Still strong on cash - unlike many others that lately have taken similar steps - CuraGen Corp. said it's laying off about one-fourth of its staff, or 128 people, and cutting back on early stage research as the company shifts from discovery efforts to a more distinct focus on drug development.
"You can't wait for the last minute to do these things," said Mark Vincent, director of corporate communications and investor relations for New Haven, Conn.-based CuraGen.
Wall Street took the news in stride. CuraGen's stock (NASDAQ:CRGN) fell 5 cents Thursday to close at $4.30.
As of Sept. 30, the company had cash and investments of about $431 million, including convertible debentures of $150 million due in February 2007. Charges of the restructuring are estimated at $11 million, including $8 million related to postponing the construction of a new research facility.
CuraGen has four locations in Connecticut, and "ideally, we want to house everybody in one location," Vincent said. "That's what we're postponing."
Cash on hand will fund operations for about four more years, the company estimates.
The disclosure of change in priorities comes the same week that CuraGen entered a deal with Tokyo-based Mitsubishi Pharma Corp., centered on schizophrenia drug targets.
CuraGen's method is "the industrialized approach to finding drug targets," Vincent told BioWorld Today. "You get to a certain point where you feel comfortable with the targets, and then you have to do hard-core biology," he added, noting that the Mitsubishi deal - in which CuraGen is using its functional genomics capabilities to confirm and characterize targets discovered by MPC - was an example of finding a way to make the right things happen for a collaborator. (See BioWorld Today, Nov. 6, 2002.)
The company also has deals with Abgenix Inc., of Fremont, Calif., and Bayer AG, of Leverkusen, Germany. And there are more.
"A lot of them we don't even announce," Vincent said, but the deals typically help CuraGen with its in-house projects.
"We've been building [development] resources for over two years," he said. "We have an entire infrastructure that will lead us right up to Phase II development," at which point pharmaceutical partners will be sought.
"We do good science, and we've decided we're more of a feeder company for the large pharma," Vincent said.
In the potential feeder pipeline, farthest along 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, published last month in Gastroenterology. Toxicology and formulation studies are under way.
As a result of the restructuring, nothing has changed for CG53135's development path, which includes an investigational new drug application in the first half of next year.
"We're on track," Vincent said.