Oscient's cash may fail to support operations beyond third quarter

By Jennifer Lanning Drey

Portland, Ore., March 26 - Oscient Pharmaceuticals Corp.'s current funds may only be sufficient to support operations into the third quarter, Philippe Maitre, chief financial officer of Oscient, said Thursday during the company's fourth-quarter earnings conference call.

During the three-month period, Oscient's cash position decreased by $11.8 million to $17.2 million, including restricted cash. Maitre said nearly $5 million of the decrease was related to legal and banking fees associated with the company's November convertible debt exchange.

The company's auditors have included a going-concern explanatory paragraph in Oscient's form 10-K filed with the Securities and Exchange Commission.

"We do intend to raise additional capital and work to refinance our existing debt. However, based on multiple factors including market conditions and the going concern designation, the company may not be able to obtain adequate financing," Maitre said.

Broadpoint hired

Oscient has hired Broadpoint Capital to assist in searching for opportunities to improve its capital structure. In addition, Broadpoint will advise on strategic options including a potential merger or sale of the company.

"The goal for this process is to identify a strategic partner that has the ability to add a product or products to our portfolio and potentially strengthen our cash position," Steve Rauscher, chief executive officer of Oscient, said during the call.

Broadpoint has contacted its potential partners and is in the process of collecting feedback, he said, adding that it was too early in the process to provide any additional detail.

To help better position itself for a new partnership or potential M&A transaction, Oscient has also undertaken a restructuring effort to reduce the cash requirements of the company.

Oscient's three key business goals for 2009 include maximizing revenues from existing products, particularly Antara, making continued improvements to its capital structure and balance sheet, and finding strategic opportunities, Rauscher said.

Oscient reported total fourth-quarter revenues of $26.4 million, compared to revenues of $25.3 million in the fourth quarter of 2007. The net loss for the fourth quarter was $11.53 million, compared to a net loss of $14.67 million in the same period of 2007.

Oscient is a Waltham, Mass.-based pharmaceutical company.

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