EntreMed Inc. said yesterday that it has sufficient cash to finance operations until the end of the year, but the struggling Rockville drug developer acknowledged it faces another financial hurdle soon.
EntreMed must renegotiate an agreement with Bristol-Myers Squibb Co. by Dec. 1, or face the possibility of buying back 291,666 of its own shares at a guaranteed price of $13.14 each, according to a recent company filing with the Securities and Exchange Commission. EntreMed can ill afford the $3.8 million the buyback might cost.
The company said it had $4.8 million in cash and investments as of Sept. 30.
Shares of EntreMed lost 3 cents yesterday to close at $1.22 on the Nasdaq stock market, where they continue to trade as EntreMed fights a Nasdaq effort to delist it.
"We're in productive and active dialogue" with Bristol-Myers, said EntreMed Chairman John W. Holaday.
EntreMed reported a net loss of $11.8 million, or 54 cents a share, on revenue of $345,569 for the third quarter. Analysts had expected a loss of 51 cents a share, according to Thomson First Call.
The company reported a profit of $6.2 million, or 34 cents a share, on revenue of $90,988 in the third quarter last year, when the company had a one-time gain of $22.4 million from selling its rights to future royalties from the drug thalidomide.
EntreMed estimated its liabilities currently top assets by $9.1 million.
The company already has laid off all but 57 of its 150 employees since August, deferred top executive's salaries and discontinued sponsoring academic research, including at the Boston laboratory of Dr. Judah Folkman, where its marquee drugs were discovered.
The company also has decided not to start additional clinical trials of protein drugs Endostatin or Angiostatin, though it has enough of the drugs to continue current trials into 2004.
Instead, EntreMed has narrowed its focus to so-called small-molecule drugs to save money and attract investment. The drugs, which include Panzem, are cheaper and easier to make as well as easier to take than proteins, which are injected. Panzem and EntreMed's thalidomide derivative, ENMD 0995, are taken orally.
All four are in clinical trials as cancer treatments.
Holaday said the company is looking at cutting costs by reducing its 96 percent stake in MaxCyte Inc.
The subsidiary is in the early stages of developing ways to use blood cells to transport gene therapies inside the body to targeted sites. EntreMed Vice Chairman Wendell M. Starke said the move would result in EntreMed retaining a large, but not majority, share of MaxCyte's stock.
The company said it continues attempts to raise money from investors and by selling rights to one of its drugs to a larger company in exchange for upfront cash and future payments.
"The upside is people are interested," analyst Peter McDonald of Gerard Klauer Mattison said of EntreMed's licensing attempts.
"The downside is any potential partner could wait them out and just do a deal after the end of the year" - when EntreMed could be out of money and at the end of its rope.