As it transforms itself from a genomics discovery company to a product development company, CuraGen Corp. in-licensed a promising cancer compound from the Danish firm TopoTarget A/S.

The deal could mean in excess of $100 million for privately held TopoTarget. CuraGen gained the rights to develop and commercialize the small molecule PXD101 to treat solid and hematological cancers. As they move PXD101 up the clinical ladder, the companies also intend to identify additional candidates from TopoTarget's histone deacetylase (HDAC) inhibitor library specifically for cancer and inflammatory disease indications.

"We feel very fortunate that we've been able to gain access to what we think is one of the most exciting new approaches to a treatment in cancer," said Timothy Shannon, executive vice president and chief medical officer of New Haven, Conn.-based CuraGen.

The agreement gives CuraGen exclusive rights to develop and commercialize PXD101 in North America, Asia and all other markets except Europe, where Copenhagen-based TopoTarget will retain commercialization rights. CuraGen will fund all of the global development, unless TopoTarget opts to fund a portion of the development of the HDAC inhibitors in exchange for higher royalties.

"We had been systematically looking for opportunities that made sense to us," Shannon told BioWorld Today. "It just so happens [TopoTarget] had interest in partnering, as well, when we hooked up with each other."

TopoTarget will receive a $5 million equity investment, $5 million in license fees, up to $10 million over the next year in milestone payments and research support, another $4 million over two years in research support, and up to $27 million more for certain development, regulatory and commercialization milestones.

Unlike similar deals, the terms include a reciprocal royalty arrangement, meaning that TopoTarget would receive royalties from CuraGen based on sales outside of Europe, while it would pay CuraGen royalties, at the same rate, on sales within Europe, said Fred Aslan, the company's director of corporate strategy and investor relations.

CuraGen also may opt to select additional HDAC compounds for development in oncology and other indications for a fee of up to $1 million. If any of those compounds are successfully developed, approved and commercialized, TopoTarget could receive up to $30 million in milestone payments.

All told, the deal for PXD101 is worth a potential $51 million for TopoTarget. If CuraGen elects to develop two additional HDAC compounds, and the company is successful with all products, the deal could mean more than $100 million for TopoTarget, not including royalties.

PXD101 entered a Phase I trial last October in up to 36 patients with advanced solid tumors at The Royal Marsden Hospital in the UK and the Beatson Oncology Centre in Scotland. Researchers have found in preclinical studies that HDAC inhibitors have a favorable therapeutic window based on PXD101's targeted activity on cancer cells vs. normal cells. PXD101 is one of the most advanced HDAC inhibitors in development, and CuraGen said it has potential either as a monotherapy or in combination with other active cancer agents. CuraGen and TopoTarget plan to initiate a Phase I trial of PXD101 in hematological malignancies sometime this summer.

"We expect we'll be in Phase II in the first half of 2005" with PXD101, Shannon said. "That, to us, is nice because it's a value inflection point for the company and the product. It will give us a second Phase II product."

The first Phase II product is CG53135, which is in development for oral mucositis. By the end of the year, CuraGen aims to have CG53135 in the Phase II trial, as well as CR002 in a Phase I trial for kidney inflammation. The company also has a deal with Bayer AG, of Leverkusen, Germany, for diabetes and obesity, another area beyond cancer and inflammation in which the company plans to focus its efforts.

HDAC inhibitors target HDAC enzymes and have been shown to arrest growth of cancer cells, including drug-resistant subtypes. They also induce apoptosis, promote differentiation, inhibit angiogenesis, and they sensitize cancer cells to overcome drug-resistance phenotype when used in combination with other agents. They have potential to treat solid malignancies, such as breast, colon, lung and ovarian cancers, as well as hematological malignancies, such as lymphomas, leukemias and myeloma, Shannon said. The current oncology therapeutic market is worth more than $20 billion.

About a year ago, CuraGen downsized its operations by about 80 employees to focus more tightly on drug development. The layoffs came about seven months following the first reduction of 128 employees in November 2002. The company had noticed a decline in the need of its genomics expertise for discovering targets and made the decision to focus on advancing its pipeline. (See BioWorld Today, Nov. 8, 2002, and June 20, 2003.)

With the TopoTarget agreement, CuraGen expects to increase its 2004 operating cash burn by $8 million to $12 million on top of its previous guidance of between $80 million and $90 million, Aslan said. As of March 31, the company had cash and investments of $408 million.

TopoTarget merged in April 2002 with the UK-based cell cycle company, Prolifix Ltd. In addition to PXD101, the company has two products in its pipeline: TopoTect, which is in Phase III to prevent severe tissue damage following accidental chemotherapeutic extravasation, and TopoTect/etoposide co-therapy for treating brain metastasis.

CuraGen's stock (NASDAQ:CRGN) rose 2 cents on Friday, to close at $5.03.

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