Guilford Pharmaceuticals Inc., taking advantage of theselective upswing in biotechnology stocks, said Friday anoffering of 3 million shares of stock was declaredeffective.
The Baltimore company originally registered to sell 1.8million shares, but upped the offering because of thegreater demand and the stock's higher price. The shares,priced at $6.50 each, will gross $19.5 million with a netto Guilford of $18 million. Oppenheimer & Co. Inc. actedas placement agent.
Guilford said the offering is expected to close byWednesday. It had $4.9 million in cash and equivalentson June 30 and 3.8 million shares outstanding. Guilford'sstock (NASDAQ:GLFD) closed Friday at $8.13, up 44cents per share. It was trading under $6 in June.
Guilford's president and CEO, Craig Smith, toldBioWorld Today the shares were priced at a discount ofjust under 10 percent to the average bid price before theoffering.
"As we went out to talk to [institutional investors] therewas a greater demand for Guilford stock than we hadanticipated," Smith said. "The second thing that happenedwas that our stock price has gone up in the last couple ofmonths. By offering this number of shares at the price wedid we felt we could strengthen the company and positionourselves to be able to do things that would have beendifficult had we raised a smaller amount."
With the proposed sale of 1.8 million shares, Guilfordplanned to carry out the steps necessary to file a treatmentinvestigational new drug (IND) application and a newdrug application (NDA) for its lead product, Gliadel, abiodegradable polymer containing carmustine (BCNU) totreat brain cancer. It also planned to use the money totake the Parkinson's disease diagnostic, Dopascan,through Phase II; and to support additional workneuroimmunophilin ligands, which are small moleculeneurotrophic factors that have shown preclinical promise.
With the additional financing, Smith said Guilford alsowill be able to fund development of new treatments forbrain cancer based on biodegradable polymers. And itwill be able to advance the competitive N-methyl-D-aspartate antagonist, GPI 3000, into the clinic next year.
Guilford's Gliadel has completed Phase III testing fortreatment of brain cancer. A treatment IND is expected tobe filed this quarter. Filing of an NDA would follow inthe fourth quarter. The product is a small wafer, up toeight of which are implanted directly into the cavitycreated when the brain cancer is removed. That deliverymethod allows for higher concentrations and extendeddelivery of drugs to the tumor site.
Smith said Henry Brem, a professor of neurosurgery atJohns Hopkins University, of Baltimore, is developingnew polymer combinations in experimental animals. "Weare anxious to work with Dr. Brown to try to convertthose discoveries into even more effective therapies thanwe already are developing for brain cancer," Smith said."We're trying to develop a franchise in the brain cancerfield. Our goal is to develop a line of products that aneurosurgeon could use to target and controlchemotherapeutic drug delivery to the brain."
Smith said the financing should take Guilford through1996, at least. Corporate partnering or other arrangementscould reduce the burn rate, and let the company moreaggressively fund its programs, he said.
On the successful financing, Smith said, "My sense is thatwe were talking to large institutions that are veryknowledgeable. On a selective basis, quite clearly, theseinstitutions do have an appetite for purchasing equity. It'sbased on the fundamentals of the companies they areconsidering. We're a company with a near-term productopportunity and a strong neuroscience and productpipeline." n
-- Jim Shrine
(c) 1997 American Health Consultants. All rights reserved.