In the summer of 1992, a brilliant young post-doctoral student at Harvard Medical School named Robert D'Amato made a phone call to his longtime mentor, John W. Holaday, who had just launched a tiny biotechnology company in Rockville named EntreMed Inc.
D'Amato wanted to share his good news that a paper he had co-written with his new boss, Dr. M. Judah Folkman. had been accepted for publication in the prestigious journal Science. The subject was eye-catching if nothing else: The banned and reviled drug thalidomide's potential for treating blindness and cancer.
"Folkman is a genius. He's 10 years ahead of everybody else when it comes to cancer research," D'Amato, an ophthalmologist, recalled telling Holaday about the Harvard professor.
The call proved pivotal for Folkman -- and for Holaday's company, which he set up with a small group of former colleagues from Walter Reed Army Medical Center in Washington, Atlanta-based biotechnology investor Steve Gorlin and Dr. Bart Chernow, a Baltimore physician and the best man at Holaday's wedding. D'Amato had worked under Holaday as an undergraduate.
Holaday, who said he considers D'Amato "a son," was intrigued by what D'Amato told him of Folkman's search for drugs that might treat cancer by blocking tumors' ability to grow blood vessels, thus starving them to death.
In short order the chief executive officer flew to Cambridge, Mass., for a visit.
By 1993 EntreMed had struck a deal with Harvard and Folkman, whose corporate sponsorships by other companies had dried up. EntreMed agreed to fund his research on Thalidomide and his quest to find other drugs that could block the process of blood vessel formation, called angiogenesis.
In turn, EntreMed got the rights to commercialize Thalidomide -- and subsequently the licensing rights to two naturally occurring human proteins that Folkman had discovered govern cancer's ability to generate new blood vessels and thus grow and metastasize.
It is those two proteins, angiostatin and endostatin, that have generated a storm of media and investor interest in the last two days for EntreMed. Like most young biotech start-ups, the company, which has 50 employees and no approved products, posted a loss last year of $6.5 million, and analysts say it is at least four years away from profitability.
On Monday, EntreMed's stock rocketed more than 300 percent and trading volume roared to 23 million shares -- nearly double its outstanding shares -- after a front page story in the Sunday New York Times reported that Folkman's discovery could be a breakthrough in cancer treatment and that the National Cancer Institute has assigned its highest priority to moving the proteins into human trials. Those tests, however, won't come for 12 to 18 months, the NCI cautioned Monday.
Yesterday, as scientists, analysts and even company executives voiced words of caution that it's far too early to consider the proteins a cure, the stock slid $8.6875, or 17 percent, to close at $43.125 -- still more than three times its Friday close of $12.0625. Trading volume remained heavy -- 9 million shares traded hands, or 123 times its 6-month trading average.
"I can't tell you how many people have come into my office this morning asking about this company," said Steven Delco, a biotechnology analyst with Miller Tabak Hirsch & Co. in New York.
"I think what happened with EntreMed is that people want these things to happen," Delco said. "They want a cure for cancer and they put their money on something they think they can believe in."
If the watchword yesterday was caution, Holaday said he was intrigued by Folkman's work from the start. Certainly it fit EntreMed's profile. The company was founded in 1991 with a somewhat unique aim at the time: find potential breakthrough medical research languishing in the laboratories of academia and elsewhere, license it and move it toward commercialization.
A neuropharmacologist and retired Army captain, Holaday, 53, said he has one trait that's served him well through his career: He favors people and work that turn old assumptions inside out for answers to vexing problems.
"I found Folkman an enormously creative man," recalled Holaday. "I liked the fact that he was looking for different ways to solve a problem."
In the end, though, it was the data Folkman had collected over 25 years of research into angiogenesis that sold him and the company's scientific advisers.
"We had faith in the science," said Holaday.
The company anted up more than $1 million in initial funding, which later was extended to include another $10 million in a deal that expires in April 1999.
While Folkman got the desperately needed corporate funding he needed for his angiogenesis research, EntreMed got something with sizzle to help it shop around for investment capital.
Holaday outlined Folkman's work to Gorlin, his pal and Atlanta financier, and the two went shopping for backers. They raised $7 million in a private placement in 1993 from a gaggle of deep pockets.
Folkman's work also served EntreMed well when it went shopping for the deep-pocketed corporate partner it would need to help it fund clinical trials.
It landed a $76 million deal with powerhouse Bristol-Myers Squibb & Co. -- a deal that positioned EntreMed to go public in 1996.
Said D'Amato, "John had the vision to see and understand Judah's vision for a new way to treat cancer at a time when he didn't have too many believers. I can't tell you the number of drug companies that came to look at his research and walked away, saying it couldn't be done."
Pub Date: 5/06/98