Thalidomide gives EntreMed rare profit in 3Q

Sale of rights to drug yields earnings of 34 cents a share, up from 66 cents loss

November 08, 2001|By Julie Bell | Julie Bell,SUN STAFF

EntreMed Inc. reported a rare, $6.2 million third-quarter profit yesterday, thanks to $22.4 million in one-time proceeds from the sale in August of its rights to the drug thalidomide.

Revenue, however, dropped to $90,988 for the quarter from $854,170 in the third quarter a year ago, a reflection of the fact that the company no longer was receiving a percentage of every thalidomide sale.

Thalidomide has been making a comeback as a cancer drug. It had been banned for more than 30 years as a treatment for morning sickness because it caused severe birth defects.

The Rockville company reported quarterly net income of $6.2 million, or 34 cents a share. That compares with a loss of $11.3 million, or 66 cents a share, in the year-ago quarter.

A loss of 68 cents a share was the average estimate of three analysts surveyed by Thomson Financial/First Call.

The company has three drugs in human testing - Endostatin, Angiostatin and Panzem - all of which are designed to attack cancer by halting the growth of tumor-feeding blood vessels. Panzem also works by attacking tumors directly.

In addition, EntreMed's majority owned subsidiary MaxCyte Inc. has just begun Phase I clinical trials of its lead product, a technology that enhances the oxygen delivery function of red blood cells.

In a conference call with analysts yesterday, EntreMed President Edward R. Gubish Jr. announced that Endostatin would move this quarter into Phase II clinical trials - the second of the three phases of human testing - in patients with neuroendocrine cancer.

Another Phase II trial, in next year's first quarter, will test Endo- statin combined with the drug interferon alpha on patients with melanoma.

"We are very resourceful at EntreMed," Chief Executive Officer John W. Holaday said in the conference call, giving as an example the company's decision to sell the thalidomide rights.

The deal boosted EntreMed's cash on hand to $38.1 million as of Sept. 30, but its expenses also increased in the quarter as it prepared to add to the dozen or so clinical trials it already has going while expanding laboratory work aimed at developing additional drugs.

Quarterly research and development expenses grew to $12.7 million, up from just under $10 million, and general and administrative costs grew to $3.9 million from $2.9 million.

Peter J. McDonald, an analyst at the New York investment bank Gerard Klauer Mattison, says EntreMed still has plenty of fund-raising options - including a potential initial public offering for MaxCyte.

Shares of EntreMed gained 36 cents yesterday to close at $11.74 on the Nasdaq stock market.

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