By Mary Welch
EntreMed Inc. is offering 2 million shares of common stock, which at Thursday's closing price (NASDAQ:ENMD) of $59.875 would yield $119.7 million.
The 2 million shares are part of the 3 million shares offered as part of a shelf registration the Rockville Md. company filed Jan. 14. "The two million are off the shelf," said Mary Sundeen, senior director of corporate communications for EntreMed. "We haven't priced the stock yet. The market's been so crazy that it's hard to project."
The offering will be jointly lead-managed by Banc of America Securities LLC, of San Francisco, and Warburg Dillon Read LLC, of New York, with Gerard Klauer Mattison & Co., of New York, acting as co-manager.
EntreMed has 14.4 million shares outstanding.
The company has very specific plans for the money. "We will have three drugs in clinical trials by mid-April," Sundeen said. "Usually companies try to space out their clinical trials, but we've been very aggressive. We had been spending our money on preclinical research and manufacturing, but now our money is going for these trials."
The farthest along in clinical trials is an endostatin protein, which entered Phase I trials in September for solid tumors and lymphomas. The endostatin protein is a naturally occurring fragment of collagen 18a.
Due to start Phase I trials any day now is 2-methoxyestradiol (2ME2) in patients with advanced breast cancer. 2ME2 is an orally active, small molecule inhibitor of angiogenesis. It is also an antiproliferative agent. 2ME2 obstructs the formation of new blood vessels required by tumors while also directly inhibiting the growth of tumor cells. This is EntreMed's first product candidate to attack both aspects of cancer: the tumor cells and their blood supply.
Angiostatin is the company's third compound, and it is slated to begin Phase I trials within a fortnight for cancer, including solid tumors. Angiostatin is a naturally derived antiangiogenic protein.
With three candidates in trials, EntreMed's burn rate will go down, Sundeen said. "Now we're just supporting the trials rather than doing the manufacturing and preclinical development. This funding should last us a couple of years, if not more."
EntreMed reported 1999 revenues of $5.2 million and a net loss of $13.5 million, or $1.07 per share. As of Dec. 31, the company had $15 million in cash. However, last summer the company raised more than $25 million in a private placement of equity securities. The shares were sold at just under $21 apiece, which was a 7.5 percent discount to a five-day average market price. In addition, investors received two series of warrants that included an exercise price at a significant premium and company call options. (See BioWorld Today, July 29, 1999, p. 1.)
"A lot of those warrants were called since Dec. 31," Sundeen said. "So really, you have to add about $26 million to the $15 million we had on Dec. 31. Actually, we now have a little more than $40 million cash on hand - and that's before this offering."