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Drug Deal
Bayer, CuraGen ink two landmark deals
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Business New Haven
1/22/2001
By: Mitchell Young
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Pharma giant Bayer and the New Haven-based CuraGen Corp. on January 16 announced two major biotechnology agreements.
The first agreement - said by the companies to be worth potentially as much as $1.34 billion - is the largest in biotech-pharma partnership history.
The agreement is the basis of a 15-year alliance to discover, develop and jointly commercialize small-molecule drugs to treat obesity and adult-onset diabetes.
The research-and-development costs will be split with Curagen bearing 44 percent and Bayer 56 percent of costs. The companies expect to commercialize drugs resulting from the alliance and will also share pre-clinical and clinical costs. If profits eventually flow from the union, they will be shared based on each companies contribution to costs.
Curagen is expected to identify 80 drug targets for potential drug development over the first five years of the pact. According to Bayer material “Drug targets are proteins expressed by human genes that can be used to discover and develop small-molecule drugs.”
Curagen will also provide “access to its comprehensive suite of functional genomic technologies, bioinformatics and pharmacogenomic expertise to select, prioritize and ensure the resulting drugs are administered to the appropriate patients.”
The companies have committed to bring 12 candidates in obesity and diabetes to clinical development.
In addition to its unprecedented size, the alliance represents a departure from early genomic biotech-pharmaceutical deals by which the genomic companies received payments and a potential royalty fee. Some industry observers see the sharing of expenses and potential profits as indicative of both the competition among genomic informatics companies as well as their stronger financial positions.
The deal is similar to though larger than a 1998 deal by Bayer with the Cambridge, Mass.-based Millennium Pharmaceuticals (NASDAQ: MLNM), which was worth $465 million over a five-year period and also included an equity investment in Millennium. The companies recently announced their first drug candidate from that alliance, which they expect to enter Phase I human trials this year.
The second agreement is a pharmacogenomic and toxicogenomic collaboration and is an expandable, five-year deal that is valued at $124 million and includes an $85 million equity investment in CuraGen by Bayer AG as well as $39 million in committed funding to CuraGen.
Under the second agreement, CuraGen will apply its toxicogenomic and pharmacogenetic technologies and expertise to evalute early-stage drug candidates and preclinical compounds across all disease areas to help select the best candidates for drug development.
The companies will also develop a toxicogenomic database consisting of “expression profiles of genes identified as indicators of toxic side effects.” CuraGen and Bayer will have exclusive rights to the database and also market the database to other drug-development companies. CuraGen will pay royalties to Bayer based upon revenues generated from these future partners.
“We are partnering with the best biotechnology companies in the world, thus building one of the most productive research platforms in the global pharmaceutical industry,” said David Ebsworth, global head of Bayer AG's worldwide pharmaceutical business based in Leverkusen, Germany. “We expect this collaboration to enhance the development pipeline for our metabolics franchise and bring novel therapies using gene-based targets to patients.''
“Bayer's expertise in developing small-molecule drugs in an industrialized manner is unprecedented in the pharmaceutical industry and is a perfect fit for CuraGen,'' said Jonathan M. Rothberg, CuraGen's founder, chairman and CEO.
CuraGen stock rose $9 5/16 to $35 7/8 after the announcement, still down from its 12-month high of $128 but almost double its $18 3/8 annual low.
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