EntreMed Inc. Reports Operating Results (10-Q)
Entremed Inc. has a market cap of $56.21 million; its shares were traded at around $4.88 with and P/S ratio of 15.22.
Highlight of Business Operations:We completed four private placements of our common stock in 2010. On January 11, 2010, we sold 284,090 shares of our common stock, par value $0.01 per share, to an institutional investor for an aggregate purchase price of $2,500,000, or $8.80 per share. On February 3, 2010, we sold 349,650 shares of our common stock to the same institutional investor for an aggregate purchase price of $2,500,000, or $7.15 per share. On April 16, 2010, we sold 526,500 shares of common stock to the same institutional investor for an aggregate purchase price of $3,000,000 or $5.70 per share. On September 7, 2010, we sold 1,886,662 shares of common stock to a group of strategic investors for an aggregate purchase price of $5,094,000, or $2.70 per share. Our net proceeds from these four offerings were approximately $12.1 million. Concurrently on September 7, 2010, the Company entered into a rights agreement with Selected Value Therapeutics I, LLC, a Delaware limited liability company (“SVT”) and an entity in which the investors have an interest, pursuant to which SVT has an option to exercise, on behalf of the investors, certain license, development and commercialization rights for ENMD-2076 in China. If the option is exercised, we will enter into a license agreement with SVT and pursuant to the terms of such license agreement, we will be entitled to receive development milestone payments and royalties on future product sales within the geographic market. The option is exercisable by SVT at any time until December 31, 2011.
Research and Development Expenses. Our research and development expenses totaled $1,398,000 for the three months ended March 31, 2011 and $844,000 for the corresponding 2010 period. Reflected in our R&D expenses for the three-month period ended March 31, 2011 are direct project costs of $1,089,000 for ENMD-2076, $26,000 for Panzem®, $10,500 for ENMD-1198, and $9,000 for MKC-1. The 2010 research and development expenses for the comparable period included $803,000 for ENMD-2076, $29,000 direct project costs for Panzem® and $12,000 for ENMD-1198. Additionally, during the period ended March 31, 2010, we wrote off approximately $268,000 of costs previously accrued for patients enrolled in MKC-1 clinical trials that wound down before all cycles of treatment were completed. The overall increase in research and development costs in the three-month period ended March 31, 2011, as compared to same period in 2010, reflects increased costs associated with the clinical development of ENMD-2076 as we continued to enroll patients during the three months ended March 31, 2011, in addition to the MKC-1 cost write off of $268,000 during the three months ended March 31, 2010.
At March 31, 2011, accumulated direct project expenses for Panzem® oncology were $54,386,000; direct ENMD-1198 project expenses totaled $13,215,000; and, since acquired, accumulated direct project expenses for ENMD-2076 totaled $19,273,000 and for MKC-1, accumulated project expenses totaled $10,148,000. Our research and development expenses also include non-cash stock-based compensation totaling $77,000 for the three months ended March 31, 2011 and $10,000 for the corresponding 2010 period. The increase in stock-based compensation expense is related to an increase in stock options granted in the three months ending March 31, 2011. The balance of our research and development expenditures includes facility costs and other departmental overhead, and expenditures related to the non-clinical support of our programs.
General and administrative expenses increased to $1,253,000 in the three-month period ended March 31, 2011 from $1,051,000 in the corresponding 2010 period. This increase is primarily attributable to the $213,000 increase in non-cash stock-based compensation expense related to stock options granted in 2011.
In January 2006, we acquired Miikana Therapeutics, a private biotechnology company. We acquired certain drug candidates in connection with the acquisition, including the lead molecule in the Aurora Kinase Program, ENMD-2076, which advanced into clinical development in 2008. ENMD-2076 is a kinase inhibitor with activity towards Aurora A and multiple other kinases linked to promoting cancer. Dosing of the first patient in ENMD-2076 trials triggered a milestone payment of $2 million to the former Miikana stockholders payable in stock or cash, at the Company s discretion. In June 2008, 233,100 shares of common stock were issued to the former Miikana stockholders as consideration for the satisfaction of the milestone payment. Under the terms of the merger agreement, dosing of the first patient in a Phase 2 trial in April 2010 triggered an additional purchase price adjustment milestone payment of $3 million, which we paid by issuing 403,550 shares of our common stock. Under the terms of the merger agreement, the former shareholders if Miikana may, upon the satisfaction of certain milestones primarily relating to ENMD-2076, receive up to $13 million of potential payments. We do not expect any further milestones to be achieved in 2011. Through the Miikana acquisition, we also acquired rights to MKC-1, a Phase 2 clinical candidate licensed from Roche by Miikana in April 2005. Under the terms of the agreement, Roche may be entitled to receive future payments upon successful attainment of certain clinical, regulatory and commercialization milestones; however, since ENMD-2076 is the only program currently under active clinical evaluation, we do not expect to trigger any of these milestone payments during fiscal 2011.
In addition, under our licensing agreement with Oxford BioMedica, PLC and Oxford BioMedica (UK) Limited Oxford, we are entitled to receive payments upon the achievement of certain milestones with respect to the development of gene therapies for ophthalmic (eye) diseases. In connection with the announced 2009 collaboration between Oxford BioMedica and Sanofi Aventis which included certain compounds (RetinoStat® and EncorStat®) that are governed by our licensing agreement, we received $368,000 from Oxford BioMedica in 2009, $74,000 of which we paid to Children s Medical Center Corporation under our agreement with Children s Medical Center Corporation. The $368,000 payment represented the Company s share of the upfront payment received by Oxford BioMedica after division among third-party product technologies. No payments were received in 2010 from this licensing agreement and we do not expect to receive any payments in 2011. However, we do not control the drug development efforts of Oxford or Sanofi and have no information or control over when or whether any milestones will be reached that would result in additional payments to us.
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