- The Washington Times - Monday, August 16, 2004

Guilford Pharmaceuticals’ announcement last week that it will test a new blood-thinning drug did little to offset a brutal quarterly earnings report.

The Baltimore company, which specializes in developing drugs to fight cancer and neurological diseases, said it will test its Aggrastat drug in two trials involving 10,000 patients in 300 medical centers nationwide. Aggrastat is designed to thin blood to prevent heart attacks during operations that require stents to be placed in patients’ hearts.

The announcement of the drug tests did little to soften news of a second-quarter net loss of $21.3 million (63 cents per share), compared with a net loss of $5.4 million (18 cents) a year earlier.

Shares of Guilford fell to a 52-week low of $3.90 on the Nasdaq Stock Market after Guilford’s earning announcement Aug. 9. They bounced back to $4.21 yesterday.

Guilford’s earnings report showed that it was not getting closer to its goal of profitability, as few of its drugs have gained widespread commercial acceptance. But the report did include some good news. Revenue in the second quarter increased from to $11.2 million from $10.6 million in second-quarter 2003, and Guilford’s sales more than doubled, from $5.0 million to $10.7 million, during the same period.

The poor earnings in the second quarter were largely the result of increased spending on marketing and administration. Such costs rose from $7.9 million in the second quarter of 2003 to $14.4 million in the most recent quarter.

In addition, the company reported $7.1 million in sales of its Gliadel chemotherapy treatments, beating the estimates of most analysts, who noted that the drug will become more popular among Medicare patients because of new rules making reimbursements to hospitals easier. Guilford also reported positive results on tests of Aquavan, an anesthetic designed to have fewer side effects than similar drugs.

Guilford said it expects $23 million to $27 million in sales from Gliadel this year and $16 million to $20 million in sales from Aggrastat. Guilford has about 180 drug patents and has applied for 700 more in the United States and internationally.

Analysts also praised the company’s decision to license the rights for GPI 1485, a new drug used to treat Parkinson’s disease, to Symphony Neurodevelopment Co. The license agreement allows the company to reap financial benefits from the drug’s development without spending as much cash.

“We believe the agreement is positive for Guilford, as it allows the company to continue development of the program without as much risk to shareholders,” said John Woolford, an analyst with Legg Mason Inc., a Baltimore investment firm. Mr. Woolford does not own Guilford shares.

Guilford also had a licensing agreement with Pfizer for its Naaladase inhibitors, which are designed to treat prostate cancer, but Pfizer terminated the agreement in March because it could not find a medical center to test the drug.

Despite the agreement, Mr. Woolford said he expected Guilford to lose $2.23 per share this year, down from an estimate of $1.95 per share before the announcement. He has a “hold” rating on the stock, indicating that he believes it will perform between 10 percent better and 10 percent worse than the Standard & Poor’s 500 Index.

The biotechnology sector as a whole has struggled this year, with few companies reporting significant profits. The Nasdaq Biotechnology Index, which tracks most major biotech firms, has fallen almost 25 percent in the past three months.

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