Guilford Pharmaceuticals Inc., a Baltimore biotechnology company, said revenue fell $5 million in the fourth quarter after federal regulators rejected its only approved product as a primary treatment for brain cancer. The company's loss for the period widened by $1.3 million, Guilford said yesterday.

Gliadel, Guilford's first federally approved product, is a chemotherapy-drug-filled wafer inserted into the brain cavity to prevent recurring tumors. Today its use is limited to about 3,000 patients undergoing repeated brain surgery because the Food and Drug Administration will not permit its use after initial tumor removal, a market estimated at 11,000 in the United States, the company says.

For the quarter ended Dec. 31, 2002, Guilford said its loss increased to $15.1 million (50 cents per share), from 13.8 million (46 cents a share) in the fourth quarter of 2001. Revenue fell to $1.6 million from $6.8 million. For the year, the company lost $60 million, about $300,000 less than it lost in 2001. The company cited declining research-and-development costs and the layoff of 60 employees last year.

In a conference call with analysts and investors yesterday, the company's chief financial officer, Craig R. Smith, referred to a series of disappointing events in 2002, including the FDA's rejection in March of Gliadel's broader use and Guilford's inability to strike a partnership to develop an experimental compound to treat diabetic neuropathy, a disorder marked by pain and numbness in the extremities. Guilford also said last year that it would discontinue development of two experimental compounds, Paclimer and Lidomer, after completing early studies in cancer patients.

With more than $20 million in annual sales, Gliadel is the linchpin of Guilford's business strategy. A typical treatment, consisting of eight wafers implanted in the area around a removed tumor, costs about $10,000. Guilford has submitted more data to the FDA that it says supports its application for broader Gliadel approval and is waiting for a reply.

For all of 2002, Guilford said its revenue was $14.7 million, down from $20.5 million a year earlier, reflecting dwindling sales of Gliadel. The company reported $101.8 million in cash and cash equivalents on hand at the end of the quarter.