Oscient Pharmaceuticals looks to raise capital, explores strategic options to prevent bankruptcy

By Angela McDaniels

Tacoma, Wash., March 25 - Oscient Pharmaceuticals Corp.'s auditors have questioned its ability to continue as a going concern, and the company may be facing bankruptcy before the end of the year, according to its 10-K report for 2008 filed with the Securities and Exchange Commission Wednesday.

The company believes it has enough cash to fund operations into the third quarter but said it must raise additional capital in the next several months - and/or refinance or amend its debt coming due in December 2009 - in order to fund operations for the remainder of 2009.

The company warned that because of market turmoil and its auditors' going-concern statement, it may not be able to secure additional financing on favorable terms or at all.

If it cannot obtain enough financing on acceptable terms or lower its expenses through cost-reduction measures, Oscient said it may have to further scale back operations, take other measures to significantly reduce expenses that will have a material adverse effect on its business and/or it may seek bankruptcy protection.

Cash and cash equivalents were $17.19 million as of Dec. 31. The figure includes $4.60 million in restricted cash and an accumulated deficit of about $510.51 million, according to the filing.

As part of its plans, Oscient will pursue privately raising additional capital from investors through equity financing, the incurrence of debt or a combination of equity and debt.

The company is also exploring strategic options, including the potential sale of the company, with the help of Broadpoint Capital, Inc.; plans to substantially reduce its sales and marketing teams and office personnel; and has extended the maturity of its $13 million 5% convertible promissory notes to Dec. 1, 2009 from Feb. 6.

Oscient, a Waltham, Mass.-based pharmaceutical company, has generated significant operating losses for the last several years and expects to continue to generate significant operating losses for the foreseeable future, the filing stated.

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