Retain &lt; and stop from convering to < for code snippets

I have the latest version of the editor insertpre synatax highlighter I can place code snippets on the editor the are converted to htmlentities for example:

<p>example</p> is converted into 

<pre class="brush:php;">
&lt;p&gt;example&lt;/p&gt;</pre>

but when if I have a code snippet already in the textarea when the editor loads then

<pre class="brush:php;">
&lt;p&gt;example&lt;/p&gt;</pre>

is changed to 

<pre class="brush:php;">

&nbsp;</pre>

<p>example</p>

How can this be prevented? 

I've tried the following options but no luck.

config.htmlEncodeOutput = false;
config.entities = false;

What I would like to do is create code snippets for tutorials using the editor, saving them is fine its editing existing ones that presents the issue.