shares to cover overallotments.

The offering could raise as much as $120 million, based on yesterday's closing price of $59.875.

That was down $6.375 from Wednesday.

But that is not likely, according to Alan Auerbach, an analyst with First Security Van Kasper & Co. in Palm Beach, Fla.

Noting that EntreMed's shares fell yesterday, Auerbach said that usually happens when a large amount of stock is placed on the market.

"An offering like this dilutes the value of the stock," he said.

The company is not certain when its new offering will take place.

"No date has been set," said Mary P. Sundeen, EntreMed's director of communications and investor relations.

EntreMed said it plans to use the net proceeds of the offering for the development of current and future products, working capital and general corporate purposes.

Last summer, the company raised $25 million to help pay for the development of three experimental anti-cancer drugs by selling an investor group a package of discounted common-stock warrants.

Founded in 1991, EntreMed has incurred increasing losses since it went public in 1996.

For the year that ended Dec. 31, the company reported a net loss of $36.9 million from revenue of $5.02 million.

At the end of the year it had 13.8 million shares outstanding.

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