GEOFFREY F. COX - ARONEX PHARMACEUTICALS - (ARNX)
CEO Interview - published 10/03/00

DOCUMENT # KAV237

GEOFFREY F. COX, PhD, has served as a member of the Board of Directors of Aronex Pharmaceuticals, Inc. since January 1994. Dr. Cox joined the company as Chairman and Chief Executive Officer in November 1997. He has more than 20 years of pharmaceutical experience. In 1984, He joined Genzyme in the UK as Operations Director and became Managing Director of Genzyme’s UK operations in Haverhill and Maidstone in 1986. Dr. Cox served most recently for Genzyme as Executive Vice President responsible for operations and the pharmaceutical and diagnosis business units. Prior to joining Genzyme, Dr. Cox was General Manager of UK manufacturing operations for Gist-Brocades.

Sector: Biotechnology

TWST: Could we begin with a brief overview of Aronex Pharmaceuticals?

Dr. Cox: The company is based in The Woodlands, Texas, which is just north of Houston. We developed a technology that came out of M.D. Anderson Cancer Center, which is a major cancer center based in Houston. We started in 1986 and went public in 1992. The company is not a basic-discovery company — it’s a product-development company. It focuses on taking potential pharmaceutical products through the development process into the commercial arena. The focus of the company is on cancer and infectious diseases. We have four products in development, two of which are in an advanced stage, including one product that is presently under review by the FDA for approval. We are publicly traded on the NASDAQ under the symbol ARNX.

TWST: Could you describe the products?

Dr. Cox: The product that is currently being reviewed by the FDA is Atragen, a liposomal formulation of all-trans-retinoic acid. It is currently under review for an indication in acute promyelocytic leukemia. We’re also pursuing a number of other indications for this product, including non-Hodgkin’s lymphoma, refractory prostate cancer, acute myeloid leukemia, and renal cell carcinoma. The second drug for which we’ve carried out a substantial part of the clinical trials is Nyotran, which is a liposomal formulation of a drug called nystatin. Nyotran is being developed for the treatment of systemic fungal infections. We anticipate submitting a New Drug Application for Nyotran next year. We have two other oncology products in our pipeline. One is Aroplatin, a new chemical entity. It is a novel platinum compound currently being investigated in Phase II clinical trials for mesothelioma and renal cell carcinoma. Mesothelioma is a particularly difficult, aggressive type of lung cancer. Aroplatin is particularly interesting because the platinum drug market is a very significant market, and Aroplatin appears to have advantages in terms of its toxicity profile. It has very little nephrotoxicity, which is typically a dose-limiting toxicity in currently available platinum drugs. So we believe that this is a drug with significant potential in a large market segment. The fourth drug that we have in the clinic is Annamycin, a new chemical entity. It’s an anthracycline that has been specifically designed to overcome two particular problems of anthracyclines: cardiotoxicity and multiple-drug resistance. Annamycin is in two Phase II trials: one in breast cancer and one in acute myeloid leukemia.

TWST: When do you expect the first drug to be commercialized?

Dr. Cox: We hope Atragen is going to be our first commercial product. We filed an NDA amendment in July of this year, and we’re now in the review process. We are obviously hopeful that we will be able to successfully achieve approval for Atragen in the first quarter of 2001.

TWST: What are the most significant trends, developments and changes that you anticipate in your marketplace over the next several years?

Dr. Cox: I think there are some very significant trends in the whole area of biotechnology at this point in time. There is a tremendous catalyst from the human genome project, which I think is going to be very important to the industry. However, sometimes the general public’s expectations are set too high regarding how quickly research science can impact drug development. In other words, I think it’s going to take longer than what people sometimes expect. One of our strengths is that we are very much focused on drug development. There is quite a difference between research and actual drug development and all of the requirements of drug formulation and the associated regulatory issues in the development process. The other big issue I think in the whole area of oncology is that we clearly have an aging population, which is typical of most of the western populations. Because of this, I think cancer is going to be a very important area for pharmaceutical development, creating a huge challenge and a huge opportunity as well for companies such as ours. I think it’s a very exciting period. What we’re seeing now is a much greater fundamental understanding of the basis of disease from a genetic perspective and a better understanding of the biochemistry and of how diseases develop. In our area of oncology, this understanding is going to be very helpful in terms of developing drugs, which are much more precise and much more targeted to the particular disease areas.

TWST: What are the major concerns or risks facing your company now and also in the future?

Dr. Cox: I think that one of our challenges is to remember that we’re still a development-stage company at this point in time. It is important for us to execute on our programs and move through the regulatory process. No matter how big or small the company, no matter how good you think your product is, pushing drug candidates through the regulatory process is always a challenge associated with a great deal of uncertainty. I think a very important defining issue in terms of companies making the transition from being development stage into full operating companies is defined by their success in the regulatory process. We very much hope to be able to demonstrate to our investors and shareholders as we go forward that we can make this transition. The other thing is that it is very important for us to keep momentum in our programs. In oncology, you typically build up these programs on an indication-by-indication basis, and that costs money. Making sure that we can finance the company effectively and keep our momentum going is always a challenge, but that’s part and parcel of the way in which this industry grows; it’s not a unique challenge for Aronex.

TWST: How is the competition? What differentiates Aronex apart from your competitors?

Dr. Cox: Our business strategy is rather unique from many companies, most of whom have fundamental technology platforms from which they then try to develop their products. We’re not a basic discovery company. What we do is in-license preclinical, early-stage or late-stage clinical products and take them through the regulatory and development processes, with the objective at the end of the day of developing our own commercial capability. So to that extent, I think that we have a lower-risk profile in what we’re doing. We also have the ability to be able to move products through the process and into the marketplace more quickly. I think we really do understand what is demanded of actually getting products into the commercial arena. This is an important strength for Aronex. There is an important distinction between developing interesting research opportunities and actually developing drugs that you can commercialize and from which you can generate revenue. Also, we have a broad pipeline of products in various stages of development, one of which is already under review at the FDA. This diversifies the risk profile of the company, and all of these products are operating in markets that have significant market opportunity associated with them. This is another strength of the company.

TWST: Are there any opportunities for improvement within Aronex, or any areas that could use strengthening at this point?

Dr. Cox: I think that we’re clearly at a growing stage. We have the intention of moving into the commercial arena, but at this point in time we clearly have not put our sales force in place. Developing that commercial infrastructure is going to be an important transition for us. We have a number of steps that we are still in the process of putting into place as we move from being a development company into an operating company. I suppose that’s the biggest challenge, and as I say, maintaining the momentum of our programs. If we are going to maximize our market opportunity, we need to be able to continue to develop our drugs in a broad range of oncology indications, and that’s obviously another challenge for us.

TWST: What are your specific goals for the company over the next several years basically in terms of growth and market position?

Dr. Cox: Obviously, the first goal that we’re really focused on is getting FDA approval for Atragen. That’s going to be very, very important for us. We also plan to make a European filing for Atragen before the end of the year, and obviously we hope to get European approval some time later next year as well. The other goal is to file our Nyotran NDA in 2001, and to continue the momentum in our clinical development programs for Aroplatin and Annamycin. Once we get approval for Atragen, our objective is to bring that product to market along with maintaining our momentum and continuing the development of our clinical products. As we mature, we want to bring other programs into our clinical development pipeline. I think that’s going to be important for the progression the company.

TWST: Have you done the R&D on these products from the very beginning, or have you licensed them in some way?

Dr. Cox: We licensed our four products from M.D. Anderson Cancer Center, which I mentioned early on. Actually M.D. Anderson is a very interesting institution with which to interact, because a lot of its research is very much tied in with its clinical development as well. This approach gives us clinical data at a very early stage, which has been very successful for us.

TWST: How do you feel about your current stock price?

Dr. Cox: Not particularly happy. Obviously, I don’t believe there are many CEOs interviewed by you who say that they think their company is fully valued. But I do think that we’re undervalued at this point in time. I think that some potential investors are waiting for the ATRAGEN outcome, and I think that milestone is going to be important in driving our price forward. But, I think there are probably few companies at our current valuation who have the range of programs and products that we have, who have the potential for success that is available to us. So I do feel that we have significant upside opportunity, with a fairly low-risk profile for this type of business.

TWST: What two or three reasons would you give long-term investors to buy stock in Aronex Pharmaceuticals today?

Dr. Cox: There is a pretty low downside risk associated with the company at this moment and a very large upside potential. The market potential of our four clinical drugs is one where your will see a market that is clearly going to be very important in an aging community in an expanding market. We feel that these drugs have the potential to be used in a broad range of hematological malignancies and solid tumors. As such, we think that the opportunity for the company to really establish a very significant commercial presence in this area is very good. I think that if you look at our company in comparison with other more research-based companies, you will see that they have a long way to go before they actually convert their research ideas into true products. Because of this, I believe Aronex is a very attractive stock at this point in time.

TWST: Is there anything that I’ve overlooked or missed that you would like to bring up?

Dr. Cox: We’re very excited about Aronex and the stage that we’re in at this juncture, and we very much hope that we’re going to be successful with the FDA regarding Atragen. I believe the launch of our first product, subject to FDA approval, will provide a great platform for Aronex to be able to progress in a very nice fashion.

TWST: Thank you. (RF)

DR. GEOFFREY F. COX
 Chairman & CEO
 Aronex Pharmaceuticals, Inc.
 8707 Technology Forest Place
 The Woodlands, TX 77381
 (281) 367-1666
 (281) 367-1676 - FAX
 www.aronex-pharm.com
 e-mail: cstout@aronex-pharm.com

Each Executive who is the featured subject of a TWST Interview is offered the opportunity to include an Investor’s Brief or other highlight material to be provided and sponsored by and for the company. This Interview with Dr. Geoffrey F. Cox, Chairman & CEO of Aronex Pharmaceuticals, Inc., is accompanied by an Investors Brief containing corporate information.

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