| CuraGen is a
company that focuses on the rapid discovery of disease genes through analysis
of gene expression patterns in cells. One of the defining characteristics
of this company is its synergy -- both scientifically, and financially.
It is fundamentally based on the interdisciplinary juncture between information
technology and biology, and funds these advances through strategic alliances
between an impressive number of companies. Its basic scientific strategy
consists of discovering genes, discovering function, and finally developing
antibody drug targets for defects in these genes. The primary areas of focus
for these drug targets include obesity and diabetes, cancer, autoimmune
and inflammatory diseases, and central nervous system disorders.The magnitude
and scope of CuraGen's drug program have led to the development of an Internet
database system, GeneScape, to manage data from experiements worldwide.
This is a robust bioinformatics platform that was created to track, analyze
and interpret industrial-scale genomic information.
Drug Programs
The stage of this company has precluded it from currently possessing any
of its own drugs beyond pre-clinicals. It has however, been cooperating
with several firms, the latest of which is Alexion Pharmaceuticals, in
the completion of a few Phase II & Phase III trials. Its focus right
now however, is on the discovery phase of drug development which will,
of course, be extended if candidates show substantial promise. Currently,
CuraGen is pursuing 246 small molecule targets, 191 antibody targets,
and 120 potential protein therapeutics, for a grand total of 557 drug
targets against metabolic disorders, cancer, and autoimmune diseases.
Of these, there are 170 projects being conducted with 25 targets being
lead candidates for further development.
CuraGen’s success as a biotech company will be highly contingent
on advancing a significant amount of these 25 targets into the clinic.
Industry averages show that only 1 in 5 drugs are successful through clinical
trials. Given the extent to which this company has been involved in profit-sharing
with other corporations, the necessity of getting a high percentage of
these candidates into clinicals becomes even more pressing. FinancialsCuraGen's
financial background is relatively stable at this time. The Year End 2001
Financial results reported indicated available cash resources and short-term
investments of approximately $508 million against $150 million in long-term
debt. With an anticipated cash burn of $85 - $90 million per year, they
will be dependent on a future round of financing. This should not be a
problem however, considering Curagen's strong technological platform and
candidates for entry into clinical trials.
Partnerships
Curagen has established a savvy strategy of partnerships with companies
that complement their existing technologies. Of these partnerships however,
two stand out beyond the rest as major collaborations with the potential
to significantly affect the company's future. In addition to the obvious
benefit of the funding, these partnerships really speak well for CuraGen's
target discovery capabilities.
Bayer
In January 2001, CuraGen and Bayer entered into a huge $1.4 billion
alliance in the area of obesity and diabetes. CuraGen is to provide
80 targets over a five-year period. As of Oct. 25th , just seven months
into the partnership, CuraGen had already delivered 24 targets. That
is quite an impressive accomplishment. The financial terms of the
agreement call for Bayer to commit $750 million in funding to the
targets, and another $375 million for them to conduct high-throughput
screening, combinatorial chemistry, medicinal chemistry, and the pre-clinical
work; this is for turning the targets into drug candidates.Clinical
expenses however, will be shared between the two companies. Profit-sharing
will also be done based upon any drug candidates making it to market.
Abgenix
Curagen also has a signifanct partnership with Abgenix as a part of
an antibody targeting program. These companies jointly hope to develop
targets against 250 antibodies during the five year alliance (which
began in 2001). Scientists at CuraGen are currently evaluating 14
fully human monoclonal antibodies as possible therapeutics for cancer
and inflammatroy diseases.
The terms of the financial agreement stipulate that CuraGen and Abgenix
share $200 million in discovery and pre-clinical expenses. Each company
will then choose antibodies they want to take to the clinic and individually
develop their products. Any drugs approved from this process will
then be subject to a equal cross royalties.
Other outstanding partnerships currently in place with other companies
include:
Genentech
GlaxoSmithKline
Biogen
SEQUENOM
Alexion
Hoffmann-La Roche
Ono Pharmaceuticals
Conclusion:
CuraGen has the potential to become a major player in the biotechnological
arena in the coming years. With its strong partnerships with many leading
companies, it has secured for itself a steady revenue stream. Beyond the
financial benefit however, these significant alliances point to the credibility
and value of CuraGen.
This is also a company based on a strong platform technology. The GeneScape
system it operates on may significantly aid in the rapid discovery and
development time of drug candidates. This will undoubtedly give a
competitive edge against other biotechs developing similar drugs.
Before making any investment decisions however, one should be careful
to perform a reasonable amount of due diligence, particularly with mid/small
cap companies because of the inherent risks involved. Potential risks
for CuraGen include:
(i) The ability to apply proprietary genomic technologies to understand
the molecular basis of disease and develop the next generation of therapeutic
products for important diseases
(ii) The ability to advance promising therapeutics into the clinic and
to leverage the entire human genome in order to accomplish that goal
(iii) The ability to establish fully integrated technologies and GeneScape
operating system as the preferred platform for genomics, drug discovery,
drug development and pharmacogenomics
(iv) The ability to enter into additional collaborations and strategic
alliances, maintain and expand current collaborations, receive royalties
and milestone payments from products currently under development by
current and former collaborators and successfully develop and market
products from our internal product pipeline
(v) The capacity of products to predict the efficiency and safety of
drugs already on the market and in development pipelines.
Copyright 2000 GSAS Harvard Biotechnolgy
Club
All Rights Reserved.
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