Guilford expects $42 million from stock sale

July 02, 2004|By William Patalon III | William Patalon III,SUN STAFF

Guilford Pharmaceuticals Inc. expects to raise approximately $42 million from its previously announced stock offering, money that will be used to finance the clinical trials of several key drugs, the Baltimore company said yesterday.

The publicly held company said it will be selling 10 million more of its shares to investors at $4.50 each, with the deal possibly closing Wednesday. Investment bankers have an option to purchase an additional 1.5 million shares, should demand prove strong, the company said.

Guilford on May 20 disclosed plans to raise as much as $100 million through the sales of common stock, bonds, derivatives such as warrants, or other types of securities, from time to time. On that date, the company's common stock was trading at slightly more than $6 per share.

Despite the subsequent slide - the shares closed yesterday at $4.81, up 6 cents - the important thing is that "they are getting the financing they need," said Brian D. Rye, a biotechnology analyst who follows Guilford for Janney Montgomery Scott in Philadelphia. "And I think they are getting enough money to take them through these [clinical] trials."

At the forefront of Guilford's clinical testing program are two injected drugs - Aggrastat, for treating heart attacks, and Aquavan, an anesthetic - that the company has identified as having good near-term prospects.

Aggrastat is on the market, having been purchased from Merck & Co. last fall for $84 million. The drug helps block the development of blood clots in hospitalized coronary-care patients, thereby lowering the recurrence of heart attacks.

Guilford hopes to win an expanded use approval from the Food and Drug Administration, so that the drug may be marketed as a lower-cost alternative to rival medications used in coronary catheterization procedures.

But that process is taking much longer than anticipated - a key reason that Guilford late last month lowered its guidance on 2004 sales for Aggrastat from prior estimates of $30 million, to a range of $16 million to $20 million.

That disclosure, coupled with Guilford's announced plans to go forward with a follow-on stock offering, caused the company's shares to drop nearly 10.5 percent in a single day's trading.

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