Guilford will sell stock to raise $36 million

Local drug maker needs funds for tests, setting up sales force

January 06, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

Guilford Pharmaceuticals Inc. said yesterday that it has agreed to sell more than 2 million shares of common stock to institutional investors, which will raise $36.3 million for the drug maker.

The Baltimore company plans to use the proceeds to finance a new commercial operations group that will sell and market Gliadel, a surgically implanted wafer that delivers a chemotherapy drug directly to the site of brain tumors, said Andy Jordan, Guilford's chief financial officer.

Money from the sale also will be used to finance clinical trials this year of as many as five different drugs, three that it hopes will be in development in the first quarter and two later this year.

The money, which should be in hand Wednesday, is "very, very important," Jordan said.

He said the cost of doing clinical trials is expensive. "It can increase your total operating expenses quite substantially," he said.

Two months ago, Guilford reacquired the distribution rights to Gliadel from Aventis Pharma, a large German pharmaceutical company. Now, it has to build its own sales and marketing force to distribute the treatment, its only product on the market.

"There are some steep upfront costs in getting that off the ground," Jordan said. "That is a whole new part of our business that we did not have before."

Guilford, which develops treatments for cancer and products to diagnose and treat neurological diseases, such as Alzheimer's, will sell the 2,095,000 shares to about a dozen institutional investors for about $17.38 a share. Jordan declined to name the investors.

The company had 23.9 million shares outstanding as of Nov. 10, according to its latest quarterly report.

Guilford's stock, which reached a 52-week high of $38.25 on March 6, fell 50 cents yesterday to close at $16.81 on the Nasdaq stock market.

Since its founding in July 1993, Guilford has made a profit in just one year, 1996.

Its losses have stemmed mainly from the large amount of money it spends on research and development.

But company executives are calling 2001 a "transformational" year. Not only are they optimistic that five drugs will be in human testing, but they expect Food and Drug Administration approval to expand the uses for Gliadel.

"We think that most investors believe that this was likely to be a good price point to enter the stock," Jordan said.

"We have a lot of good things going on. I do think we have a modest [stock] price. Of course, beauty is in the eye of the beholder."

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