Idera Raises Cash After Accounting Firm's Red Flag
The pharmaceutical company, which has accumulated nearly $400M in debt, has earmarked the cash for a clinical trial
Struggling Idera Pharmaceutical Inc. (Nasdaq: IDRA) says it raised enough money in a recent public offering to make it through the fourth quarter. The Cambridge, Mass.-based developer of treatments for psoriasis and lupus reported in a May 15 filing with the U.S. Securities and Exchange Commission that a review of its 2012 financial statements caused accounting firm Ernst & Young LLP to raise "substantial doubt" about the company's ability to continue as a growing concern, or without the threat of liquidation.
Ernst & Young raised the doubt because of Idera's history of recurring losses and negative cash flows from operations. The accounting firm cautioned that in order for Idera to remain in business, it would need to raise more capital or obtain an alternate means of financial support.
Idera develops treatments for autoimmune and inflammatory diseases, such as lupus and psoriasis. As a clinical-stage biotechnology company, none of its products are available for commercial sale. The company's revenue stems from collaboration and license agreements.
In a May 7 public offering, Idera sold 17.5 million shares of common stock together with warrants for up to 17.5 million additional shares of common stock, bringing in $14.7 million, which is expected to fund operations through the fourth quarter.
Idera says that money raised in May will enable it to conduct a clinical trial for one of its medications but that it will have to raise more funds to launch clinical trials for other medications.
The company raised $7 million from a previous offering in 2012, which it also planned to use for a clinical trial.
The company is operating with an accumulated deficit of $398.5 million. It has operated at a loss since 2009. In the May 15 filing, Idera says it has about $6.8 million in assets, down from the $10.8 million it listed for Dec. 31.
The company is also at risk of being delisted from the Nasdaq exchange, because its shares have traded consistently at less than $1. On June 18, Idera's shares were trading at $0.74 at midday.
"We expect to incur substantial operating losses in future periods," the company says in SEC filings.
Idera did not respond to requests for comment.
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