Establishing a second major collaboration, this time in the fields of cancer and tissue repair, Curis Inc. and Genentech Inc. joined forces to discover and develop small-molecule modulators of an undisclosed pathway.

The deal potentially is worth $149 million for Cambridge, Mass.-based Curis if two candidates reach the market for two indications each. The companies formed their first agreement almost two years ago to find tumors that express the Hedgehog pathway and to identify lead cancer compounds. That collaboration was worth up to $240 million. (See BioWorld Today, June 12, 2003.)

An investigational new drug application for the first compound from that agreement, a potential treatment for basal-cell carcinoma, was filed with the FDA last week.

Under the new agreement, Curis will work exclusively with Genentech to identify small-molecule modulators of a pathway that controls progenitor-cell proliferation and differentiation. Researchers believe that cancer is a disease of progenitor cells, and conventional chemotherapies do not always work because they fail to eliminate the mutated progenitor cells that give rise to the tumor.

The pathway is "inappropriately used by tumors to foster their proliferation and growth," said Daniel Passeri, president and CEO of Curis.

Aside from the applications in cancer, Curis believes that normal progenitor cells participate in tissue repair and that aging involves a reduction in signaling in the pathways that control those progenitor cells. Small-molecule stimulators of those pathways might be used to promote tissue repair and regeneration.

Curis has identified drug candidates through a series of assays that could be applied to regenerative medicine and oncology. Passeri declined to say how soon something might reach the clinic.

Terms of the agreement call for a $3 million up-front license payment to Curis and up to an additional $6 million in research support from Genentech over the next two years. Genentech also could make cash milestones payments of more than $140 million if two products are commercialized in two indications, one for tissue repair and the other for cancer. In addition to single-digit royalties on net product sales, Curis has the right to use small-molecule modulators of the pathway that are discovered as part of the collaboration for ex vivo cell therapy purposes in areas outside of oncology and hematopoiesis.

The agreement with South San Francisco-based Genentech falls in line with Curis' strategy to diversify its portfolio in order to limit product development risk.

"This is a continuation of our evolving business model," Passeri told BioWorld Today.

The company is working to build a pipeline of assets that are at various stages of development. In addition to its collaborations with Genentech, Curis is working with Ortho Biotech, a subsidiary of New Brunswick, N.J.-based Johnson & Johnson, in the area of kidney disease, and with Madison, N.J.-based Wyeth Pharmaceuticals Inc. in neurological disorders. Independently, it is working in hair growth and cardiovascular disease.

"As this portfolio matures, triggering milestone payments, it should reduce our reliance on the capital markets and allow us to take further risk," Passeri said.

Earlier this year, Curis received a development milestone from Wyeth under its agreement for Hedgehog proteins and small-molecule Hedgehog pathway agonists. It also elected to exercise a co-development option with Genentech to share in U.S. development costs and profits for the basal-cell carcinoma product, which should enter human trials this year. Passeri said Curis' strategy to partner early gives the company a greater likelihood of developing drugs that reach the market.

"There are several studies showing that the highest probability of success in drug development is when a pharmaceutical or large biotech partners with a small biotech and in-licenses," Passeri said. "The reason is because of the extensive due diligence performed on that asset."

Curis' stock (NASDAQ:CRIS) rose 22 cents on Monday, to close at $3.91, while Genentech's stock (NYSE:DNA) dropped 38 cents, to close at $55.90.