National Editor

CuraGen Corp. said it plans to offer $75 million in convertible notes due 2011 in a private placement, with an option for the initial purchaser to buy up to $15 million more.

The company, which is in a quiet period as required by the SEC, said the conversion price is yet to be determined. Its stock (NASDAQ:CRGN) closed Tuesday at $7.07, down $1.28, or 15.3 percent.

CuraGen said a portion of the proceeds will be used to repay debt.

According to an SEC filing, CuraGen as of Sept. 30 had total consolidated debt of $151.5 million and an accumulated deficit of $272 million. The company's total cash position at Sept. 30 was $358.3 million, counting its cash, cash equivalents, short-term investments and marketable securities.

Depending on market conditions, the company said it might use a portion of the proceeds from the placement to repurchase some of the outstanding 6 percent convertible subordinated debentures. The money also will be used for general corporate purposes.

Last summer, CuraGen made its second staff reduction to tighten drug development efforts, letting go about 20 percent of its work force, or 80 employees. (See BioWorld Today, June 20, 2003.)

The company's most advanced product candidate is CG53135, a protein therapeutic in Phase I trials. Data from earlier experiments were published in the August 2003 edition of Clinical Cancer Research, showing the fibroblast growth factor's activity to be encouraging in two animal models of oral mucositis.

Thousand Oaks, Calif.-based Amgen Inc. has disclosed Phase III data for palifermin, its recombinant human keratinocyte growth factor, against chemo-related mucositis. (See BioWorld Today, June 3, 2003.)

Until earlier this month, Human Genome Sciences Inc., of Rockville, Md., had one called repifermin (keratinocyte growth factor-2). The drug, having failed in a Phase II trial for venous ulcers, failed another Phase II study for mucositis and the company stopped development. (See BioWorld Today, Feb. 4, 2004.)

CuraGen's drug has the distinction of interacting with receptors on both the epithelial and mesenchymal cell layers; the Amgen product, like the one developed by HGS, works only with epithelial cell receptors.

CG53135 also is being studied for inflammatory bowel disease, and CuraGen hopes to receive approval for an investigational new drug application in that indication this year. Another compound to be the subject of an IND is a fully human monoclonal antibody to treat kidney inflammation of three types: immunoglobulin A nephropathy, lupus nephritis and diabetic nephropathy.

Data published in the September 2003 issue of the Journal of the American Society of Nephrology showed activity of the antibody, called CR002, in an animal model of nephritis. CR002 reduced mesangial cell proliferation in an anti-Thy 1.1 nephritis animal model. The research was conducted by CuraGen and colleagues from Abgenix Inc., of Fremont, Calif., as well as the University of Aachen in Germany. CuraGen has rights to develop CR002 through a collaboration with Abgenix.

CuraGen, one of the first to advance into genomics, has a deal with Bayer AG, of Leverkusen, Germany, for diabetes and obesity, and another with Tokyo-based Mitsubishi Pharma Corp. centered on schizophrenia drug targets. Partners are being sought for CuraGen's oncology, inflammation and central nervous system disorder programs.

In 2002, the firm laid off about one-fourth of the staff, or 128 people, and said it was shifting from discovery efforts to a stronger effort in drug development. (See BioWorld Today, Nov. 8, 2002.)

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