EntreMed sells 3 million shares Initial public offering raises $43 million for Rockville company

June 13, 1996|BY A SUN STAFF WRITER

EntreMed Inc., a Rockville-based company attempting to develop novel drugs to treat cancer and other diseases by controlling blood vessel growth, went public yesterday, selling 3.2 million shares of common stock and raising more than $43 million.

The 4-year-old biotechnology company saw its shares in the initial public offering rise 75 cents, to $15.75, by the close of trading on the Nasdaq. More than 1.8 million shares traded hands on the first day. The IPO was managed by Allen & Co. Inc., Dillon, Read & Co. Inc. and Volpe, Welty & Co.

The company expects to use proceeds from the sale to fund research and to pay for corporate expenses.

In going public, EntreMed joins 13 other publicly held biotechnology companies in Maryland, two of which are now owned by parent companies outside the state. There are about 300 publicly held biotechnology companies in the United States.

Like most fledgling biotechnology companies, EntreMed has no approved products and isn't profitable. In 1994 and 1995, it lost $5.1 million and $7.7 million respectively.

What EntreMed investors are betting on is that the company can tap into a huge market treating such diseases as cancer and macular degeneration, which leads to blindness, if it is successful in developing new drugs that control abnormal blood vessel growth.

A key area of research at EntreMed is whether thalidomide, banned in the U.S. market decades ago because it causes birth defects, effectively inhibits the growth of some breast and prostate tumors and Kaposi's sarcoma, by preventing the abnormal formation of blood vessels and cutting off tumors' blood supply.

The company has human trials under way on this front, as well as exploring whether thalidomide can inhibit age-related macular degeneration.

Two companies, Celgene Corp. of Warren, N.J., and Andrulis Pharmaceuticals of Beltsville, are considered EntreMed's top competitors in exploring thalidomide's therapeutic effects.

EntreMed believes it has the edge because it was among the first into the field, known as angiogenesis. It licensed research from Dr. Judah Folkman, an angiogenesis pioneer and director of the Surgical Research Laboratory at Children's Hospital in Boston.

Another factor EntreMed believes is in its favor is its recent research alliance with Bristol-Myers Squibb Co., one of the nation's largest pharmaceutical firms. The deal gives Bristol-Meyers the rights to market any thalidomide-related compounds. EntreMed would get royalty payments.

In the IPO, Bristol-Meyers agreed to buy 333,333 shares and has an option to buy 400,000 more at $22.50 a share.

Analysts have pegged EntreMed's share of royalties from a thalidomide-related compound for cancer treatment at $20 million to $50 million annually.

Pub Date: 6/13/96

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