EntreMed 1st-quarter loss grows nearly 37%

67 cents a share beats 69 cents analysts predicted

revenue falls sharply

May 16, 2002|By Julie Bell | Julie Bell,SUN STAFF

EntreMed Inc. said yesterday that its first-quarter net loss rose nearly 37 percent as expenses related to researching and developing its experimental drugs increased along with costs related to employees.

The company reported a net loss of $14.5 million, or 67 cents a share. That compares with a loss of $10.6 million, or 62 cents a share, in the first quarter last year.

Chief Executive Officer John W. Holaday told analysts in a conference call that expenses are expected to remain relatively flat through year's end. The Rockville company spent aggressively on manufacturing drugs and has stockpiled enough of them for its clinical trials this year, he said.

As with all young biopharmaceutical companies that have yet to put a drug on the market, the speed with which EntreMed "burns" through cash is critical.

The company reported that it had a little more than $26 million in cash, an amount Alan H. Auerbach, an analyst with Wells Fargo Securities LLC, estimated would last less than six months.

EntreMed emphasized yesterday that it is prepared to raise money on the stock market or by licensing some uses for its drugs. It is working on those options as it prepares to report results of its latest clinical trials - for cancer drugs Endostatin, Angiostatin and Panzem - at a scientific conference next week.

The first-quarter results beat the expectations of analysts, who had projected a loss of 69 cents a share, according to the average estimate of two analysts surveyed by Thomson Financial/First Call.

Revenue declined to $59,930 from $883,952, primarily because EntreMed sold rights to royalties it previously received in the sale of thalidomide. The once reviled drug now is approved as a leprosy treatment, allowing doctors to legally prescribe it for other uses. It increasingly has been used to treat cancer.

Research and development costs rose to $10.9 million from $8.6 million a year ago. But Holaday said that "costs associated with manufacturing drugs for clinical trials dropped significantly during the first quarter, resulting in losses almost $10 million lower than in the fourth quarter 2001," when the company posted a $24 million loss.

Holaday said EntreMed also is involved in numerous discussions with companies about licensing its drugs for use against certain cancers or other diseases. The company hopes to build on the partnership it announced in January with Allergan Inc., which it estimated is worth up to $41 million, plus royalties.

Auerbach said it might be more difficult for EntreMed to raise money in the stock market without a chief financial officer. Former CFO Thomas P. Russo resigned months ago for what Holaday has said were personal reasons. Russo has not returned phone calls.

Auerbach also questioned the departure of Dr. Joanna Horobin, the former executive vice president, who took a position as chief operating officer of a new Boston biotechnology company.

Ivonne E. Marondel, an analyst at Gerard Klauer Mattison, said the departures of Russo and Horobin are "old news. As for the company's ability to raise cash, Marondel said, "They've done this before many times."

Shares of Entremed gained 23 cents yesterday to close at $7.89.

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