Guilford Pharmaceuticals Inc. said yesterday that its third-quarter loss widened to $14.6 million, a result largely of a layoffs-related charge and a decline in sales of its Gliadel treatment for brain cancer. The company's results were better than analysts had expected.
The Baltimore company said its third-quarter revenue, nearly all of which came from Gliadel, fell to $3.3 million from $5.9 million a year earlier.
Guilford described use of Gliadel by brain-cancer patients as "flat," but Chief Executive Officer Craig R. Smith said sales to distributors rose in last year's third quarter as the company stockpiled the chemotherapy-packed wafer on the incorrect assumption that the Food and Drug Administration was about to approve expanded use of it.
Guilford said the loss amounted to 49 cents a share. That compares with a loss of $13.8 million, or 46 cents a share, reported for last year's quarter.
Analysts had expected a loss of 58 cents a share, according to the average estimate of five analysts surveyed by Thomson First Call.
UBS Warburg analyst Andrew A. Gitkin said Gliadel's sluggish sales are difficult to understand, given that it's a new product that should still be gaining market share. Sales of Gliadel, which was approved in 1996, totaled $20.4 million last year, and the company said yesterday that it expects to sell $15 million worth this year.
"I'm not sure that bodes well for the product," Gitkin said. "The demand is down."
Guilford President David P. Wright told analysts during a conference call that "the decrease in revenue, quarter over quarter, reflects the demand for Gliadel" as approved. The company is hopeful that the FDA will approve broader uses of it.
Gliadel is a dime-size wafer that is inserted during surgery into the cavity left when a brain tumor is removed. As its biodegradable polymer coat dissolves over two to three weeks, it slowly releases the chemotherapy drug carmustine directly at the tumor site. The treatment is approved only for use during second surgeries necessitated when an aggressive kind of tumor, malignant glioma, grows back.
In March, the FDA rejected Guilford's push to approve use of Gliadel in initial surgeries for malignant glioma. Guilford since has submitted more data to the FDA backing its approval for that use.
Guilford, which in July laid off 60 employees - about 20 percent of its work force - said its third-quarter results include a $1.5 million restructuring charge. About $1.3 million of the charge was related to severance and other costs for laid-off workers, and $200,000 was related to closing research and development labs.
The company has narrowed its focus from five drugs in clinical trials to concentrate primarily on its Aquavan anesthetic and GPI 1485 Parkinson's disease treatment, which it announced yesterday had moved into phase II clinical trials.
It is seeking to find a partner willing to license some of its other experimental drugs, including - for certain diseases - its Naaladase inhibitors for nerve-degeneration disorders.
As a result of its restructuring and continued efforts to reduce expenses, Guilford Chief Financial Officer Andrew R. Jordan said, the company expects to spend $48 million to $50 million of its cash on research and development this year, down from the company's earlier estimate of $55 million.
Guilford had cash and investments totaling $113.8 million at the end of the third quarter.
Shares of Guilford fell 18 cents to $5.18 yesterday on the Nasdaq stock market.