Curis Inc. last week shed certain assets as part of an ongoing realignment, while licensing out its second program in about a week's time and simultaneously cutting jobs.
During the last week of November and early December, the company out-licensed parts of two technologies - a portion of its PYY peptide program as well as some rights to its bone morphogenetic protein - in return for up-front fees, milestone payments and future royalties, all of which could total more than $45 million. The moves spelled the end of a need for certain jobs at Curis, leading to a staff reduction. The cuts included a 50 percent reduction in general and administrative personnel - trimming that came from the executive assistant, public relations and legal staff. Curis also has subleased a portion of its facilities.
The Cambridge, Mass.-based firm said the sum of all such steps increases its probability of meeting a major financial goal: stretching existing capital to sustain the company through the end of 2005. Curis reported a pro forma cash position of $43.3 million as of Oct. 1.
"What we've been doing throughout 2002 is implementing a transition plan to get this company streamlined and focused," Curis CEO Dan Passeri told BioWorld Today. "The company has a lot of assets based on promising science, but the biotech reality is that [companies should have] a revenue-generating model. Early this year we concluded that the market is looking at biotech as it's looking at all other sectors - you're either looking at a company that has a road to potential profitability or not. Preclinical research simply is not going to be rewarded in this climate."
Late Wednesday Curis said it agreed to license and selectively assign to Amylin Pharmaceuticals Inc. patents covering the use of the peptide PYY for the in vivo treatment of metabolic diseases such as diabetes and obesity, a move that might bring Curis more than $15 million. San Diego-based Amylin already possesses an in vivo PYY program.
"We've been trying to get the company as focused as possible on those assets that offer the highest probability for Curis to succeed in its own activities, aggressively partnering with strategic alliances with those assets that have a lot of promise but have more complexity, and more demanding clinical trial requirements," Passeri said. "We approached Amylin to take over this intellectual property for them to exploit in their own program. It's just another transaction of utilizing or trying to exploit our assets by maximizing the probability that it will generate value while taking the burden off our books."
Amylin will pay an up-front licensing fee, milestone payments for regulatory approval and sales goals, and would pay royalties on product sales. Curis said all payments, excluding royalties, could exceed $15 million. Curis retains rights to other PYY patent applications that relate to the peptide's in vitro and ex vivo use to transform stem cells into insulin-producing cells and other types of specialized cells, though Curis isn't keeping such rights for internal development.
"We're looking to partner that, and we're actually in discussions with several parties right now," Passeri said.
The week before its deal with Amylin, Curis farmed out its bone morphogenetic protein technology portfolio - called BMP compounds - including BMP-7 to Ortho Biotech Products LP, a unit of New Brunswick, N.J.-based Johnson & Johnson. Ortho gained rights for all indications except for the repair or regeneration of local musculoskeletal tissue defects and dental defects - indications covered under a separate agreement with Kalamazoo, Mich.-based Stryker Corp., in a deal that garnered $14 million for Curis.
The deal with Ortho Biotech included $3.5 million up front and Curis could receive milestone payments and would earn an undisclosed royalty rate on product sales. Curis added that U.S. approval of a product to treat kidney disease or associated complications could be worth $30 million. (See BioWorld Today, Dec. 2, 2002.)
But the company isn't selling all its research assets. Curis pointed to a Hedgehog small-molecule agonist program being studied to treat diabetic neuropathies and Parkinson's disease in a joint venture partnership with Dublin, Ireland-based Elan Corp. plc, though Passeri said the long-term nature of the agreement is not resolute.
"We're looking at resolving that relationship, such as finding other partners for certain fields that Elan is not interested in" including diabetic neuropathy, he said. "Elan is very impressed by our data, but we need to move forward in how to clarify that relationship."
A Curis oncology program includes a Hedgehog antibody product candidate and a Hedgehog small-molecule antagonist. The antibody candidate is being studied to treat pancreatic and other cancers, including colon cancer, though Passeri labeled the pancreatic cancer application most promising. An investigational new drug application was filed for an injectable form of the small-molecule antagonist to treat basal cell carcinoma, but Passeri said he suspended the application in favor of a topical formulation of the candidate. Curis has shown that higher doses of its CUR-61414 candidate to treat basal cell carcinoma lower the disease's activity.
Passeri said Curis continues discussions with partners regarding "various strategic development alternatives" for the antibody and small-molecule programs, including a possible partnership to reinitiate the IND process for the basal cell carcinoma topical formulation.
"We potentially have other topical applications with our agonist and antagonist," Passeri said. "With the agonist, we have the potential for using a small molecule through the Hedgehog signaling pathway for stimulation of hair growth, which could be used for alopecia and cancer patients, as well as wound healing. That's based on early data, but the key is those applications would have a pretty clean path through the clinic without requiring intensive capital commitments."
The nearly yearlong restructuring process began soon after Curis underwent a management change. The company earlier this year cut about 35 employees and dropped development efforts of its minimally invasive tissue augmentation product, Chondrogel. At the same time the company suspended its development of Vascugel, a cellular transplant product for coronary artery disease. (See BioWorld Today, Feb. 19, 2002.)
"The basic tone of all of this is that there is an underlying premise of aggressive risk management and value creation through strategic partnering," Passeri said. "And we're using various strategies in our partnering for having a mix of risk-value ratios, so we have a diverse portfolio of assets that we're managing as aggressively as we can to try to exploit the upside as well as minimize our exposure in terms of capital outlay."
Curis' stock (NASDAQ:CRIS) rose 10 cents Friday to close at $1.14.