By Brady Huggett

Guilford Pharmaceuticals Inc., now that it has its Gliadel Wafer back, is raising $59 million to fund the development of other products while maintaining U.S. rights.

Guilford, of Baltimore, entered definitive agreements to privately place 3 million shares with selected institutional investors, at a purchase price of $19.70 per share. CIBC World Markets Corp., of New York, served as placement agent for the financing.

Guilford¿s stock (NASDAQ:GLFD) closed Monday at $22.35. It dropped 36 cents Tuesday to close at $21.99.

¿We have two programs, Aquavan and Naaladase, both in Phase I, and the funds are earmarked for Phase II development later this year,¿ said Stacey Jurchison, director of corporate communications at Guilford. ¿We had $135 million in cash at the end of the first quarter. This will bring us near $200 million. So we certainly weren¿t in a position where we had to go out and raise funds, but we wanted to strengthen our balance sheet to support these programs.¿

Aquavan Injection is a candidate for treatment of chronic and acute neurodegenerative disorders. The Naaladase inhibitors are candidates for treatment of individuals with diabetic peripheral neuropathy and other disabling chronic or acute neurodegenerative disorders.

After the placement, Guilford will have about 29 million shares outstanding. Jurchison said Guilford has been burning through approximately $30 million to $40 million per year in the recent past, and is expected to spend somewhere between $35 million and $40 million this year.

In the fall, Guilford reacquired commercial rights to its biopolymer product, Gliadel Wafer, by giving Aventis Pharma AG, of Frankfurt, Germany, 300,000 Guilford shares that were valued at about $8 million at the time. (See BioWorld Today, Oct. 25, 2000.)

Gliadel Wafer is a dime-sized wafer comprised of biodegradable polymer incorporating the chemotherapeutic agent carmustine. The wafer is placed at the site of an excised brain tumor, where it releases the chemotherapy. The product has been approved for recurrent malignant brain cancer and last week the FDA accepted Guilford¿s supplemental new drug application for first-line therapy in patients with newly diagnosed malignant glioma. Jurchison said the FDA granted the application priority review status.

Jurchison said things have been ¿going very well¿ since Guilford reacquired rights.

¿Revenues for Gliadel were $4.7 million for the first quarter,¿ she said. ¿And we are projecting revenue for that program to be $19 million to $22 million for the year.¿

While the market for recurrent malignant brain cancer is about 3,500 treatments per year in the United States, Jurchison said, the market for first-line treatment is in the neighborhood of 10,000 to 12,000 surgeries a year in the United States.

Guilford has the Neuroimmunophilin program, partnered with Amgen Inc., of Thousand Oaks, Calif., for patients with Parkinson¿s disease. The company anticipates having results from the Phase II trial in the second half of this year, at which point Amgen will evaluate the next step. Also, Guilford has Paclimer Microspheres, based on the same concept as Gliadel Wafer, in a Phase I trial for women with advanced ovarian cancer.

What the funds do, Jurchison said, besides paying for trials and development, is give Guilford the chance to take products to market solo and benefit from their sales in the long run, at least in the United States.

¿It puts us in a position of strength moving forward,¿ she said. ¿We have four product candidates in clinical development and potentially a fifth. We are talking to potential partners for the Far East and we may partner in Europe. But what is important to us is taking these forward independently, and we want to retain the rights domestically for these programs.¿