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EntreMed CEO Burns sees renaissance for company

Friday, Jan. 6, 2006

Click here to enlarge this photo Laurie DeWitt⁄The Gazette Researcher Lita Suwandi separates compounds for analysis at EntreMed, a Rockville biotech that is focusing oncancer treatments.

Two weeks ago, the company sharpened that focus by agreeing to buy privately held Miikana Therapeutics Inc. of Fremont, Calif., for $21.2 million and take over its small-molecule oncology drug trials.

EntreMed, which was founded in 1991 and went public in 1996, still has not developed a commercial drug on its own and is still not profitable.

So far, the company has raised $300 million through the sale of common and preferred stock, said spokeswoman Ginny Dunn.

Burns, a 59-year-old veteran of the drug industry who joined the company in June 2004, shrugged off the company’s turbulent past.

‘‘Biotechs go through stages and biotechnology still has a lot of promise,” he said. ‘‘You always have investors who are willing to step behind good science and ideas and management teams that they feel comfortable that can execute.”

When he talks about EntreMed’s renaissance, Burns sounds more like the CEO of an emerging startup, not the head of one of Rockville’s oldest biotechnology firms.

‘‘In the last year and half more investors are willing to listen to the story,” he said. ‘‘We are still a little early though,” referring to the company’s efforts to get a new set of lead drug candidates into phase 2 of clinical trials. The Miikana deal adds one and possibly two phase 2 cancer drug candidates for clinical trials next year.

The company, which has 42 employees, has a rosier revenue picture this year compared to last year, with $1.25 million in revenue for the quarter ended Sept. 30, versus $143,000 for the same period in 2004. For the nine months ended Sept. 30, revenues increased 387 percent from last year to $1.85 million, largely from royalties from a drug sold previously to Celgene Corp. of Morris, N.J.

Still, the company reported a loss of $4.38 million for the first nine months of the year, as expenses totaled $5.9 million, up from $3.9 million the previous year.

EntreMed had $33 million left in cash in September, enough to sustain clinical trials and operations into 2007, said both Burns and analysts.

‘Core technology excellent’

Before joining EntreMed, Burns was an executive with MedPoint Pharmaceuticals in Somerset, N.J., and toyed briefly with the idea of retiring. Then he got a call from Michael Tarrow, EntreMed’s chairman, a former top executive with Merck & Co. Inc.

‘‘Michael said there is a company here that could benefit from strong leadership,” Burns recalled. ‘‘I came in and agreed with Michael that the core technology is excellent. I learned after I came in that the core scientific team had already been through some ups and downs.”

Enthusiastic and confident, Burns said he is ‘‘having enormous fun” refocusing a company that he admits has at times been overextended by trying to run three major research and development programs with enough resources to guide only one of those programs’ products into the marketplace.

The company has decided to focus on small-molecule drugs because they have a faster profit potential and are easier to manufacture than large-molecule, or protein-based, drugs such as endostatin and angiostatin, the two drug candidates that are historically identified with EntreMed.

In 2004, the company transferred rights to those drugs back to the Children’s Medical Center, an affiliate of Harvard University, from which EntreMed had licensed the rights several years ago. The compounds are designed to prevent the growth of blood vessels that build around cancer tumors, thus nourishing and sustaining the tumors — a process called angiogenesis.

EntreMed’s lead drug candidate, Panzem, is an anti-angiogenesis compound that may cut off new blood vessel growth of tumors, killing them. Targets include breast, ovarian and brain cancers.

In earlier trials, Panzem was not effective in oral doses. Now the company uses a nano-milling technology to grind already microscopic crystals of the Panzem into Panzem NCD, or nano-crystal dispersion. In terms of scale, it is like grinding bathroom tiles into grains of sand.

In phase 1 clinical trials this year, the new formulation was safe and effective. The trials also determined the dosage levels to use in further trials.

Analysts still bullish

‘‘The new EntreMed is an interesting turn-around story,” said Ren Benjamin, senior biotechnology analyst for Rodman and Renchaw Inc. of New York.

‘‘They won’t be profitable for some time. But this is a classic biotech stock — a lot of money getting reinvested into the R&D until a product is approved by the FDA,” Benjamin said. Benjamin is optimistic about Panzem.

‘‘Two years ago I was impressed with the old version of the compound that they had. Data looked good,” he said. ‘‘I feel that they could improve upon it now that they have reformulated it.”

Asher Epstein, managing director of the Dingman Center for Entrepreneurship at the University of Maryland Robert H. Smith School of Business in College Park, said EntreMed’s staying power may also be a sign that cancer research ‘‘is always hot.”

‘‘There is a high rate of product failure, but when they have an idea that is intriguing to get sufficient capital, it works,” Epstein said of cancer drug candidates. He noted that the company is losing about $20 million each year, but the balance sheet shows two good signs: a good cash position and no debt.

Burns is proudest of showing progress to investors.

‘‘And every time we have given guidance we have nailed it,” he said, snapping his fingers. ‘‘So we have started to build credibility. So perhaps some of the earlier missteps of the company are starting to pass us by.”