At A Glance
Name: Steven Kriegsman
President, CEO — CytRx
Background: Global Genomics, majority shareholder — 2000 Kriegsman Capital Advisors, founder — 1999 The Kriegsman Group, founder — 1992 Kriegsman, Ader, & Co., founder — 1976 BS, accounting, New York University —1964
Starting his career as a certified public accountant, Steven Kriegsman seems an unlikely candidate for head of a biotech firm. But after a series of successful private investments in the sector during the early 1980’s, and as an investment company and financial consulting firm he founded over the next decade became more and more focused on healthcare, so too did he.
That focus led Kriegsman to the doorstep of Global Genomics, a privately held genomics firm in which he purchased a majority stake. After Global Genomics was acquired by floundering biopharmaceutical firm CytRx in the summer of 2002, Kriegsman became CytRx’s top shareholder and CEO. RNAi News recently spoke to Kriegsman to discuss how he got into the RNAi field and CytRx’s new direction under his leadership.
How did everything get started with RNAi?
When I took over CytRx, they had technology in DNA-based vaccines and they had technology in cardiovascular and sickle cell disease that had been in the clinic. When I wanted to restructure the company, I formed a very prominent scientific advisory board, led by Dr. Lou Ignarro, the Nobel Laureate from UCLA … [of people] who really knew what was going on in the technology area. And so, we called a scientific advisory board meeting over the summer of 2002, and we discussed what direction should CytRx take. The conclusion was that the old technology we should outlicense … and look for something that was compelling and could be a breakthrough going forward.
One of the scientific areas that was mentioned at that meeting was to look into RNAi, which was just then starting to get more and more prominent, but had not been yet the scientific breakthrough of the year in December 2002 in Science magazine. So we started to study the area [and] we had our scientific advisory board getting us information on it. …
As a result of that work, we discovered that the University of Massachusetts Medical School was a pioneer in RNAi and [decided] that we should go and meet with them … and look into seeing if maybe we would enter into a transaction with them to develop their RNAi technology. …
We told them of our interest in RNAi … and we negotiated a very broad-based alliance with UMass where they became our second largest shareholder. And, we entered into a series of license agreements with them, where we licensed in the RNAi area [Type II] diabetes, obesity, and Lou Gehrig’s disease, and the possibility for other opportunities. That really gave us the impetus to move forward in [the RNAi] space.
When the Global Genomics merger with CytRx first occurred, you had intended on cleaning up CytRx and selling it off. When did that change?
That changed, I would say, after we completed the alliance with the University of Massachusetts Medical School. … At that point, I realized, with the RNAi technology we were responsible for, with the exclusive licenses we now had, we had an opportunity to develop some therapeutics that were world-class. … At that point, our board said, ‘let’s go for it. Let’s raise additional capital and let’s build a company.’
Are you CytRx’s biggest shareholder?
CytRx’s strategy seems to involve developing its drugs through academic partnerships, aside from Araios. Why this approach?
Araios may be the only subsidiary we only set up. Typically, we would set up divisions. …
[Academic partnerships] is the foundation [for CytRx]. It was the foundation for Amgen; they basically started out of UCLA. It’s one strategy, but not the only strategy. We are always in discussions with other companies, both public and private, both foreign and domestic, for additional platforms related to our basic technology or other big market opportunities.
I would say that, over time, not only will we work with universities, but we’ll work with major pharmaceutical, biotech, and possibly generic [drug] companies. Clearly the purpose will be to build on the platforms that we have, or add value, or do strategic alliances.
How far off would you say a corporate partner is?
It’s interesting, because we’ve had opportunities already in Lou Gehrig’s in that arena. But right now, our feeling is that we’d rather bring the product along, get it into the clinic, and see if we might partner or, [with] Lou Gehrig’s, we may decide that we would take it all the way through the clinic and not partner that one — just sell that one directly by having a sales force internally to sell to neurologists and neurosurgeons.
On the other hand, in [Type II] diabetes and obesity, and with regards to RNAi in any other indications, that’s a longer row to hoe. I think probably in those areas, when the time is right, we would entertain partnerships. We’ve had some discussions already with big pharma, but we’re not yet desirous of doing anything.
Do you see a time when R&D is brought in-house?
R&D is in-house at Araios. We are building a scientific team ... and there, initially, will be about 10 scientists on board. … So, we actually have, and are developing, an active lab in Worchester [Mass.].
We own 95 percent [of Araios]. … It’s an operating unit, we have scientists there, and we’re working on building a lab. If all goes well, but some time next year we’ll probably have about 25 people working there, most of whom will be scientists.
What about CytRx’s cash position? What does it look like now?
Right now, we have a very good cash position. In the past six months, we’ve raised over $14 million. In addition, we’ve had warrants, which were in the money. So, a number of warrant holders exercised their warrants and that brought in additional capital. As a result of out licensing …the balance of our old technology … came a certain amount of capital.
Obviously, our cash position is pretty good.
Can you project about how far the position will carry the company?
I think we have sufficient resources to pretty much execute our plan right at the moment. I think, over a period of time, as necessary, we’re always open to a possible strategic alliance … and bringing in additional capital, or maybe getting an NIH grant, or perhaps raising additional capital through an equity offering or perhaps a secondary offering. …
At the right time, if we have a capital need — which we don’t have right now — we would pursue raising additional money.
When might that capital need possibly come about?
We have roughly enough capital to last, and this is an approximation, probably a year and a half to two years. At the same time, if we see an opportunity that we just have to have, and we think it will add value to the company … we would always consider raising capital.
Since you’ve come on board at CytRx, there have been a flurry of collaborations. Has the company’s path right now been set, or should we expect more things in the near term?
I think you can expect more things to occur in the short term and the long term in those areas we’re in. … Obviously we’re exploring additional large-market opportunities in RNAi, and that will continue …
There’ll be growth internally through Araios … that will expand our franchise in [Type II] diabetes and obesity. … In terms of the Lou Gehrig’s program, once we cemented our relationship with Mass General … we pretty much … have what our scientists and doctors tell us [is needed] to bring a drug to market down the road. The next step will be to get into the clinic as quickly as possible. … Realistically, [Lou Gehrig’s] is our first RNAi project that has a very, very legitimate chance of being a therapeutic and coming to market.
So working within the existing collaborations is probably the main focus right now?
Yeah. We’re working with Dr. Xu at UMass, we’re working with Robert Brown Jr. at Mass General and Harvard ... and as quickly as we can, we’d like to get a product into humans.
When are the third quarter results coming out?
They should be out around November 15. Actually, not should, they have to be out, and they will be. ... And as far as I know, there are no surprises there — pretty much vanilla ice cream.