- The Washington Times - Monday, May 9, 2005

Baltimore company Guilford Pharmaceuticals Inc. yesterday reported a wider-than-expected loss for its first-quarter.

The company, which provides drugs for the hospital and neurology market, said its loss for the quarter ended March 31 expanded to $54.5 million ($1.19 per share) from $18.1 million (53 cents) a year earlier.

President and Chief Executive Officer Dean Mitchell said most of the loss came from a one-time, $31 million charge in scaling back on its product, Aggrastat, an injection used to treat acute coronary syndrome.

“We understand the situation and the need for dramatic improvement,” he said of the charge and high loss in a conference call yesterday.

The charge is part of the company’s restructuring strategy to focus more on its lead product, Gliadel, and develop more drugs by 2008, Mr. Mitchell said. Gliadel is a biodegradable implant used to treat brain cancer.

Company shares on the Nasdaq Stock Market dropped yesterday to $2.57, down 9 cents from Friday’s price at $2.66. The stock has stayed in the $2 range for the past month.

Guilford’s sales for the quarter rose 20 percent to $10.7 million from $8.9 million in the 2004 comparable period.

Most of the sales came from Gliadel, which had a higher volume of sales and 7 percent price increase.

Gliadel is expected to bring most of the company’s sales for 2005 as Guilford prepares its clinical drug, Aquavan, for market approval from the Food and Drug Administration.

Aquavan is a water-soluble injection being developed for sedation during minor surgical procedures such as colonoscopies. Mr. Mitchell said the company expects to file for FDA approval during the second half of 2006.

Maged Shenouda, an analyst with global investment bank UBS, said he expected the company’s loss to be at 46 cents per share, 4 cents less than the 50-cent consensus from Wall Street.

Guilford’s future stock valuation now depends on how successful the company is in marketing Gliadel and Aquavan, said Mr. Shenouda, who rated the stock as “neutral.”

The FDA could require an anesthesiologist to be present when Aquavan is administered, Mr. Shenouda said in his most recent report.

“We believe this would limit the prospects for Aquavan and impact our estimates significantly,” he said. Mr. Shenouda does not own any company stock, but UBS has business with Guilford.

Despite its high risk, analyst Brian Rye kept his “buy” rating of Guilford, noting the company is working to increase Gliadel sales while achieving higher overall sales by 2008. Mr. Mitchell projected $130 million to $160 million in annual revenue by 2008.

“We believe Guilford is poised to generate meaningful revenue growth over the next couple of years,” said Mr. Rye, with Philadelphia investment bank Janney Montgomery Scott LLC, in his most recent report.

Mr. Rye does not own any Guilford shares, but Janney is seeking a banking relationship with the company.

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