By Randall Osborne

Less than a year after EntreMed Inc.'s stock skyrocketed on news reports regarding its pair of anti-angiogenesis proteins against cancer, the company's shares plummeted with the disclosure that partner Bristol-Myers Squibb Co. is returning development of one of those proteins, called Angiostatin, to EntreMed.

"In our view, the molecule is not ready," said Peggy Ballman, spokeswoman for Bristol-Myers, of New York. "This was a difficult decision, but the best place for [Angiostatin] right now is with EntreMed."

Rockville, Md.-based EntreMed's stock (NASDAQ:ENMD) fell 47 percent on the news about Angiostatin, on which the company had been working with Bristol-Myers since 1995. The shares closed Wednesday at $12.875, down $11.625, after trading as low as $12.

She cited "various issues still unresolved about the characterization of the molecule, and a lot of issues related to potency, and getting consistent reproducible biological effects."

Bristol-Myers has other products in its pipeline to focus on, she added, while Angiostatin will "probably be EntreMed's highest priority right now."

John Holaday, chairman, president and CEO of EntreMed, said the move is only a restructuring of the agreement, done because Bristol-Myers could not manufacture Angiostatin consistently.

"One batch would work beautifully and the next batch wouldn't," Holaday told BioWorld Today. Bristol-Myers used a mammalian expression system, whereas EntreMed uses the Pichia pastoris yeast expression method to make the protein. The companies agreed EntreMed's system is better, and EntreMed was given back the responsibility for development - at least for now.

"We said, 'Frankly, if we're going to make [Angiostatin], we think we should get something in return,'" Holaday said. "So, the royalty rates were increased."

Details of the new royalty arrangement will be disclosed shortly, he added.

"We're still in the driver's seat, and [Bristol-Myers] is riding shotgun," Holaday said.

Similar, NCI-Partnered Protein Nearing The Clinic

For the other anti-angiogenesis protein, Endostatin, EntreMed has a five-year development agreement with the National Cancer Institute (NCI), signed in September 1998. Like Angiostatin - which was being developed in parallel with Bristol-Myers - Endostatin is "right on time," Holaday said. The company expects to file in the second half of this year to begin clinical trials with Endostatin.

Last May, EntreMed's stock more than quadrupled on the Monday after a weekend feature story by the New York Times, which detailed the company's early-stage research in mice with Angiostatin and Endostatin, was picked up by many major newspapers. (See BioWorld Today, May 5, 1998, p. 1.)

Data from the research by scientist Judah Folkman had been published much earlier, but investors apparently were impressed by enthusiasm for EntreMed's work in the scientific community. NCI officials and Nobel laureate James Watson spoke highly of the research. The stock's price eventually returned to more moderate levels.

"There's a great proclivity for misinformation" regarding EntreMed's products, Holaday said.

For now, the company will proceed on its own with Angiostatin, scaling up Good Manufacturing Practices production for clinical trials, with an investigational new drug application expected later this year. Bristol-Myers, of New York, has the option to reassume development and marketing rights for the protein, if clinical proof of principle is demonstrated.

Bristol-Myers May Opt In Again At Phase II

Ballman told BioWorld Today the option will be considered when Angiostatin reaches Phase II trials.

"That's still probably two or three years away," she said.

"We still have a relationship with [EntreMed], and we look forward to that continuing," Ballman said. "We have the right to retain [Angiostatin] as a basic science tool. We'll share any data with them that are pertinent."

The Bristol-Myers deal, begun in December 1995, included a $6.5 million equity investment in EntreMed, with an agreement to fund research for five years and pay milestones. In exchange, Bristol-Myers got worldwide rights to anti-angiogenic applications.

Also in development by EntreMed is thalidomide, granted orphan drug status last year for treating Kaposi's sarcoma and primary brain malignancies.

Warren, N.J.-based Celgene Corp.'s thalidomide, trade-named Thalomid, was approved last July for treating erythema nodosum leprosum, a debilitating condition associated with leprosy. Thalomid was launched in September. Several months later, Celgene sublicensed thalidomide-related patents and technology from EntreMed for other uses, in a deal that includes royalty payments to EntreMed for all indications. Celgene is investigating Thalomid for use against multiple myeloma; HIV/AIDS-related conditions; and Crohn's disease.