Holaday, cancer drug visionary, steps down today at EntreMed

Chairman, co-founder was an early proponent of nontoxic treatments

January 31, 2003|By Julie Bell | Julie Bell,SUN STAFF

EntreMed Inc. Chairman John W. Holaday officially resigns today from the company he co-founded, clearing the way for a new chairman who Vice Chairman Wendell Starke said would have experience in bringing drugs to market.

Holaday's departure comes nearly three months after he relinquished the title of chief executive officer, remaining chairman and chief scientific officer.

Holaday, 57, a scientist who previously co-founded Medicis Pharmaceutical Corp., was among the first in the industry to embrace the potential for a new class of nontoxic cancer drugs.

He led EntreMed to license several of the drugs - designed to fight cancer by blocking the blood supply to tumors - a decade ago from the laboratory of Harvard University researcher Judah Folkman when no other company would.

Today, Folkman estimates that at least 50 similar drugs are in human testing in the United States and Europe. One is on the market: Thalidomide, approved in the United States for leprosy, is commonly prescribed by doctors for cancer.

But while Holaday's passion for the approach helped shape the direction of cancer treatment, it also sowed the seeds of his departure: Long after Wall Street had become disillusioned, Holaday kept after his dream of building a company that would make some of the drugs itself. Along the way, a number of top EntreMed executives headed for the door along with investors.

"What we have here is a brilliant ... scientist passionate about the development of drug candidates with tremendous potential in a market where the amount of money that had to be raised was extremely high - and where the market's patience with raising money simply ran out," Starke said.

Part of Holaday's problem perhaps was not of his own making: Investors had lofty expectations for the experimental drugs after a 1998 article in The New York Times quoted Nobel Prize winner James Watson as saying they would "cure cancer." Instead, early human tests showed them to have only hints of effectiveness without side effects, something Holaday could not persuade Wall Street was a good start. Still, he pressed on, laying plans some privately grumbled were unrealistic.

"I don't think you can be too passionate as long as that passion doesn't obscure what the future could be," Holaday said yesterday. "I have no regrets."

Early last year, he still was planning a plant to make EntreMed's protein drugs, large complex molecules that generally are more expensive to manufacture and more difficult to administer than so-called small-molecule drugs. He talked of holding off on licensing one or more of its protein drugs to a large pharmaceutical company in exchange for cash, considering any deals at hand to be too cheap for the drugs.

"I think clearly investors lost faith in the drug after clinical trial results," Wells Fargo Securities analyst Alan Auerbach said of EntreMed's drug Endo- statin. "I would speculate that investors lost faith in the management of the company for not being able to complete a licensing deal and complete a financing deal."

It was a game of financial brinkmanship that wound down in mid-2002 as EntreMed was close to running out of cash. The company was without a chief financial officer after two resigned. Its president, who also headed research, had left, replaced by Neil Campbell, former Celera Genomics Group development executive. And the stock market was melting down.

EntreMed's shares, which had gained 330 percent to close at $51.81 the day after Watson's remarks in 1998, drifted ever lower, closing the door to additional stock sales to raise funds. Shares ended trading yesterday at 96 cents, off 8 cents.

The company laid off 60 employees - more than half its work force - last fall.

It also decided to continue only current clinical trials of protein drugs Endostatin and Angiostatin, looking for a larger pharmaceutical company to financially back testing. EntreMed opted to focus on developing small-molecule drugs led by Panzem, which is being tested in cancer patients.

It was Holaday, Starke said, who suggested in a meeting one day several months ago that the changes include his stepping down. But he didn't want to leave the company until it had assured its survival.

It announced early this month that it had raised $27 million by selling certain rights to a version of the drug thalidomide to Celgene Corp. - enough to keep the company going into 2004.

Yesterday, the Rockville company announced that Holaday would leave to pursue other opportunities in biotechnology.

But not without first having a broad impact.

"I've been extremely impressed by what they've done," Folkman said of EntreMed under Holaday. "When you make products like this it's not easy. They've done it beautifully."

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