Chasing Blockbuster Drugs, Using Chinese Help
BusinessWeek Tuesday September 9, 8:08 am ET By Pete Engardio
When Curis (NasdaqGM:CRIS - News) went public eight years ago, it symbolized the unbound optimism of biotechnology. Its stock rose fast, to 25, and it possessed promising technologies. Ever since, Curis has illustrated the risks of investing in biotech startups. There have been heartbreaking setbacks in clinical testing, failed partnerships with Wyeth (NYSE:WYE - News) and Procter & Gamble (NYSE:PG - News), and collaboration with Genentech (NYSE:DNA - News) that has seemingly dragged on forever. Curis's stock has crashed, rebounded, and crashed again, hitting just 91% in November.
But the tiny
For more than two years, Curis has been outsourcing sophisticated chemistry work to Shanghai ChemPartners, a fast-growing contract research organization in an industrial park in
The low-cost Chinese help is pivotal to Curis' two-pronged strategy for success, says CEO Daniel P. Passeri. On the one hand, Curis has its continuing tie-up with Genentech to develop drugs targeting Hedgehog, a complex pathway of proteins and cells believed to influence growth of cancerous tumors in the stomach, pancreas, lungs, and other tissues (BusinessWeek.com, 5/16/05). The project finally is producing promising results. Genentech has reported that several cancer patients taking its Hedgehog drug in clinical trials have shown dramatic improvement. It has recently begun Phase II human trials involving 150 patients. If a commercial drug results, which would still be several years from now, Curis stands to receive hefty milestone payments and royalties if it results in a commercial drug that could be worth hundreds of millions of dollars.
Aiming at Many Targets
At the same time, Curis is trying to develop a broad portfolio of its own cancer drugs, the funding for which is mainly from payments from corporate partners such as P&G and Genentech. Rather than trying to discover new biological targets, Curis is developing single-dose drugs aimed at hitting a number of targets simultaneously. It says it believes it is the only company attacking both the surface and the nucleus of the cell. The goal is to make treatments that are easier to use, more affordable, and more effective not only in attacking cancer cells but also in keeping them from reappearing.
That is where
For small companies with limited resources like Curis, that presents a dilemma. Most have to bet their resources on only one or two drug programs and try to rush them into clinical testing, rather than methodically spreading their risks by developing a range of candidates simultaneously. Given the high chances of failure, "it is tantamount to spinning a roulette wheel," says Passeri. "Curis is representative of what is happening in the sector."
Low Costs Mean More Options
By using Chinese medicinal chemists costing so much less than Americans doing similar work, Curis can afford to have 10 drugs aimed at different kinds of cancer in early-stage development. To pull off its strategy, "we needed a dramatic buildup of our chemistry capabilities," says Passeri. "If we did all of this in the
This fall, it plans to begin human testing on its first single-pill drug, based on a molecule called CUDC-101.
Curis says it had one advantage that made it relatively easy to work with a Chinese company: Its chief scientist, Qian Changgeng, as well as nearly half of its 30 researchers in
After a two-week search in 2006, Curis settled on Shanghai ChemPartners, a unit of a larger company, privately held ShangPharma, with 1,200 scientists. Among its major Western clients are Eli Lilly (NYSE:LLY - News). Curis also sent staff to
While Curis'
Resulting from a Merger
It is still far too early, of course, to predict whether Curis or any other small biotech will succeed. Curis has already weathered many setbacks. The company sprang from a 2000 merger between Onto-geny, which owned rights to the Hedgehog technology, and two other small companies. But the following year its chief product, a protein to induce bone growth in fractures that had been shaping up as a big money-maker, failed in testing after limited to approval to market the product in the U.S. and Europe.
Curis then entered into a series of partnerships with larger corporations for treatments based on Hedgehog. In 2006, Genentech halted a trial of a topical cream to treat nonlethal skin cancer. The next year, P&Ge pulled out of potential cure for hair loss. And in March, Wyeth did the same with efforts to develop drugs for stroke and cardiovascular disease.
Curis stock got a bump in January, after Genentech's news that its Hedgehog drug performed well in early human trials after it had already invested more than $100 million in the program.
Now, Curis stock trades at around 1.70. CFO Gray says the company has $33 million in cash, enough to continue work on its propriety drugs at least through 2009. Curis also is exploring expanding its
This may all sound threatening to Americans who fear another prized industry could shift offshore. But Passeri views it differently. "The