EntreMed signs deal with Calif. drug firm

Allergan aims to use cancer treatment for eye diseases

January 24, 2002|By Julie Bell | Julie Bell,SUN STAFF

EntreMed Inc., best known for its experimental anti-cancer drugs, said yesterday that it signed a deal worth up to $41 million with a California company to use one of those drugs to treat eye diseases.

Under the agreement, Allergan Inc. of Irvine, Calif., first will explore developing an implantable treatment for age-related macular degeneration, a disease characterized by bleeding in the eyes, using EntreMed's drug Panzem.

Panzem is in the second of three stages of human testing as an anti-cancer drug designed to fight tumors by blocking their blood supply.

The deal is the first EntreMed has announced under a new strategy: It hopes to find a number of companies willing to back development of its drugs to treat some of the more than 80 diseases characterized by abnormal blood-vessel growth. It previously had pursued only deals focused on cancer.

"This in no way reduces our commitment to develop Panzem for oncology," Chief Executive Officer John W. Holaday said yesterday in a conference call, noting that EntreMed retains rights to Panzem for all uses but those designed to treat eye diseases.

EntreMed's other drugs in human testing, Endostatin and Angiostatin, are not affected.

Terms of the deal call for Allergan to pay as much as $41 million in upfront cash, equity investments and payments upon the completion of certain development milestones.

Additionally, EntreMed stands to get royalties from the sale of any resulting eye treatment, to which Allergan would have worldwide marketing rights.

If EntreMed incurs further development costs, Allergan would pay for them, Allergan spokeswoman Suki Shattuck said.

Shattuck said the upfront and milestone payments to EntreMed would total $41 million only if the Panzem product is approved in Europe, the United States and Japan.

Investor reaction was mixed, in part because some wanted more details. The companies declined to disclose the amount of Allergan's upfront payment, how much of it would be in stock and at what price the EntreMed shares would be sold or when.

"You can't get us all excited about something and then not give us any details," said William Slattery, a partner with Deerfield Partners who listened to yesterday's conference call. New York-based Deerfield oversees $1.7 billion in publicly traded health-care investments.

But Charles Mills, who oversees an investment of more than 557,000 EntreMed shares as portfolio manager for Mills Value Adviser Inc., said he thought the announcement was positive. It has a lot of other applications, he said, noting EntreMed's statement that more than 80 diseases involve abnormal blood-vessel growth.

Under the deal, Allergan plans to explore encapsulating Panzem in a tiny, biodegradable polymer and implanting it in the back of the eye, allowing the drug to be slowly released at the site of the problem as the polymer dissolves.

Oculex Pharmaceuticals Inc., of Sunnyvale, Calif., is developing such polymers for use in a number of products to treat the eye, though none are yet on the market.

It has a separate agreement with Allergan, a publicly traded specialty pharmaceutical company focused on products to treat the eyes, skin and movement disorders.

Oculex said it would be responsible for manufacturing the product if it's successful.

Allergan earned $225 million last year on $1.7 billion in net product sales. The company announced this week that it was spinning off its ophthalmic surgical and contact lense care business.

Shares of EntreMed gained 17 cents yesterday to close at $8 on the Nasdaq stock market.

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