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Entelos Eyes Acquisitions, New Markets as it Posts $5.5M Profit for H1 2007, Raises $2M

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Fresh off its acquisition of Iconix last month, simulation and modeling firm Entelos this week said it is looking to acquire additional “complementary” technologies and expand into new markets beyond its traditional pharma base.
 
Entelos outlined its strategic goals alongside its financial results for the six months ended June 30. The company reported a 3-percent increase in revenues for the period amid an 8-percent boost in profits to $5.5 million. In addition, the company raised $2 million from long-standing investor Abingworth Management, which bought 3.8 million shares at 26.55 pence per share.
 
The extra cash will bolster the company’s coffers, which stood at $2.5 million as of June 30. These additional resources should come in handy as it seeks to “build more models or acquire complementary predictive technologies for efficacy and safety testing,” according to a statement accompanying its financial report.
 
In an interview with BioInform, Entelos CEO James Karis would not comment on the company’s merger and acquisition strategy other than to say it is always looking at opportunities to acquire “next-generation” companies. He added that its acquisition of Iconix in early September was in line with this goal [BioInform 09-07-07].  
 
“We created a novel, best-in-class approach to look at efficacy,” Karis said, noting that he hopes to find similar types of “leading edge” products to complement the company’s own product line.
 
Karis said that Entelos will likely provide further details on its M&A strategy “as we get closer to the end of 2008.”
 
Entelos also views a number of opportunities beyond its current customer base of pharmaceutical firms. Karis said that the cosmetics and anti-aging industries in particular, as well as nutrition — particularly the so-called “functional foods” space — are areas Entelos will likely explore.
 
Revenues, Profits Inching Up
 
Entelos posted revenues of $15.7 million for the six-month period ended June 30, a 3 percent increase over $15.2 million in the same period last year.
 
Abingworth partner Jonathan MacQuitty told BioInform that “the revenue is confusing with Entelos because they are covered by software revenue recognition rules. They are still extremely back-ended [by] revenue recognition, but from a cash point of view, they are structured completely differently.”
 
Entelos recognized net income of $5.5 million for the six-month period, an 8 percent increase over $5.1 million in the prior year.
 

“We think in this day of the difficulty trying to develop new therapeutics, given the safety and efficacy hurdles imposed, to have the latest tools to help you manage that process more effectively [is very important].”

This year, Entelos has worked with “about 14” major pharmas, Karis said, including Johnson & Johnson, Organon, Pfizer, Novartis, and Roche.
 
The company recently signed an agreement with the Food and Drug Administration to develop a model for studying liver disease [BioInform 08-10-07].
 
Financial terms for that agreement were not disclosed.
 
Entelos is also forging ahead with its internal therapeutics and drug discovery programs — a relatively recent activity for the firm. In a statement, the company said that it expects to “begin development” of a series of selective progesterone-receptor modulators that it licensed from Ortho-McNeil last year [BioInform 04-20-07].
 
Karis said the company uses its virtual modeling approach as part of these in-house programs.  
 
Entelos also reiterated its plans to develop a version of its PhysioLab modeling platform focused on oncology, though Karis declined to provide further details.
 
Abingworth’s MacQuitty said he feels the company is poised to hit the marks required for addressing hot-button topics of safety and toxicity and that Abingworth may infuse more cash into Entelos in the future.
 
“We think in this day of the difficulty trying to develop new therapeutics, given the safety and efficacy hurdles imposed, to have the latest tools to help you manage that process more effectively [is very important],” MacQuitty said. “We think Entelos is an extremely good space to provide that capability to the pharma and biotech industries.”

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