Maxygen CEO Sees Cash Burn Rate Of $32M In 2001
By BETH M. MANTZ
Of DOW JONES NEWSWIRES
NEW YORK -- Maxygen Inc. (MAXY) could burn less cash this year than earlier predicted, said Chief Executive Russell Howard.
The Redwood City, Calif., company expects to spend about $32 million this year, below earlier forecasts between $35 million and $40 million, said Howard in an interview with Dow Jones Newswires.
Most of this investment will occur in the human therapeutics area, where Maxygen want to make a name for itself, instead of spreading itself thin among its chemicals, agricultural, vaccines and protein pharmaceuticals businesses. This transition could occur by an intensified focus on human therapeutics as well as elimination of the chemicals and agricultural operations.
Maxygen intends to exit its chemicals and agricultural operations through either divestiture or spinoff, but Howard would not specify when such an event would occur. "It is absolutely on the horizon ... somewhere between next month and five years," he said.
Until then, the company will continue to collect milestones and sales revenue from its agricultural and chemicals businesses and deploy them for further research and development of its drug and vaccine pipeline.
Although Howard expects this revenue should bring the company to profitability in the 2005-06 timeframe, he doesn't think the money will be sufficient to grow the company's human therapeutics operations.
Eventually Maxygen will have to raise the cash elsewhere to fund drug and vaccine development because of the hundreds of millions of dollars needed to bring a product from the lab to the market. And the company doesn't have just one possible lead, it has 30 therapeutic leads it might pursue: 20 in protein pharmaceuticals and 10 in vaccines.
"It will be necessary for Maxygen to go to the market before having (any) therapeutics approved," said Howard. "We are looking at another six to eight years (before its current preclinical compounds reach the market) and we will need to raise more funds. The fact is we don't want to be a one-product company in human therapeutics; we want to be putting several products simultaneously together to spread around our risks."
Currently, Maxygen is testing four compounds preclinically in small animals: two are partnered and two are internally developed and owned. Maxygen has teamed up with Denmark's H.Lundbeck A/S (K.LUN) to develop an unnamed protein pharmaceutical for multiple sclerosis and with InterMune
Inc. (ITMN) on improving a gamma interferon compound and extending its half life. Based on its research grant from the Department of Defense's Defense Advanced Research Projects Agency on improving DNA vaccines, Maxygen is developing a colorectal cancer vaccine and a dengue fever vaccine.
Maxygen expects to begin early safety human clinical tests for these four products in 2003, and start phase II trials by 2005-06.
Some of this financial pressure could be alleviated by further collaborations. Maxygen would like find a partner for its dengue fever vaccine, said Howard. Additionally, he said the company has promised an additional pharmaceutical alliance by the end of this year.
"If it doesn't get done this year, it will happen in 2002," said Howard.
Shares of Maxygen closed at $19.50, up 62 cents, or 3.3%, on composite volume of 108,500 shares, compared with average daily volume of 82,700 shares. |
