By Ameet Sachdev | The collapse of the auction-rate securities market burned NeoPharm Inc. of Lake Bluff.
The pharmaceutical company said it lost $735,000 in the fourth quarter of 2009 on an auction-rate securities put option. The one-time loss made up half of NeoPharm’s $1.5 million net loss in the quarter ended Dec. 31.
Auction-rate securities are long-term debt with interest rates reset
periodically through auctions. The market collapsed in 2008 as dealers
stopped bidding to keep auctions from failing, leaving clients unable
to sell their supposedly liquid investments, which they said were
pitched to them as cash equivalents.
NeoPharm’s fourth-quarter loss equaled 5 cents a diluted share, down
from a loss of 8 cent share, or $2.2 million, in the year-ago quarter.
Other one-time items in the quarter included $300,000 for employee
severance costs and a $800,000 credit to research and development
expenses.
For the full year, NeoPharm reported a net loss of $7.4 million, or 26
cents a diluted share, compared with a net loss of $8.2 million, or 29
a cents a share, in 2008.
The company has no revenues because its drugs developed to treat cancer and other diseases are in clinical trials.
The company said it had $12.3 million in auction-rate securities on its balance sheet at the end of 2009.
$100 billion is still “frozen” in the collapsed ARS market. Read: Fund companies like Pimco, BlackRock and Van Kampen are refusing to give back money the rightful owners want back.
I do not understand why corporations don’t unite and put pressure on the funds that are sitting on this money. Pimco could refinance instantly, but it has refused to refinance one dime not required by law.
Nuveen, on the other hand, is making superb progress refinancing its ARS, without hurting the dividends of its common shareholders. (See recent WSJ article on Nuveen dividends.)
Corporations like NeoPharm: demand that the funds REFINANCE ARS NOW!