EntreMed Inc. Reports Operating Results (10-Q)
Entremed Inc. has a market cap of $16.33 million; its shares were traded at around $1.33 with and P/S ratio of 4.42.
Highlight of Business Operations:Reflected in our R&D expenses totaling $950,000 for the three-month period ended June 30, 2011 are direct project costs of $679,000 for ENMD-2076, $18,000 for Panzem® oncology, $7,000 for ENMD-1198 and $16,000 for MKC-1. The 2010 research and development expenses for the comparable period included $722,000 for ENMD-2076, $22,000 for Panzem® oncology, $22,000 for ENMD-1198 and $7,000 for MKC-1. Research and development expenses totaling $2,348,000 for the six-month period ended June 30, 2011 include direct project costs of $1,768,000 related to ENMD-2076, $43,000 related to Panzem® oncology, $17,000 related to ENMD-1198 and $25,000 for MKC-1. The 2010 research and development expenses for the comparable period included $1,525,000 for ENMD-2076, $50,000 for Panzem®, and $34,000 for ENMD-1198. Additionally, during the six-month period ended June 30, 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 decrease in research and development costs in the three month period ended June 30, 2011, as compared to the same period in 2010, relates to fewer patients added during the 2011 period and increased costs during the 2010 period to due to the start of the Phase 2 trials in 2010. The overall increase in research and development costs in the six-month period ended June 30, 2011, as compared to the same period in 2010, reflects increased costs associated with the clinical development of ENMD-2076 as we continued to enroll patients during 2011, in addition to the MKC-1 cost write off of $268,000 during the three months ended March 31, 2010.
At June 30, 2011, accumulated direct project expenses for Panzem® oncology were $54,404,000; direct ENMD-1198 project expenses totaled $13,222,000; and, since acquired, accumulated direct project expenses for ENMD-2076 totaled $19,951,000 and for MKC-1, accumulated project expenses totaled $10,164,000. Our research and development expenses also include non-cash stock-based compensation totaling $20,000 and $96,000, respectively, for the three and six months ended June 30, 2011 and $9,000 and $19,000 for the respective corresponding 2010 periods. The increase in stock-based compensation expense is related to stock options granted in January 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.
Research and development expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract preclinical testing and clinical trials of our product candidates, including the costs of manufacturing drug substance and drug product, regulatory maintenance costs, and facilities expenses. Research and development expenses decreased to $950,000 during the three months ended June 30, 2011 from $1,011,000 for the corresponding period in 2010. Research and development expenses increased to $2,348,000 during the six months ended June 30, 2011 from $1,855,000 for the corresponding period in 2010. Expenditures during the three and six months ended June 30, 2011 were specifically impacted by the following:
General and administrative expenses decreased to $720,000 in the three-month period ended June 30, 2011 from $771,000 in the corresponding 2010 period. For the six-month period, general and administrative expenses increased in 2011 to $1,973,000 from $1,822,000 for the corresponding 2010 period. This increase is attributable to the $226,000 increase in non-cash stock-based compensation expense primarily related to stock options granted in 2011, offset by lower salary and rent expenses.
Interest Expense. Our term loan from General Electric Capital Corporation, pursuant to a transaction in September 2007, was fully paid on January 3, 2011, and accordingly there was no interest expense recorded for the three and six month periods ended June 30, 2011. Interest expense for the three and six month periods ended June 30, 2010 was approximately $169,000 and $390,000, respectively (including $15,079 and $35,550 of non-cash interest, respectively).
On June 28, 2011, we entered into a standby equity distribution agreement (the “SEDA”), with YA Global Master SPV Ltd. (“YA Global”), a fund managed by Yorkville Advisors, LLC (“Yorkville”). Under the SEDA, the Company has the option, at its sole discretion, to sell, from time to time, up to $7.5 million of common stock to YA Global during the three-year term of the SEDA, and YA Global is obligated to purchase such shares. Concurrent with the signing of the SEDA, we agreed to sell shares to YA Global and received gross proceeds of $1.1 million on June 29, 2011. Between June 29 and August 5, 2011, we issued an aggregate of 600,412 shares to YA Global in settlement of the initial $1.1 million drawdown. The number of shares issued each week, and the purchase price for such shares, in settlement of the initial $1.1 million drawdown were determined in accordance with the SEDA.
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