National Editor

Seven months after making cutbacks to focus more tightly on drug development, CuraGen Corp. is doing more of the same, losing about 20 percent of its work force, or about 80 staffers this time around.

"This is good news for us," said Fred Aslan, manager of corporate strategy and investor relations for New Haven, Conn.-based CuraGen. The company's stock (NASDAQ:CRGN) dipped 76 cents Thursday, or 13.1 percent, to close at $5.03.

Much of the company's genomics expertise is being used less for target discovery these days than for work in finding biomarkers and determining toxicology, Aslan said.

"In an ideal world we could do it all, but we're choosing to focus on advancing the pipeline," he said. "We continue to hire folks for our clinical and preclinical functions," Aslan added, pointing out that most of those released have been in jobs related to early stage research.

Some employees still aboard have been transitioned to drug development areas, and CuraGen has severance pay, continuation of benefits and outplacement services for those let go.

The company is still well stocked with cash. As of March 31, cash and investments totaled about $395 million, including convertible debentures of $150 million due in February 2007. More financial guidance regarding the impact of the restructuring this year will be offered in second-quarter results, expected July 24, it said.

Late last year, CuraGen laid off about one-fourth of the staff, or 128 people, and said the company was shifting from discovery efforts to a stronger effort in drug development. Cash on hand as of Sept. 30 was about $431 million. (See BioWorld Today, Nov. 8, 2002.)

CuraGen, which calls itself a "first mover" in genomics, claims one of the broader pipelines of proteins, antibodies and small molecules in the industry based on novel genes.

Most advanced in the pipeline is CG53135, a fibroblast growth factor also known as FGF-20, being studied for mucositis and inflammatory bowel disease. The drug has shown positive preclinical data, as disclosed last year in the journal Gastroenterology, and in March the FDA approved an investigational new drug application to begin clinical trials with the drug for mucositis after chemotherapy.

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

Another treatment, "a little farther along than ours," is repifermin (keratinocyte growth factor-2), from Rockville, Md.-based Human Genome Sciences Inc., Aslan said.

All are growth factors, but "one of the key differences" is that the Amgen and HGS products work with receptors on the layer of epithelial cells, while CuraGen's also interacts with receptors on the mesenchymal cell layer, Aslan told BioWorld Today - and both layers are damaged in mucositis.

The broader function of CuraGen's drug "can also mean there's more activity that you can't anticipate," he allowed, but clinical trials will reveal more. In any case, Amgen has established the proof of principle with its compound.

Aslan said CuraGen is looking ahead to two more IND approvals next year - one for the inflammatory bowel disease indication with CG53135 and another for a fully human monoclonal antibody to treat kidney inflammation of three types: immunoglobulin A nephropathy, lupus nephritis and diabetic nephropathy.

The first condition is caused by deposits of the protein IgA inside the glomeruli within the kidney. It generally affects patients 20 years to 40 years old, Aslan said, and "they're generally free of disease except for this condition," which makes it the easiest to study and the quickest path to the clinic.

In the other two indications, separate diseases complicate the picture.

"It's a little bit trickier to study them," he said.

CuraGen's corporate deals include one with Tokyo-based Mitsubishi Pharma Corp., centered on schizophrenia drug targets, as well as others with New York-based Pfizer Inc.; Abgenix Inc., of Fremont, Calif.; and Bayer AG, of Leverkusen, Germany.