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CuraGen Corp.
NASDAQ: CRGN.
555 Long Wharf Drive
New Haven 06511
203-401-3330
www.curagen.com
Chairman, President & CEO: Jonathan M. Rothberg
Annual revenues:
$20.4 million
Profit (loss): ($25.9 million)
Market capitalization:
$1.49 billion
No. employees: 288
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Business New Haven
11/27/2000
By: Mitchell Young
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CuraGen Corp.
New Haven's CuraGen Corp. describes itself as an integrated genomics-based drug discovery and development company.
The company's approach combines biology and information technology. The opportunity, according to CuraGen scientists, is in seeing diseases in developed nations as having their roots in complex genetic disorders.
Over the past year investors have begun to see much the same, as investment has increased substantially in biotech and genomics companies across the board.
CuraGen's stock price has soared from a low of $9 to a high $128 (the company had a two-for-one stock split on March 31). The stock's current price is approximately $34 per share, but has ranged as high as $64 in the past month.
CuraGen recently announced its intention to sell up to $500 million of various types of securities. On November 16 it raised $186.5 million through a public offering of 4,800,000 newly issued shares of common stock at $41 per share. Proceeds will bring the company's cash resources to more than $430 million.
According to company officials, proceeds will be used for general corporate purposes and to support the company's own drug discovery efforts.
Why raise this much cash for a company that currently is losing only about $6 million per quarter and is hoping to increase its revenues from customers by 100 percent per year?
That answer may lie in the recent history of the biotech and Internet industries and a fear that investors may again lose confidence in the industry. Until this year, most biotech companies drew limited interest from investors. CuraGen's stock was well under its offering price of $10 per share for a good part of 1999.
With a fat bank account, the company appears to be proceeding on a variety of fronts.
CuraGen has partnerships with some of the world's largest pharmaceutical and biotech companies, including: Biogen, Genentech, Pioneer HiBred Intl., Glaxo-Wellcome, Hoffman-La Roche, Roche Vitamins, COR Therapeutics and Abgenix
The company recently launched 454 Corp., a majority-owned subsidiary funded in part through a private placement totaling $32.5 million from investors including Soros Fund Management, LLC and Cooper Hill Partners, LLC.
On October 10, the company announced it had formalized a drug-discovery collaboration with the UK-based Gemini Genomics, PLC (NASDAQ: GMNI), a clinical genomics company. Gemini would employ CuraGen's PathCalling proteomic technology in order to more rapidly identify the biological context of disease-associated genes.
The same week it announced it had licensed five drug targets to the Boston-based Biogen Inc., a longtime CuraGen collaborator. This announcement marks the completion of the research portion of the pair's discovery collaboration.
Under terms of the agreement, CuraGen is entitled to receive potential milestone payments as the targets move through clinical trials - and royalty payments if the targets become marketed drugs.
During the third quarter of this year, total CuraGen revenues grew by approximately 17% percent to $5,040,215, compared to $4,311,737 for the same period of 1999. For the nine months ended September 30, total revenues increased by approximately 51 percent to $15,619,770, compared to $10,316,367 for the same period a year ago. Net loss for the third quarter of 2000 increased by approximately 37 percent to $7,051,042 or 18 cents per common share. That compares to a net loss of $5,147,393 or 18 cents per common share in the third quarter of 1999.
For the nine months ended September 30, net loss increased by less than one percent to $18,371,628, or 49 cents per common share, compared to a net loss of $18,279,463 or 67 cents per common share, for the same period in 1999.
Analysts have become very positive toward the company over the past six months. Bear Stearns initiated coverage as a Buy on November 17. This recommendation follows an upgrade by Dain Rauscher Wessels on October 31, Lehman Brothers on October 24, and Prudential on September 22.
Since June, insiders have sold more than one million shares at prices ranging from $34 to $53 per share. CuraGen CEO Jonathan M. Rothberg sold 800,000 of those shares, yielding approximately $30 million. Rothberg continues to own more than five million shares.
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