Back to GetFilings.com



 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

Commission file number 000-23736

GUILFORD PHARMACEUTICALS INC.

(Exact name of Registrant as specified in its charter)
     
Delaware   52-1841960
(State or other jurisdiction of
incorporation or organization)
   (IRS Employer
Identification No.)
 
6611 Tributary Street
Baltimore, Maryland
   21224
(Zip Code)
(Address of principal executive offices)
    
410-631-6300
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

      Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

     
Class Outstanding November 5, 2004
Common Stock, $.01 par value
  44,443,457

 

Guilford Pharmaceuticals Inc.

INDEX
             
Page
Part I Financial Information
        
 
Item 1. Financial Statements
    3  
    Consolidated Balance Sheets     4  
    Consolidated Statements of Operations     5  
    Consolidated Statement of Changes in Stockholders’ Equity     6  
    Consolidated Statements of Cash Flows     7  
    Notes to Consolidated Financial Statements     8  
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
    14  
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
    29  
 
Item 4. Controls and Procedures
    30  
 
Part II Other Information
        
 
Item 1. Legal Proceedings
    31  
 
Item 2. Unregistered Sale of Restricted Securities and Use of Proceeds
    31  
 
Item 3. Defaults Upon Senior Securities
    31  
 
Item 4. Submission of Matters to a Vote of Security Holders
    31  
 
Item 5. Other Information
    31  
 
Item 6. Exhibits
    49  
 
Signatures
    50  
 
Certifications
    51  

2

 

PART I. FINANCIAL INFORMATION

Item 1.     Financial Statements

      The consolidated financial statements as of and for the periods ended September 30, 2004 and 2003 included in this report have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and the related notes included in our annual report on Form 10-K for the year ended December 31, 2003.

      In the opinion of our management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, necessary to present fairly our financial position, results of operations, changes in stockholders’ equity and cash flows as of and for the three- and nine-month periods ended September 30, 2004. Interim results are not necessarily indicative of results for the full fiscal year.

3

 

GUILFORD PHARMACEUTICALS INC.

AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share data)
                     
September 30, 2004 December 31, 2003
(unaudited)
ASSETS
Current assets:
               
 
Cash and cash equivalents
  $ 51,574     $ 29,939  
 
Investments, net
    32,468       50,261  
 
Investments – held by Symphony Neuro Development Company
    35,295       —  
 
Accounts receivable, net
    4,387       3,460  
 
Inventories, net
    2,388       2,504  
 
Prepaid expenses and other current assets
    2,776       1,787  
     
     
 
   
Total current assets
    128,888       87,951  
Investments – restricted
    20,159       21,743  
Property and equipment, net
    20,850       22,395  
Intangible assets, net
    77,656       82,796  
Other assets
    5,054       6,438  
     
     
 
    $ 252,607     $ 221,323  
     
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
               
 
Accounts payable
  $ 7,923     $ 8,549  
 
Current portion of long-term debt
    2,850       3,394  
 
Accrued payroll related costs
    2,360       4,538  
 
Accrued contracted services
    4,279       1,909  
 
Accrued expenses and other current liabilities
    4,275       3,590  
     
     
 
   
Total current liabilities
    21,687       21,980  
Long-term debt, excluding current portion
    87,472       88,885  
Revenue interest obligation
    44,043       42,155  
Other liabilities
    5,216       1,103  
     
     
 
   
Total liabilities
    158,418       154,123  
     
     
 
Minority interest
    31,575       —  
Commitments and contingencies
               
Stockholders’ equity:
               
 
Preferred stock, par value $0.01 per share; authorized 4,700,000 shares, none issued
    —       —  
 
Series A junior participating preferred stock, par value $0.01 per share; authorized 300,000 shares, none issued
    —       —  
 
Common stock, par value $0.01 per share; authorized 125,000,000 shares, 45,310,271 and 34,908,076 issued at September 30, 2004 and December 31, 2003, respectively
    453       349  
 
Additional paid-in capital
    426,857       377,168  
 
Accumulated deficit
    (357,334 )     (303,538 )
 
Accumulated other comprehensive loss
    (2,243 )     (1,485 )
 
Note receivable from officer
    —       (85 )
 
Treasury stock, at cost; 927,166 and 1,055,816 shares at September 30, 2004 and December 31, 2003, respectively
    (4,575 )     (5,209 )
 
Deferred compensation
    (544 )     —  
     
     
 
   
Total stockholders’ equity
    62,614       67,200  
     
     
 
    $ 252,607     $ 221,323  
     
     
 

See accompanying notes to consolidated financial statements.

4

 

GUILFORD PHARMACEUTICALS INC.

AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited)
(in thousands, except per share data)
                                     
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
                               
 
Net product sales
  $ 10,430     $ 5,302     $ 29,904     $ 13,708  
 
Revenues from license fees, milestones and other
    6,892       118       7,495       5,777  
     
     
     
     
 
   
Total revenues
    17,322       5,420       37,399       19,485  
Costs and expenses:
                               
 
Cost of sales
    2,060       975       4,283       2,899  
 
Research and development
    12,521       9,056       30,746       24,253  
 
Selling, general and administrative
    14,098       7,862       40,278       22,250  
 
Intangible amortization
    1,713       210       5,140       630  
 
Acquired in-process research and development
    1,917       —       7,155       —  
     
     
     
     
 
   
Total costs and expenses
    32,309       18,103       87,602       50,032  
     
     
     
     
 
Operating loss
    (14,987 )     (12,683 )     (50,203 )     (30,547 )
Other income (expense):
                               
 
Investment and other income
    630       585       1,510       2,361  
 
Revenue interest expense
    (2,026 )     —       (6,456 )     —  
 
Interest expense
    (1,251 )     (1,184 )     (3,924 )     (1,643 )
     
     
     
     
 
Loss before minority interest
    (17,634 )     (13,282 )     (59,073 )     (29,829 )
 
Minority interest
    3,173       —       5,277       —  
     
     
     
     
 
Net loss
  $ (14,461 )   $ (13,282 )   $ (53,796 )   $ (29,829 )
     
     
     
     
 
Basic and diluted loss per common share
  $ (0.33 )   $ (0.46 )   $ (1.45 )   $ (1.01 )
     
     
     
     
 
Weighted-average shares outstanding to compute basic and diluted loss per share
    43,457       28,967       37,134       29,541  
     
     
     
     
 

See accompanying notes to consolidated financial statements.

5

 

GUILFORD PHARMACEUTICALS INC.

AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholders’ Equity

Nine Months Ended September 30, 2004
(unaudited)
(in thousands, except share data)
                                                                               
Accumulated
Common Stock Other Note
Additional Comprehensive Receivable Total
Number of Paid-In Accumulated Income From Treasury Deferred Stockholders’
Shares Amount Capital Deficit (Loss) Officer Stock, at Cost Compensation Equity
Balance, January 1, 2004
     34,908,076     $ 349     $ 377,168     $ (303,538 )   $ (1,485 )   $ (85 )   $ (5,209 )   $ —     $ 67,200  
Comprehensive loss:
                                                                       
 
Net loss
                            (53,796 )                                     (53,796 )
 
Other comprehensive loss:
                                                                       
   
Unrealized gain on interest rate swap agreements
                                    273                               273  
   
Unrealized loss on available-for-sale securities
                                    (1,031 )                             (1,031 )
                                                                     
 
     
Total other comprehensive loss
                                                                    (758 )
                                                                     
 
Total comprehensive loss
                                                                  $ (54,554 )
                                                                     
 
Forgiveness of officer loan
                                            85                       85  
Issuance of common stock
    10,402,195       104       43,831                                               43,935  
Deferred compensation related to officer separation agreement
                    622                                       (622 )     —  
Issuance of warrants
                    5,238                                               5,238  
Distribution of 37,269 shares of treasury stock to 401(k) plan
                    75                               184               259  
Distribution of 86,968 shares of treasury stock to ESP plan
                    (86 )                             429               343  
Distribution of 4,314 shares of treasury stock to consultant
                    9                               21               30  
Amortization of deferred compensation
                                                            78       78  
     
     
     
     
     
     
     
     
     
 
Balance, September 30, 2004
     45,310,271     $ 453     $ 426,857     $ (357,334 )   $ (2,243 )   $ —     $ (4,575 )   $ (544 )   $ 62,614