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May 7, 2002 | CuraGen has more than $800 million in business booked, $500 million in the bank, 25 active development projects, and plans to file two investigational new drug (IND) applications this year — not bad for a genomics discovery company that started in a basement in 1993 and went public in 1998. It's also built around a powerful bioinformatics core, underscoring the field's continuing importance, despite recent events.

Now, the New Haven, Conn.-based company must show it can go the distance.

"Herceptin [developed by Genentech] and Gleevec [developed by Novartis], that's how many genomic medicines there are," says Jim Golden, director of bioinformatics at CuraGen.

But CuraGen is hoping to change that, and soon.

According to Golden, the company's large number of targets and candidates is not surprising. Besides having a full range of advanced genomics laboratory tools, the company has one of the most sophisticated bioinformatics platforms in the business, betting from its earliest days that such tools would speed drug development. "Jonathan [Rothberg, CuraGen CEO] started with this as a vision," Golden says, "and it's not the kind of infrastructure that you can just wake up and build."

Everything at CuraGen is bar-coded, from the samples to the staff — bar-coded badges are used for security and link individuals to specific projects — and each project is monitored in real time. Every piece of data gathered from a sample, and its analysis, is retrievable. Rapid communications has been a key goal. A collaborator at Bayer's research center in Germany, for example, can log into CuraGen's online GeneScape portal and see the immediate status of a project. Video monitors placed around CuraGen's research facilities broadcast progress reports on the company's projects.

Underneath this show of IT sophistication and aggressive process management are solid research fundamentals. For example, CuraGen never confused the difference between a target and a well-validated target.

"Anyone can go on to the Web and find 20,000 targets," Golden says. Using its platform, CuraGen whittled that number down to about 8,200 "tractable" ones, and patented more than 500 of these. This should mean that CuraGen's targets advance more quickly, and that their collaborators get more value from them. CuraGen has a number of major deals with companies such as Bayer, Biogen, and Genentech that include royalty sharing.

"We have substantially reduced the time for drug discovery and development already," Golden says. "Based on our analysis so far, we have cut it by 30 to 40 percent." The goal is to cut the drug development timeframe from 10 to 12 years, to five to seven years. Progress on CuraGen's proposed INDs — two protein therapeutics, one called CG53135 aimed at ulcerative colitis, and another not disclosed — will show if CuraGen can really speed drug development.

One major goal of all this automation is to allow scientists more thinking time, and to help them not only track current tasks, but also plan for future ones. "It's an ERP (enterprise resource planning) system for drug discovery, development, and production," Golden says. "It's what any bioinformatics platform should be evolving toward." The company may eventually market the system if it makes strategic sense.

Getting this far hasn't been easy. "The hardest part has been data integration, and it continues to be," Golden says.

But CuraGen has sought to stay ahead of the curve as each new field of genomics matures and delivers a new flood of complex data. Currently, GeneScape contains the full range of genomic and proteomics data, from sequence information to validation in animal models. CuraChart, a clinical trial management system, has also been integrated into the platform. Results from the company's first drug trial will pop out from CuraDox as fully CFR21.11-compliant documents.

That moment cannot come too soon.

While the progress to date has been impressive, investors are looking for clear signs that genomics can be profitable. Neither of the high-profile pioneers, Human Genome Sciences and Millennium Pharmaceuticals, has successfully developed a single genomic drug yet. And CuraGen, which hasn't made a profit yet, reported a $42.9 million loss for 2001 in its 10-K form released this April.

"There is huge pressure throughout the industry," Golden says. "People are saying, 'We did the human genome, so what?' People constantly compare it to the lunar landing, but at least that got us Teflon and Tang. The sequencing of the genome has given us nothing so far. The real question is, 'What are you going to do with it?' "

The two IND applications mean it's a big year for CuraGen, Golden says. The company's position is different from that of many other genomics companies because, he says, "We had a good plan, and we are sticking to it."

But genomic stocks have dipped precipitously since the extraordinary highs around the time the genome sequencing was announced. CuraGen shares were trading around $14 at press time. Their 52-week high was $41.34, while the low was just over $13. In its heyday of February 2000, the stock traded at $114.25.

Given the persistently low stock price, CuraGen recently adopted a "poison pill" provision to protect it from a hostile takeover.

CuraGen's future doesn't just rest on the speed with which it can get its drugs into the market. The company has delivered a large number of "well-qualified" targets to partners, including Bayer, and the success of those targets will also be important.

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