Guilford's loss climbs to $13.8 million in third quarter

Red ink despite big rise in revenue from Gliadel

November 07, 2001|By Julie Bell | Julie Bell,SUN STAFF

Guilford Pharmaceuticals Inc. said yesterday that its third-quarter loss grew to $13.8 million despite a more than 20-fold increase in revenue from its chemotherapy-packed Gliadel wafer for brain cancer.

The Baltimore-based company, rocked by Amgen Inc.'s recent decision to quit a drug-licensing deal under which Guilford stood to gain millions, also said it would narrow its research focus to cut costs.

For the quarter, the company's quarterly loss amounted to 46 cents a share on revenue of $5.9 million. That compares with a loss of $10.1 million, or 43 cents a share, on revenue of $4.4 million in the year-ago quarter.

Analysts had predicted a loss of 55 cents a share, according to the average estimate of five analysts surveyed by Thomson Financial/First Call. Guilford shares rose 6 cents to close at $10.76 on the Nasdaq stock market.

Shipments of Gliadel, which accounted for almost all of Guilford's revenue in the recent quarter, rose 68 percent over the year-ago quarter. The increase came after the company's own sales force took over marketing of the product on Jan. 1 from Aventis Pharma. Guilford had struck a deal in the fall to reacquire the rights, meaning it now gets all the revenue from each sale. Guilford derived $5.9 million in revenue from Gliadel in the recent quarter, up from $285,000 a year ago.

But Guilford's costs also increased because of research and marketing expenses, while payments from pharmaceutical collaborators have dried up.

Amgen Inc. decided earlier in the year to give up rights to the Guilford family of nerve-regeneration drugs after the first one to be tested in people failed to reverse the motor symptoms of Parkinson's disease.

Chief Financial Officer Andrew R. Jordan said in a conference call with analysts yesterday that the company would focus on getting its "burn rate" - the annual rate at which it spends cash reserves - down to $30 million to $35 million in 2002.

The company has said it expects its burn rate to total $37.5 million to $42.5 million this year if it negotiates a deal to sell the rights to one of its lines of drugs.

"I don't think they're going to be able to," UBS Warburg analyst Andrew Gitkin said of accomplishing a licensing deal by year's end. The company reported cash and cash equivalents of $164.4 million as of Sept. 30.

Despite Amgen's decision to give up on NIL-A and its sister drugs, Guilford Chief Executive Officer Craig R. Smith told analysts that "We believe we have good reason to continue the development of NIL-A. ... "

Amgen had licensed the drugs for up to 10 diseases and injuries, including Alzheimer's disease and traumatic head injuries.

Yesterday, Guilford officials also said they are seeking a licensing deal for the company's Naaladase neuroprotectant drugs for diabetic neuropathy and other neurodegenerative disorders.

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