Entelos celebrated its one-year anniversary as a publicly traded company this month, and laid out a series of goals that it plans to meet during 2007. Among these is a new focus on the use of its PhysioLab biosimulation platform for drug repositioning and the development of a new PhysioLab platform that will focus on oncology.
In addition, Entelos this week said that it had acquired from Ortho-McNeil a set of therapeutic compounds that it intends to develop internally — the first such deal for the company, and a “significant” step in its development, according to Jill Fujisaki, vice president of investor relations at Entelos.
Other goals include expanding the company’s customer base into consumer healthcare, and a growth strategy that includes the acquisition of companies with technology platforms “complementary” to its own predictive methodology and with a similar customer base, Fujisaki said.
Entelos outlined these goals in its preliminary financial results for the 12 months ended Dec. 31, 2006 — its first year-end financial report since its initial public offering on the London Stock Exchange’s Alternative Investment Market last April [BioInform 06-16-06].
Entelos raised $16.6 million in net proceeds in its IPO. As of Dec. 31, it had $4.7 million in cash and cash equivalents, plus an additional $5.2 million in investments and accounts receivable.
According to the preliminary results, annual revenues jumped to $21.6 million from $2.8 million because the company recognized revenue for a “large, multi-year” contract during 2006.
Consequently, net loss narrowed to $754,000 from $13.8 million in 2005.
R&D expenses rose to $6.7 million from $5.3 million due to an increase in personnel and several new internal development projects, Entelos said.
Indeed, the company has been ramping up its product-development activity over the last year. During 2006, Entelos completed PhysioLab platforms for type 1 diabetes and skin sensitization and began developing a PhysioLab platform for artherosclerosis and cardiovascular disease.
The company now intends to further build out its R&D pipeline with a new PhysioLab platform for oncology, as well as a version of the platform to help it further develop the compounds it acquired from Ortho-McNeil — a series of selective progesterone-receptor modulators that may be useful for treating “a range of women’s health-related indications,” such as endometriosis, uterine fibroids, and breast, uterine, or ovarian cancers, Entelos said.
“Currently, we don’t have a PhysioLab model that’s looking at one of these indications, so we plan to build something we’d be able to use for that,” Fujisaki said. “Our strategy is to use PhysioLabs to add value to compounds — whether they be our own or our customers’. … Our intent is to use the model to increase the knowledge about a compound and accelerate its development.”
Fujisaki said that the company will likely outsource any chemical development of the newly acquired compounds, rather then build up any internal chemistry capability. “I would imagine that it would have to be separate fundraising,” Fujisaki said, “because it would be outside the scope of what we usually do.”
The company plans to advance the compounds, which Ortho-McNeil has already studied in a Phase 1 clinical trial, to “roughly Phase 2” within the next year, Fujisaki said.
Financial terms of the agreement were not disclosed, but Entelos noted in its financial results that it waived the contractual right to $4.2 million of receipts from a customer during 2006 “as payment for a family of therapeutic compounds.”
In addition to using PhysioLab for its internal development work, Entelos plans to extend the platform into the area of drug repositioning, in which it plans to find new indications for drugs in partnership with pharmaceutical firms.
“Our intent is to use our PhysioLabs to do the repositioning,” Fujisaki said. “As we work with our customers and we have all this disease knowledge, we do see particular compounds that could be useful for other indications. They could be for drugs that are already on the market, they could be for drugs that are novel, they could also be drugs in our own portfolio to develop and then outlicense.”
Fujisaki said that the company already performs this capability with some of its current pharmaceutical partners, but noted that, so far, “we haven’t actually promoted or talked about it very much. So we’re just raising that profile a little bit.”
“There is a lot of interest from companies to build a model in oncology, so we would be seeking a partner.”
Entelos is also seeking to grow its business by looking for additional agreements in the consumer healthcare market similar to its agreement with Unilever, which tapped the company to create the skin-sensitization PhysioLab platform.
Fujisaki said that Entelos sees a promising opportunity for its skin sensitization-modeling platform in the European cosmetics market, which is under regulatory pressure to phase out all animal testing by 2009.
“The companies there are highly motivated to find alternative ways of testing for whether something might cause sensitivity in human skin,” Fujisaki said. “Our model is targeted to do that, and that’s why we built it with Unilever and we’re pursuing other companies that are also in that field.”
Entelos is also looking to grow via acquisitions. “We focus on predictive technology, and our core PhysioLabs are the centerpiece of what we do,” Fujisaki said. “But if there are other companies that have technologies that are also predictive that are complementary to what we do, those are the types of companies we’d be quite interested in because they would serve the same customer base that we already focus on and could expand our offerings.”
Finally, the company is looking to dip its toe into the potentially lucrative oncology market — a therapeutic area that the company has not tackled to date because of the complexity of the disease, Fujisaki said.
“It’s something that we have been intending to do for awhile,” she said, noting that one reason the company didn’t address oncology sooner was because of the breadth of the disease.
“Oncology means very different things to different companies and different people,” she said. “Really, it’s almost like hundreds of diseases in one, so how do you build something that would be applicable relatively broadly, yet be targeted enough so that it can be used right away in projects?”
Fujisaki said that Entelos has identified a focus area within oncology that it plans to disclose in several months. The company is also seeking a development partner for the platform, which would be in line with its development model for prior PhysioLab platforms.
“There is a lot of interest from companies to build a model in oncology, so we would be seeking a partner,” she said. “The model we’ve used all along is to build in partnership with a company.”