By Debbie Strickland

CuraGen Corp. and Biogen Inc. signed a five-year genomics-oriented research collaboration and database access agreement potentially worth in excess of $33.5 million.

The $33.5 million consists of $5 million worth of CuraGen shares at the initial public offering (IPO) price (the company's offering is currently in registration); a $10 million loan, which CuraGen may convert to equity at any time; and research support payments and database access fees that could reach $18.5 million.

CuraGen also will receive royalties, plus milestone payments of up to $18.5 million for each therapeutic product that evolves from the research.

The agreement further provides for additional licensing fees during specified periods in which Biogen has an exclusive option to license discoveries arising from the collaboration.

Cambridge, Mass.-based Biogen first expressed interest in fellow New Englander, CuraGen, of Norwalk, Conn., in June by making a $1 million equity investment in the firm.

"We believe the emerging technological platform in genomics may allow us to significantly accelerate drug discovery and development," said Kenneth Keen, senior communications specialist for Biogen. "CuraGen has outstanding proprietary technology and is a world leader in genomics."

Through this research program, Biogen is seeking to identify therapeutic proteins and disease targets, and to better analyze and characterize its current pipeline candidates, said Keen.

Officials at CuraGen could not comment on the deal because of "quiet period" restrictions related to its IPO registration.

According to the company's mid-October Securities and Exchange Commission filing, the CuraGen genomics platform consists of the following components:

* GeneCalling, to identify genes and analyze their expression.

* PathCalling, to characterize the roles of genes and their related proteins in biological pathways.

* HitCalling, for the identification of small-molecule drug candidates.

* GeneScape, a unifying bioinformatics operating system.

The company plans to generate revenues over the next five years through research collaborations and database subscriptions. The Biogen deal grants access to GeneCalling, PathCalling and GeneScape. HitCalling is expected to come online in 1998.

In addition to the Biogen pact, CuraGen in June signed a five-year agricultural genomics deal worth up to $26 million with Pioneer Hi-Bred International Inc., of Des Moines, Iowa.

Thus the company is looking to go public with a ready-to-collaborate technological platform, plus two existing deals worth more than $59 million. CuraGen's cash level at mid-year was $21.3 million, with a net loss of $1.65 million for the first half of 1997.

The market for biotech IPOs and secondary public offerings "has been pretty good this fall," said analyst Edmund Debler, of Mehta & Isaly, in New York.

There has not been a significant pattern in successful IPOs of late, he said, noting that bankers typically cite as key factors in biotech IPO success late-stage products, enabling technology and partnerships.

"This is a much more mature business than it was several years ago," said Debler. "As an investor I am a little more focused on opportunities of a later-stage nature."

But ultimately, in the IPO game, "beauty is in the eye of the beholder. Some companies with very early technology have been received very warmly, while others with late-stage products were not very warmly received."

He cited Corixa Corp., of Seattle, as the most recent example of a company that defied the conventional wisdom by outperforming expectations despite having reached only the Phase I clinical trial level. Corixa, which focuses on T cell vaccines to treat cancer and infectious diseases, raised $39 million in an oversubscribed offering.

As for CuraGen, the four-year-old company did not say in its prospectus how much it was seeking, or how many shares it planned to offer. *

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