EntreMed Inc. said yesterday that its president and chief operating officer will resign, marking the latest departure from the top executive ranks of a company that is getting down to its final weeks of cash.
The Rockville drug developer, which has operated for months without a chief financial officer, said it will promote Senior Vice President Neil Campbell to replace Edward R. Gubish Jr. as president and chief operating officer.
Gubish is a biologist who is respected on Wall Street and is a longtime company insider with an in-depth knowledge of both EntreMed's clinical trials and the Food and Drug Administration.
"He was a pretty trustworthy guy," said Peter J. McDonald, an analyst with Gerard Klauer Mattison, adding that investors saw Gubish as a "straight shooter."
EntreMed trumpeted Campbell's promotion yesterday as one that will "strengthen the company's business position."
Campbell is leading efforts to sell rights to one or more of its anti-cancer drugs and will continue that role in his new position.
He already has pushed EntreMed to broaden its strategy beyond oncology. He successfully licensed its drug Panzem - now in clinical trials as an anti-cancer treatment - to Allergan Inc. for development as a treatment for eye diseases.
The deal brought in $5 million in January and the promise of up to $41 million, plus royalties, should such an eye treatment ever reach the market.
But EntreMed has acknowledged it has only enough cash to last it into the fourth quarter.
Company Chief Executive Officer John W. Holaday, a neuropharmacologist with extensive research experience, will take over Gubish's duties as head of research and development.
Analysts said yesterday that Gubish's departure is symptomatic of broader problems at the company.
In two years, EntreMed has gone through the loss of two chief financial officers, the makeover of its entire business development team and the departures of a president and experienced investor relations director.
"They're preparing to be a fallen angel at this point," said John McCamant, editor of the Medical Technology Stock Letter. "There's greener pastures out there" for biotech executives.
McCamant noted that EntreMed's market capitalization - a measure of its value figured by multiplying share price by shares outstanding - yesterday was $25.7 million.
That, he said, is below a $50 million requirement applied to some companies by the Nasdaq stock market. The stock, which gained 8 cents yesterday to close at $1.17, soon could dip below $1 a share, violating another Nasdaq requirement, he said.
After a period of being in violation, EntreMed may have to delist from Nasdaq and move to over-the-counter trading - traditionally a more difficult market in which to raise large amounts of cash.
EntreMed's last chief financial officer was Thomas P. Russo. In a May conference call with analysts, Holaday had acknowledged that Russo had left months before for "personal reasons."
Russo never returned phone calls for comment. Russo had been hired in October 2000 to replace departed CFO Nelson Campbell, who left to join investment banking firm Friedman Billings Ramsey Group Inc.
Former Executive Vice President Joanna Horobin left in the fall of 2001. Her departure came after Holaday had hired Campbell and passed her over for the position of company president in favor of Gubish the previous spring.
She became chief operating officer of CombinatoRx, a Boston drug developer. Horobin acknowledged the lack of opportunity for promotion was one of the reasons she left.
Horobin had played a key role in the commercial development and marketing of the anti-cancer drug Taxotere at the company now known as Aventis. She had many contacts within the industry as a result.
Harobin had been leading EntreMed's efforts to license one of its three experimental anti-cancer drugs to a larger drug company.
The departure, and Campbell's arrival with a team of his own, marked a near total makeover for EntreMed's efforts to license a drug, a key way for any small biotechnology company to raise funds.
"Neil Campbell has the contacts and the ability to do what it takes, but you just want someone who has been there awhile and has a stake in the company," McDonald said.
Holaday said yesterday that a CFO was "not an urgent need at this point." He said EntreMed has an excellent company controller in Dane Saglio and relies on Steven Goldfarb, vice president of finance, to play a key role with fund-raising on Wall Street.
Holaday also has been upbeat about the company's chances of achieving a licensing deal under Campbell, even as EntreMed laid off 60 workers in less than two months to save money.
Gubish's departure comes exactly a week after company spokeswoman Amy Finan denied he was leaving the company amid layoffs. She said yesterday she did not know at the time that Gubish's departure was imminent. His last day is Oct. 15.
"He's got some other opportunities he's wanted to explore," Holaday said of Gubish. "I don't know what they are. He's been talking about this for awhile."
Gubish is a biologist who once worked at the FDA reviewing applications for biologic drugs. He joined EntreMed in 1993 as senior regulatory affairs director, a position that generally includes interacting with the FDA.
He most recently was promoted in spring 2001, from overseeing research and development to president and chief operating officer. Gubish did not return calls yesterday for comment.