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StockTalk:
TMF Interview With EntreMed CEO John Holaday
With Yi-Hsin Chang (TMF Puck)
and Brian Graney (TMF Panic)

May 6, 1998

Our guest is Dr. John Holaday, President & CEO of EntreMed Inc. (Nasdaq: ENMD), the biotech company that has been in the news this week because of a front-page article in The New York Times about the company's two new drugs, angiostatin and endostatin, which in combination have been shown to eradicate tumors in mice. The director of the National Cancer Institute was quoted as saying that these drugs are "the single most exciting thing on the horizon" for the treatment of cancer. As a result of this write-up, EntreMed stock quadrupled on Monday to $51 13/16 from $12, and traded as high as $85.

TMF: Dr. Holaday, were you surprised by the market response to the New York Times article?

Holaday: Indeed I was. Fundamentally, the scientific news here about the combination of these two drugs as well as either of these drugs by themselves in rigid models of cancer have been known for some time.
"For drug development, the average time from concept to ultimate clinical approval is about 12 years, and the average costs are in excess of $320 million."
Dr. Folkman's report on the cover of Nature in November indicated that drug resistance does not occur to one of these, endostatin. That was widely publicized, but surprisingly, the cover of The New York Times has a remarkable effect on the visibility of the technology as well as the company.

TMF: Can you talk briefly about angiostatin and endostatin and where they are in the clinical trial process?

Holaday: Yes, indeed. The fundamental strategy that's employed in blocking blood vessel growth to starve tumors has been under investigation for about 30 years by Dr. [Judah] Folkman and his colleagues at Children's Hospital [a teaching affiliate of Harvard Medical School in Boston]. This field, known as antiangiogenesis -- in other words: stopping blood vessel growth -- has only recently yielded some good results in terms of potential drug candidates, the first of which, I wanted to emphasize, is not either angiostatin nor endostatin but thalidomide, the old drug that we've taught a new trick. Thalidomide was a drug that was causing birth defects in the '50s and never sold in the United States.

One of Dr. Folkman's colleagues Dr. [Robert] D'Amato reasoned that the reason why it caused birth defects was by blocking blood vessel growth in the developing baby and therefore prevented the formation of limbs. Putting that drug to good use, we've been working at Harvard with the Dana Farber Cancer Institute and looking at its effects on brain tumors, as well as with the National Cancer Institute [looking at] prostate cancer, breast cancer, etc. and seeing some really remarkable results in those circumstances.

Getting back to your question, however, what are endostatin and angiostatin? They are natural proteins that the body uses perhaps in its attempt to counterbalance the growth of tumors, but perhaps it's not adequate by itself, and therefore we're making those materials and testing them in larger quantities to see whether or not we can stifle the growth of the blood vessels and thus choke the tumors to death.

"There's a long distance from mouse to man. If you're a mouse and you've got cancer, we can cure you."
TMF: Dr. Holaday, when do you see these drugs coming to market? Obviously, they have not even been tested on humans, yet there's been a lot of hype as if these drugs are coming soon. Could you clarify that for us?

Holaday: Yes. I want everyone to understand that we feel an enormous sense of urgency here to do everything as fast as possible. Probably the audience knows that for drug development, the average time from concept to ultimate clinical approval is about 12 years, and the average costs are in excess of $320 million, and that's the money and time that it takes to sort the one drug out of the 10,000 to start.

Since the discovery of endostatin, only 1 1/2 years have gone by, and during that time we've made remarkable progress in testing it in mice with various kinds of cancer, and likewise the discovery of angiostatin is rather new. It was only discovered a little over three years ago. What we're finding in the process of development, though, is that despite the remarkable results we see in mice, we, as any company, have to go through the usual set of required development timetables to include manufacturing the drug in quantities to take into the pre-clinical studies of toxicity. Then you apply to the Food and Drug Administration for permission to go to early studies on man.

What we see for angiostatin or endostatin, but particularly endostatin, is that we hope to be sending our applications to the Food and Drug Administration for clinical use or clinical testing to begin in approximately 12 to 18 months. From there, the process requires time. We're not testing sedatives or painkillers that could be evaluated overnight. What we're testing is a drug affecting cancer, and as one always knows, even aggressive tumors by those timetables take months or years to develop. So if survival were an end point that we were required to address, these studies, by virtue of the nature of the disease, are going to take several years to perform.

TMF: You're certainly not alone in trying to develop new drugs to offset the effects of cancers. Many other companies are working on the same type of drugs or at least other antiangiogenesis drugs. What's going to set EntreMed apart from all your competitors?

"Perhaps this interest will put the 'buy' back into biotech."
Holaday: Well, first of all in the field of antiangiogenic drugs, our relationship with Children's Hospital where Dr. Folkman works has allowed us access to the fruits of his labor since we supported the discovery of angiostatin and endostatin, so our association with the founder of the field is one thing. Secondly, our association with the National Cancer Institute has made this a primary objective of the National Cancer Institute. Through that we're able to combine resources with those of the government to accelerate the pre-clinical and clinical studies. Thirdly, I'd say for the development of angiostatin, our sub-licensee Bristol-Myers Squibb (NYSE: BMY) is working closely with us, and Bristol-Myers Squibb is the world's largest cancer company. We've got confidence in their ability to bring those drugs forward. And lastly, I'd say it's the dedication and commitment of our group of scientists here at EntreMed. Seventy-five percent of our resources go into research and development here, and we've made some remarkable discoveries in terms of not only how these drugs work but also in making large enough quantities through preliminary scale of manufacturing so we can move very rapidly.

TMF: Going back to the timetable for the drugs, assuming that all goes well, what's the soonest that you anticipate these drugs could be approved by the FDA?

Holaday: First of all, we have to say that there's a long distance from mouse to man. If you're a mouse and you've got cancer, we can cure you. But I would further say that I think that there are a lot of enthusiastic developments in the field of biotechnology, and we are one company that's offering a lot of promise. I think our general field of biotech has been rather flat as you folks know over the last year. But finally the world is beginning to recognize the value of this important research, ours as well as the research of others, for cancer and other diseases. Perhaps this interest will put the "buy" back in biotech.

But getting back to the direct question: How long will it be? If we walk through the process, and say 12 to 18 months between now and the time we can begin clinical trials if we recognize that tumors grow over a period of months to years -- and it would take that period of time in order to assess whether a drug is working or not -- even with accelerated approval through the Food and Drug Administration based upon Phase II data, it would be probably three to five years before drugs can be tested and approved and ready for availability in a broad sense.

TMF: Do you think that the stock market is ahead of itself a little bit then, not taking that timetable into account in valuing in your stock?

Holaday: I would look at it from a different perspective. I would think that the stock market is behind that. I think that, for instance, the P/E ratios of big pharma [pharmaceuticals] have been elevated to enormous levels, and people have not really taken note of the fact that their pipelines are drying up and their drugs are going off patent. Certainly we've had some exceptions with Viagra and others coming along more recently, but I think biotech has been undervalued, and if one were to do a net present value on the products that are in the approval pipeline right now across the industry, you would find that we are a very good opportunity. We certainly think EntreMed is among those as well.

TMF: Thank you, Dr. Holaday, for talking to us today.

Related Links:

  • EntreMed website
  • EntreMed message board

     

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