SOUTH SAN FRANCISCO, Calif. ( TheStreet) -- Poniard Pharmaceuticals ( PARD) finds itself in a worrisome financial hole following Monday's failed phase III study of picoplatin in small cell lung cancer. The company reported cash and marketable securities totaling $40 million at the end of the September quarter. But Poniard is also burning about $10 million a quarter and carries an $18 million loan on its books that requires the company to maintain cash reserves at least equal to the outstanding balance on the loan. At its current rate of spending, Poniard could be in violation of its loan agreement at the end of the year, which would make the loan callable and thereby force the company to restrict the use of its remaining cash. Poniard does have a $60 million equity line of credit that it could tap, but only if the company's stock price is above $3 a share. Obviously, Monday's negative picoplatin results make that impossible, unless the company can re-negotiate the terms of the deal. The stock is down 76% to $1.77 in recent trading. In many ways, the financial mess that Poniard finds itself is the biotech equivalent of the gamble taken Sunday night by New England Patriot's head coach Bill Belichick, when he decided to go for it on fourth down, late in the game with the ball still deep in his own end of the field. Poniard could have partnered picoplatin earlier to bring in much-needed money, but CEO Jerry McMahon decided to hold off, betting that positive results from the picoplatin lung cancer study would boost the drug's value and bring with it much better partnering deal terms. McMahon rolled the dice, even with the knowledge that the company was getting uncomfortably close to a financial cliff. Belichick was too smart for his own good Sunday night. On Monday, so was McMahon.
Cardium plans to move Excellerate into a phase III study following a meeting with the U.S. Food and Drug Administration. I wonder if regulators will ask Cardium to do more phase II work to better define the clinical benefit of Excellerate and its two individual components before proceeding into a pivotal phase III study. That's just speculation on my part, but again, this is something I'd dig into if, like Paul, I were either invested in Cardium or interested in buying the stock. It goes without saying that the stock sale with hefty warrant coverage initiated by Cardium the day after announcing the Excellerate data didn't help either.
Bianco benefited the most from the new stock grants. He was awarded 2.9 million free shares of Cell Therapeutics stock. After accounting for stock sold to cover taxes, Bianco's take amounted to more than $1.8 million, based on the stock's Nov. 10 closing price. In addition to Bianco, four other top executives were awarded similar free stock grants, as were all six of the company's outside directors.
Picoplatin is a next-generation platinum chemotherapy drug designed to overcome resistance to prior platinum therapy. The drug may also cause less nerve-related toxicity. The phase III study, dubbed "SPEAR," compared treatment with picoplatin against best supportive care in second-line small cell lung cancer patients. These were patients with advanced, progressive disease after treatment with a front-line platinum agent. The primary endpoint of the study was overall survival. -- Reported by Adam Feuerstein in Boston.