By Mary Welch

Guilford Pharmaceuticals Inc. raised $45 million in a private placement of 3.36 million shares of its common stock with institutional and other investors.

The purchase price per share was $13.50, a discount of 4.5 percent to the stock's price when the deal was made, the company said. The stock (NASDAQ:GLFD) fell 62.5 cents Monday to close at $14.50.

The company has 23 million shares outstanding. Prudential Vector Healthcare Group, of New York, served as placement agent.

With this funding, the Baltimore-based company will have $150 million in cash. The company reported a second-quarter net loss of $8.6 million, or 44 cents per share, compared with a net loss of $7.1 million for the same period in 1998. Revenues in the quarter were $3.6 million.

"We've already tried to have a strong balance sheet and this $45 million will solidify that," said Stacey Jurchison, director of corporate communications.

"It's a very positive transaction with a solid group of investors," said John Sonnier, vice president with Prudential Vector Healthcare in Deerfield, Ill.

Guilford will use the proceeds in three areas: developing its drug delivery and pharmaceutical areas, enhancing its pharmaceutical and chemical development capacity and possibly securing additional product candidates through in-licensing agreements.

The preclinical candidates closest to development are paclimer injection, a polymerized paclitaxel drug delivery product, for ovarian cancer; and two enzyme inhibitors, NAALADase, for the treatment of a number of disorders such as peripheral neuropathies, chronic pain and schizophrenia, and PARP, for acute ischemic indications, such as stroke and myocardial infarction. An investigational new drug (IND) application is slated for filing this year for the paclimer injection.

NAALADase was found to be an effective non-narcotic analgesic, act as a neuroprotectant, and promote re-myelination of damaged nerves in animal models of peripheral neuropathy. There is no timetable for IND filings for NAALADase or PARP, Jurchison said.

"The funding does several things for Guilford," Sonnier said. "First, it lets them be opportunistic. If they see an interesting product, they will be in a better position to in-license it. But, its three most interesting preclinical products are all unpartnered. When they were a younger company, they got interesting preclinical data, protected their intellectual property and then partnered it. However, they took more money up front and less in the back end."

Now that Guilford has one product on the market (Gliadel wafer, a polymer-based drug delivery product for brain cancer), and a FKBP-neuroimmunophilin for Parkinson's disease in a partnership with Amgen Inc., of Thousand Oaks, Calif., Sonnier believes Guilford might be looking for a different sort of deal for its next partnership.

"They might want less up front and the back end loaded," he said. "They will probably want more control of the development process or they might even decide not to partner. But, either way, if they don't partner or if they take less up front, they have to get the money from somewhere. This $45 million gives them more options, more flexibility."

In fact, Sonnier said the company might reach sustained profitability by 2001.