West Coast Editor
Gaining funds for a deal under way to develop a drug for basal-cell carcinoma, Curis Inc. said early Tuesday that it had entered an agreement to net about $12.5 million through a direct offering's sale of stock and warrants pursuant to a shelf registration.
Later, after the market closed, the company said the net had risen to $18.9 million.
"Post-announcement, our bankers started getting some interest we hadn't seen before," said Michael Gray, chief financial officer for Cambridge, Mass.-based Curis.
The company's stock (NASDAQ:CRIS) closed Tuesday at $3.71, down 2 cents.
Specifically, the firm first said it would sell about 3.6 million shares and warrants to buy 0.10 shares for each share of common stock at $3.67 per share. The warrants to buy 360,912 shares expire Oct. 12, 2009, and can be exercised at $4.59 per share.
In the updated and revised sale, the total number of shares grew to about 5.5 million with more warrants under the same pricing structure.
"We had a handful of high-quality investors join today," Gray said. "We had presented the story to one of them last week. The others were generally aware of the story," and when they saw the morning press release, they wanted to be part of the financing.
"So we let them," Gray said.
Last year, Curis inked a potential $240 million licensing deal with South San Francisco-based Genentech Inc. for rights to small-molecule and antibody inhibitors of the Hedgehog signaling pathway for use in cancer. The deal included the CUR-61414 program, which Curis has been developing as a treatment for basal-cell carcinoma. (See BioWorld Today, June 12, 2003.)
Curis noted in its most recent quarterly report, filed in July, that the $14.8 million in cash and equivalents on hand as of June 30 "should enable us to maintain current and planned operations into the second half of 2006," but said the company had not decided whether it would exercise its co-development option for a basal-cell carcinoma product candidate with Genentech.
"That's the real need for the financing," Gray told BioWorld Today. "What we're trying to do is obtain enough capital so that we can realistically exercise our option in a meaningful percentage," which could be as much as 50 percent.
If Curis decides to co-develop, the firm would forego development milestone and royalty payments, sharing in development costs and any profits based on a percentage equal to its cost-sharing contribution in the development effort. By the first quarter of next year, the company will disclose which way it will go.
Genentech has said it will file an investigational new drug application in the fourth quarter of this year or the first quarter of next, Gray said, and Curis' goal was to raise "enough to give us a cash runway to get us through Phase II."
Meanwhile, Curis' positive news flow has been steady. In September, Cancer Cell online published a report showing that treatment with a small-molecule inhibitor of the Hedgehog signaling pathway, HhAntag, halted tumor growth and eliminated the tumor in a model of medulloblastoma at high doses. The Proceedings of the National Academy of Sciences had reported results against medulloblastoma in July.
The Hedgehog protein pathway, involved in tissue and organ development, gets reactivated during the formation and progression of various types of cancer, including not only basal-cell but also small-cell lung cancer. (See BioWorld Today, March 6, 2003.)
Curis also has in the pipeline BMP-7, from its bone morphogenetic protein technology. The compound, a signaling protein made in the kidney that has been implicated in that organ's health, the skeleton and the vascular system, is partnered with Ortho Biotech, a division of Johnson & Johnson, of New Brunswick, N.J., which has rights for all indications except the repair or regeneration of local musculoskeletal tissue defects and dental defects. (See BioWorld Today, Dec. 2, 2002.)
In May, Brain Research reported studies in which BMP-7 stimulated dopamine levels in a preclinical model of Parkinson's disease. Earlier the same month, studies published in the Journal of Molecular Medicine showed the compound reversed the effects of kidney scarring, thus helping to restore function. Near the start of the year, the Journal of the American Society of Nephrology detailed studies in which the drug blocked development of adynamic bone disease in a preclinical model of chronic kidney failure.