Entelos has secured a $6.5 million debt financing loan from Imperium Master Fund. The company plans to use about $1.5 million to pay off debt related to last year’s $8.3 million acquisition of Iconix Biosciences. It will use the remaining $5 million for various other expenses that are still to be determined, though further development of its PhysioLab simulation platform is a likely target.
“One of the things we want to do is have some additional cash because we do see a lot of opportunities we’d like to pursue,” James Karis, president and CEO of Entelos, told BioInform this week.
As of June 30, the last period for which figures are available, Entelos had $2.5 million in cash. The company raised an additional $2 million from its primary shareholder, Abingworth Management, in September [BioInform 09-21-07], and another $1.5 million in November when Pfizer Ireland Pharmaceuticals, a subsidiary of the pharmaceutical firm, bought more than 2.5 million shares of the company’s stock [BioInform 11-02-07].
Karis said the company is confident it can pay the money back. “Loans, if you can generate cash to pay them, are not bad money-raising vehicles,” he said. “Our business has matured enough that we do have decent revenues so we do have some ability to pay.”
Imperium is providing Entelos with $1.5 million under a secured bridge note and $5 million under secured convertible debentures. The bridge note will mature in 15 months while the debentures, provided in two separate tranches, will mature five years from their respective issuance dates. Imperium has already bought the first debenture for $3 million, and plans to purchase the second on or before April 9.
Expanding the Business
Karis said that the company hasn’t yet decided exactly where it will spend the money, but indicated that it will integrate more models with its PhysioLab system.
“So it’s not say, just a [certain disease type] model or an obesity model, [for example], but we will look more at metabolism broadly and potentially integrate cardiovascular as well,” Karis said. “We will continue that process of integration; a virtual human type concept. Obviously, we are a long way from a virtual human but more of these multiple disease areas [will be] integrated.”
Karis did not have sufficient opportunity to offer further comment on the integration by press time. But back in April of 2007, BioInform reported that Entelos, which had just celebrated its first year as a publicly-traded company, sought to expand its use of PhysioLab into areas such as oncology, for example.
The news of the loan agreement followed an announcement last week that Entelos had expanded an existing partnership with Johnson & Johnson Pharmaceutical Research & Development to use PhysioLab to study new therapies for type-2 diabetes.
“One of the things we want to do is have some additional cash because we do see a lot of opportunities we’d like to pursue.”
The agreement builds on a collaboration that began in 1999 to validate targets, select biomarkers, and optimize clinical trials for type-2 diabetes, obesity, and anemia. Last year, the companies agreed to expand the collaboration to include "multiple therapeutic areas" over a five-year term, but did not provide further details at the time [BioInform 03-17-06].
Karis said this week that Entelos’ long-term partnership with J&J is important.
“It’s one company [with which] we’ve clearly demonstrated some value and they’re strong believers in the in silico approach,” Karis said. He declined to elaborate. J&J would not comment.
Entelos has also recently expanded an ongoing collaboration with Pfizer based on its Cardiovascular PhysioLab platform. The expanded project will focus on identifying biomarkers and interpreting clinical study data. [BioInform 11-16-07]
Karis said that Entelos currently works with between 11 and 14 pharmaceutical partners and that the company hopes to add “more pharma partners for sure this year.”
He acknowledged some instability in the pharmaceutical market due to layoffs, dwindling drug pipelines, and blockbuster drugs about to come off patent. “Clearly, as the pharma industry struggles it’s a problem for us in the short term because contracts are harder to get, money’s tighter, and things of that nature,” he said. Nevertheless, he added that the industry’s push to “rationalize and create much more efficient R&D process[es] is a good megatrend for us.”
In addition to its pharma parters, the company has an ongoing collaboration with the FDA on a model to study liver disease [BioInform 08-10-07].
Karis said that relationship has been going well, and that “we hope to make some announcements about that at the end of the year .”
New Markets, Possible Acquisitions
In September, Karis told BioInform that the company was looking to play in other markets, such as cosmetics, anti-aging, and the “functional foods” space [BioInform 09-21-07].
Karis said this week that such evolution is “still an opportunity for us,” but declined to elaborate. “I think we’ll make some announcements about that sometime in 2008,” he said.
“I think lines are a little blurry in some areas, particularly around metabolism between foods and therapeutics and even healthcare in general, so I think [that in] some of these areas there is an opportunity for … a very reliable predictive model around human biology. … So I do think we will see some things in that area,” said Karis.
Entelos also said in September that it was considering adding to its acquisition of Iconix by acquiring “complementary predictive technologies for efficacy and safety testing.” Karis confirmed that is still an option but could not elaborate.
“We’re always looking,” he said. “There is an opportunity to provide more effective services and capabilities to this whole process of research and development, and we think that is a long-term opportunity and so we continue to look at interesting technologies and companies such as the acquisition of Iconix.”
He added, though, that “I don’t have one I’m working on now that I’m going to be announcing soon.”