Developer of drugs reports smaller loss, higher revenue

EntreMed credits sales of Thalomid

March 31, 2001|By Julie Bell | Julie Bell,SUN STAFF

EntreMed Inc. reported yesterday that its fourth-quarter loss narrowed as research and development costs fell while revenue rose.

EntreMed reported a fourth-quarter loss of $13.7 million, or 82 cents a share, compared with $14.8 million, or $1.01 a share, in the year-ago period. Revenue was $1.2 million, up from $458,163, thanks to royalties from increased sales of Thalomid, a drug EntreMed licensed to Celgene Corp. Analysts surveyed by Nelson's had expected a loss of 85 cents a share.

The Rockville-based developer of anti-cancer drugs also said it had been able to raise an additional $1.7 million in the stock market because the investment bank that underwrote its recent offering exercised an option to buy 100,000 more shares. Gerard Klauer Mattison & Co.'s decision to exercise the overallotment option at $18 a share brought the offering's total net proceeds to $26.2 million, giving EntreMed enough cash to carry it for about a year when it is added to the cash the company had in the bank, Chief Financial Officer Thomas P. Russo said.

For the year, EntreMed reported a loss of $48.8 million, or $3.04 a share, compared with a loss of $36.9 million, or $2.67 a share, for 1999. Losses for the year rose as research and development costs rose from $35.5 million to $41.7 million and revenue fell from $5 million to $3.7 million.

The revenue decrease for the year reflected the fact that EntreMed in 1999 still was receiving some final payments from Bristol Myers Squibb Co., which had licensed from EntreMed the rights to develop the drug Angiostatin. EntreMed has since taken the development of Angiostatin back from Bristol Myers, which decided not to pursue it, and the payments have ceased.

Meanwhile, Thalomid sales have been increasing. The Food and Drug Administration approved it for the treatment of leprosy, but doctors are allowed to prescribe approved drugs as they see fit, and many use Thalomid as an anti-cancer therapy. Thalomid, Celgene's name for the drug thalidomide, is thought to attack the formation of tumor-feeding blood vessels, as are EntreMed's three drugs in early testing in cancer patients - Endostatin, Angiostatin and Panzem, a drug formerly known as 2ME2.

Despite the recent fund-raising, analysts Maria Phillips of Banc of America Securities and Alan Auerbach of First Security Van Kasper both estimated that EntreMed has enough cash left for a little less than a year and will have to raise money again soon.

Fund raising may be made challenging by the fact that two of EntreMed's three drugs in human testing have yet to progress beyond trials designed to test whether they are safe, not whether they work, Auerbach said.

But Phillips said she expects EntreMed to strike a deal about mid-year with a pharmaceutical company that would share in development costs for one of its drugs. And EntreMed expects Endostatin, the drug Phillips mentioned as the probable subject of any deal, to move into the second of three stages of human testing within the next several months, chief executive John Holaday said.

Endostatin has shown some evidence of an ability to fight cancer in certain patients enrolled in clinical trials, despite the fact that it is in early testing. And Holaday noted that EntreMed's most advanced drug, Panzem, already is in the second stage of human testing for prostate cancer and multiple myeloma.

"I'm very optimistic about Panzem," Phillips said. "It's moved ahead. ... Panzem is quite attractive to me."

Shares of Entremed closed yesterday at $16.63, down 13 cents.

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