Late-stage products are valuable, even ones with a somewhat troubled history.
IntraBiotics Pharmaceuticals Inc.’s iseganan, in Phase III development, was enough to attract industry veteran Ernest Mario as its new CEO and chairman, a move accomplished by IntraBiotics acquiring Apothogen Inc., the company he founded.
“At Apothogen, Ernie was interested in identifying late-stage compounds already near the market,” said Eric Bjerkholt, senior vice president and chief financial officer at IntraBiotics. “So, he had identified IntraBiotics and iseganan early on as a company and a product he was interested in. We’ve been talking for a while and it culminated in Ernie coming on as CEO. We acquired Apothogen to facilitate that.”
Mario has more than 35 years of experience in the pharmaceutical and biotechnology industries. Before Apothogen, he was CEO of Alza Corp. until it was bought by Johnson & Johnson, of New Brunswick, N.J., for $12 billion. Before that he worked for major pharmaceutical companies. He brings with him Jim Butler as senior vice president for sales and marketing, Al Burnette as vice president of sales and Del Nordstrom as vice president of business development.
Mario replaces Kenneth Kelley, who left in November.
IntraBiotics gave up 450,000 shares of stock in the acquisition. Based on Wednesday’s closing price of $4.07, IntraBiotics snapped up Apothogen for about $1.8 million. IntraBiotics’ stock (NASDAQ:IBPI) jumped 51 cents Thursday, or 12.5 percent, to close at $4.58.
Calling Apothogen “a development-stage company without significant tangible assets other than know-how,” Bjerkholt said that know-how, now inside IntraBiotics, is locked in on iseganan approval.
“We’ll be very focused on bringing iseganan to market,” he said. “That’s our No. 1, 2 and 3 priority in the near term.”
Iseganan has an interesting history. When the product still was called Protegrin IB-367 Rinse, the oral rinse failed in a Phase III trial for the prevention of oral mucositis in patients undergoing high-dose chemotherapy. The setback was notable because a dosing error by a third-party vendor fouled data on 102 patients in the 323-patient study. The trial missed its primary endpoint. Since then, IntraBiotics cut its work force by more than 70 percent to reduce spending, Bjerkholt said, “resolved amicably” the dispute with the vendor to the tune of a $3.6 million settlement and started a chemotherapy trial to replace the contaminated one. (See BioWorld Today, June 1, 2001.)
With all that done, plus a radiotherapy Phase III trial under way for iseganan, the rest of 2002 and 2003 loom large.
“The radiotherapy trial will be unblinded in May and will be presented at [the American Society of Clinical Oncology meeting] on May 21,” Bjerkholt said. “The chemotherapy trial is enrolling and we expect it to be fully enrolled in the third quarter and announce results in the fourth. If data support a filing, we hope to file in the first quarter of 2003.”
Iseganan was given fast-track designation by the FDA, but “whether that translates into priority review, we’ll have to see,” Bjerkholt told BioWorld Today. If so, the company could see approval by 2004.
As of March 31, IntraBiotics was supported by a cash position of $45 million. The staff reductions and other measures the company took following the failed Phase III have helped Bjerkholt said the company consumed about $7.3 million in the first quarter.
“We’re pretty good financially and we have no plans to raise capital at this point,” he said. “We’ll be opportunists, like any biotech company, but we have no plans right now.”
Mario added to IntraBiotics’ bank account by buying $5 million worth of stock at $4.01 per share. The equity investment makes the new CEO and chairman “the seventh or eighth largest shareholder,” Bjerkholt said.
Besides the influx of funds and the addition of experienced management, the deal provides an answer to the question of what IntraBiotics would do with an approved, unpartnered product.
“Our plan is to commercialize iseganan ourselves in North America,” Bjerkholt said, saying the acquisition gives IntraBiotics “the beginning of a commercialization leadership team in-house.”
Mario and his colleagues will form the core of the commercialization team, bringing aboard their experience in the area, and IntraBiotics will hire a sales force to push iseganan if and when it is approved. With the new commercialization expertise, added to IntraBiotics’ clinical experience, Bjerkholt said, the company will seek to “attract compounds and products that are complementary to iseganan in the anti-infective and oncology fields.”
“We feel like before this, we had phenomenal clinical development capability and expertise,” he said. “Ernie and the other people bring commercial expertise to the organization. This will make us an attractive partner for others.”