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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
______________
Date of Report (Date of earliest event reported): January 20, 2000
CuraGen Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-23223 06-1331400
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
555 Long Wharf Drive, 11TH FLOOR
New Haven, Connecticut 06511
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 401-3330
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ITEM 5. OTHER EVENTS.
On January 20, 2000, the Registrant publicly disseminated a press release
announcing its intention to issue $100 million aggregate principal amount of
convertible subordinated debentures ($120 million if the over-allotment option
is exercised in full). The information contained in such press release is
incorporated herein by reference and filed as Exhibit 99.1 hereto. Subsequently,
on January 28, 2000, the Registrant publicly disseminated a press release
announcing its intention to increase the aggregate principal amount of
convertible subordinated debentures to $125 million from $100 million ($150
million if the over-allotment is exercised in full). The information contained
in such press release is incorporated herein by reference and filed as Exhibit
99.2 hereto. The Registrant described its business in the Offering Memorandum
related to this issuance. Such description of the Registrant's business is
incorporated herein by reference and filed as Exhibit 99.3 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 The Registrant's Press Release dated January 20, 2000.
99.2 The Registrant's Press Release dated January 28, 2000.
99.3 Excerpt of the "Business Section" from the Registrant's Offering
Memorandum dated January 27, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CURAGEN CORPORATION
(Registrant)
Date: January 27, 2000 By: /s/ David M. Wurzer
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David M. Wurzer
Executive Vice President, Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Sequential
Number Description Page Number
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99.1 The Registrant's Press Release 5
dated January 20, 2000.
99.2 The Registrant's Press Release
dated January 28, 2000. 6
99.3 Excerpt of the "Business Section" from the 7
Registrant's Offering Memorandum dated
January 27, 2000
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Exhibit 99.1
Press Release of the Registrant
CURAGEN ANNOUNCES PROPOSED SALE OF $100 MILLION OF CONVERTIBLE NOTES
NEW HAVEN, CT- JANUARY 20, 2000 - CuraGen Corporation (Nasdaq: CRGN), a genomics
based drug discovery and development company, announced today its intention to
issue $100 million aggregate principal amount of convertible subordinated
debentures, with an additional $20 million over-allotment option.
CuraGen intends to sell these debentures in a private offering in the United
States to qualified institutional buyers under Rule 144A of the Securities Act
of 1933, as amended, and outside the U.S. to Non-U.S. persons under Regulation S
under the Securities Act. The debentures will be convertible into shares of
CuraGen's common stock and will have a seven-year term.
CuraGen intends to use the net proceeds from this offering for general purposes
including the Company's internal discovery and development programs and the
development of new technologies. This offering is subject to certain market
conditions and other factors.
The debentures to be offered will not be registered under the Securities Act or
applicable state securities laws, and may not be offered or sold in the United
States absent registration under the Securities Act and applicable state
securities laws or available exemptions from the registration requirements.
CuraGen Corporation is advancing the discovery and development of pharmaceutical
and life science products through the systematic application of genomics.
CuraGen's fully integrated, Internet-based genomics technologies, services, and
information systems are designed to rapidly generate comprehensive information
about genes, human genetic variations, gene expression, biological pathways, and
potential products that affect these pathways. CuraGen's strategic collaborators
include Abgenix, Biogen, COR Therapeutics, Genentech, Glaxo Wellcome, Hoffmann-
La Roche, Pioneer Hi-Bred International, and Roche Vitamins. The Company employs
approximately 300 people and is headquartered in New Haven, CT, with additional
facilities in Branford, CT and Alachua, FL. Additional Company information is
available at www.curagen.com.
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This release may contain forward-looking statements that are subject to certain
risks and uncertainties, including the Company's ability to successfully enhance
and develop its technologies. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the forward-
looking statements. The Company cautions investors that there can be no
assurance that actual results or business conditions will not differ materially
from those projected or suggested in such forward-looking statements as a result
of various factors, including, but not limited to, the following: the Company's
early stage of development, technological uncertainty and product development
risks, uncertainty of additional funding, reliance on research collaborations,
competition, the Company's ability to protect its patents and proprietary rights
and uncertainties relating to commercialization rights.
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Exhibit 99.2
CuraGen Raises $125 Million from the Sale of Convertible Debentures
New Haven, CT - January 28, 2000 - CuraGen Corporation (NASDAQ: CRGN), a
genomics based drug discovery and development company, announced today that it
has entered into a purchase agreement providing for the sale to certain initial
purchasers of $125 million aggregate principal amount of convertible
subordinated debentures ($150 million if the over-allotment option is exercised
in full). The debentures, which will be issued on February 2, 2000, will be
resold by the initial purchasers to qualified institutional buyers under Rule
144A of the Securities Act of 1933, as amended, and to non-U.S. persons outside
the United States under Regulation S under the Securities Act.
Interest on the debentures will accrue at a rate of 6% per year, subject to
adjustment in certain circumstances. The debentures will mature in 2007 and are
convertible into shares of CuraGen common stock at a conversion price of
$127.6550 per share, subject to adjustment in certain circumstances.
CuraGen intends to use the net proceeds from the sale of the debentures for
general corporate purposes including its internal discovery and development
programs and the development of new technologies. This offering is subject to
certain market conditions and other factors.
Initially, the debentures will not be registered under the Securities Act or
applicable state securities laws, and may not be offered or sold in the United
States absent registration under the Securities Act and applicable state
securities laws or available exemptions from the registration requirements.
CuraGen has agreed to file a shelf registration statement for the debentures and
the common stock issuable upon conversion of the debentures within 90 days of
the issuance of the debentures.
CuraGen Corporation is advancing the discovery and development of pharmaceutical
and life science products through the systematic application of genomics.
CuraGen's fully integrated, Internet-based genomics technologies, services, and
information systems are designed to rapidly generate comprehensive information
about genes, human genetic variations, gene expression, biological pathways, and
potential products that affect these pathways. CuraGen's strategic collaborators
include Abgenix, Inc., Biogen, Inc., COR Therapeutics, Inc., Genentech, Inc.,
Glaxo Wellcome, Inc., Hoffmann-La Roche, Inc., Pioneer Hi-Bred International,
Inc. and Roche Vitamins, Inc. CuraGen employs approximately 300 people and is
headquartered in New Haven, CT. Additional information about CuraGen is
available at www.curagen.com.
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This release may contain forward-looking statements that are subject to certain
risks and uncertainties, including the Company's ability to successfully enhance
and develop its technologies. Such statements are based on management's current
expectations and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the forward-
looking statements. The Company cautions investors that there can be no
assurance that actual results or business conditions will not differ materially
from those projected or suggested in such forward-looking statements as a result
of various factors, including but not limited to, the following: the Company's
early stage of development, technological uncertainty and product development
risks, uncertainty of additional funding, reliance on research collaborations,
competition, the Company's ability to protect its patents and proprietary rights
and uncertainties relating to commercialization rights.
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Exhibit 99.3
BUSINESS
General
We are a genomics based drug discovery and development company. We research,
develop and use technologies based on the discovery of genes and our
understanding of their functions and relationships, which we refer to as
"genomics technologies", to accelerate the discovery and development of
products to improve human and animal health and the vitality of agriculture, in
collaboration with other companies and through our own internal programs.
Our Internet-enabled genomics technologies, processes and information systems
are fully integrated with one another and rapidly generate comprehensive
information about the following:
. gene sequence, the order in which nucleotides (the building blocks of DNA)
appear in a gene and control the function of the gene;
. variations in gene sequences;
. gene expression, the degree of gene activity;
. biological pathways, the pathways that proteins follow in carrying out the
biological functions of cells; and
. the way potential drugs affect gene expression and the related biological
pathways.
We believe that our genomics technologies can overcome the limitations of
competing technologies currently in use and that they condense key steps in
genomics based drug discovery and development. We believe our genomics
technology and information systems platform will facilitate the development of
protein therapeutics, antibody-based drugs and small molecule targets to treat a
variety of complex diseases, including metabolic diseases, cancer, auto-immune
diseases and disorders of the central nervous system.
Our genomics technology and information systems platform has three primary
systems (each consisting of proprietary technologies, automated processes,
related databases and bioinformatics analysis tools), each of which is fully
operational and has been commercialized:
. SeqCalling for gene sequencing and discovery of variations in gene
sequences;
. GeneCalling, a patented technology for gene discovery and comprehensive
gene expression analysis; and
. PathCalling for analyzing the function and relationships between genes
(and the proteins these genes encode) in biological pathways.
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In addition to accelerating the discovery of new drug candidates, we are also
using our GeneCalling technology, automated process and related databases and
bioinformatics analysis tools to predict the efficacy and safety of drug
candidates currently in pharmaceutical development pipelines, and to review the
performance and side effects of drugs already being marketed. This approach,
referred to as pharmacogenomics, is aiding in the development of more effective,
safer drugs. Pharmacogenomics can also potentially be utilized to identify more
appropriate patient populations for use in clinical drug studies.
Our SeqCalling system generates comprehensive sequence databases of expressed
genes from any species and is used to identify human genetic variations known as
Single Nucleotide Polymorphisms (SNPs). This system is also biased towards
identifying cSNPs, which are located within the coding regions of genes. cSNPs
are of increasing value in research because they are believed to be useful
markers in the identification of disease genes and genetic differences, which
may predispose a patient to disease or determine the response of a patient to a
specific drug treatment.
We have unified our SeqCalling, GeneCalling and PathCalling technologies,
processes and databases under a computer program we refer to as GeneScape, which
tracks and analyzes data and integrates all aspects of process management, data
analysis and visualization. GeneScape is also a web-based portal that provides
simultaneous, real-time access to our technologies, systems, databases and
bioinformatics to researchers at multiple sites, allowing them to work together
on discovery and development projects. We plan to continue to enhance and build
additional technologies upon our GeneScape platform.
Our business strategy is:
. to develop and maintain the leading genomics technology and information
systems platform, in order to provide us with a unique opportunity to
participate in the development of the next generation of therapeutic
products for important complex diseases;
. to enter into collaborations in order to generate short-term revenue and
advance internal discovery and development efforts; and
. to ensure our long-term profitability by pursuing the internal discovery
and development of protein therapeutics, antibody-based drugs and small
molecule targets aimed at metabolic diseases, cancer, auto-immune diseases
and disorders of the central nervous system.
We market our genomics technologies and information to pharmaceutical,
biotechnology, agricultural and animal health companies through research
collaborations. These research collaborations involve the application of our
SeqCalling, GeneCalling and PathCalling technologies, systems and databases to
collaborative research projects, and include support services required to
characterize gene and target discoveries. These collaborations typically provide
current revenues, but also include milestone payments for successful projects,
and royalty-based revenues from products emerging from the drug development
programs of our partners. We currently have research collaborations with
Abgenix, Biogen, COR, Genentech, Glaxo-Wellcome, Roche Pharma and its affiliate,
Roche Vitamins, and Pioneer Hi-Bred.
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We are also applying our suite of genomics technologies on our own behalf to a
broad portfolio of research programs that encompass drug discovery, drug
development and pharmacogenomics. We have established internal programs to
develop products to treat metabolic diseases, cancer, auto-immune diseases and
disorders of the central nervous system. During the next five years, our
objective is to analyze systematically the genetic basis of many common diseases
as well as the mechanisms of action and adverse side effects of many commonly
prescribed drugs. We are focusing our efforts on programs that address unmet
medical needs and that we believe have the potential to yield products that can
be commercialized in a relatively short time. In particular, we select human
diseases and animal models of human diseases based on their potential to yield
protein drugs, antibody drugs or novel small molecule drug targets for common
diseases that lack effective treatments or to aid rational development or
marketing of existing drugs. At each stage, we plan to reevaluate the relative
merits of continuing such programs solely through internal efforts or through
research collaborations.
The goal of our drug development programs is to advance promising therapeutic
candidates into the clinic. We believe that we are leveraging the entire human
genome to do this more systematically than ever possible before. We are focusing
on two broad classes of therapeutics, secreted proteins and fully human
monoclonal antibodies raised against membrane-bound or secreted proteins. In
order to determine the therapeutic potential of genes encoding secreted
proteins, we have implemented high-throughput protocols for the production,
purification and testing of these proteins. We have established high-throughput
cell-based assays for characterizing the therapeutic potential of secreted
proteins. We are currently evaluating the efficacy of a number of secreted
proteins as potential human therapeutics using animal models. We are also
employing a genomics based approach for the development of monoclonal antibody
therapeutics. We have identified 750 genes that make suitable targets for
monoclonal antibody therapy, which may be associated with disease, and on which
we potentially have a good intellectual property position. These proteins will
be used to make fully human monoclonal antibodies. Antibodies are naturally
occurring proteins used by the body's immune system to combat many diseases. As
therapeutic products, antibodies have several potential advantages over other
therapies. The highly specific interaction between an antibody and its target
may, for example, reduce unwanted side effects that may occur with other
therapies. Fully human antibodies are desirable because they avoid the risk of
rejection present with mouse or partial mouse antibodies. We will be
systematically testing approximately 120 human monoclonal antibodies for
efficacy in human cell and animal models of disease.
Our business and competitive position are dependent upon our ability to
protect our genomics technologies, gene sequences, products, information systems
and proprietary databases, software and other methods and technologies. We have
filed patent applications for our proprietary methods and devices for
sequencing, gene expression analysis, for discovery of biological pathways and
for drug screening and development. As of the date of this offering memorandum,
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we had approximately 140 patent applications pending covering our technologies,
discoveries and products with the United States Patent and Trademark Office, and
had filed numerous corresponding international and foreign patent applications.
As of the date of this offering memorandum, we have been issued six patents with
respect to aspects of our technologies, discoveries and products.
OVERVIEW
Complex diseases often arise through a combination of genetic and
environmental factors. The successful treatment of such diseases often depends
upon an understanding of how the body uses its genetic information, how
disruptions in this information can lead to disease and, in turn, how drugs can
arrest or reverse disease progression. Metabolic diseases, cancer, auto-immune
diseases and disorders of the central nervous system are examples of such
complex diseases. As scientific advances improve our understanding of the
genetic basis of many diseases, we believe that the methods the pharmaceutical
industry uses to develop new drugs will undergo a fundamental transformation. We
believe that if we can develop and apply new genomics technologies to address
this transformation, we will have a unique opportunity to develop the next
generation of therapeutic products for important complex diseases.
In recent years, scientists have begun to analyze large portions of the
genetic information contained within the human genome, which is a complete set
of human genetic information. The most prominent of these projects being the
publicly funded Human Genome Project. This discipline is termed genomics.
Through genomics, scientists seek to understand the genetic basis of disease and
to develop more effective treatments. However, to date, the pharmaceutical,
animal health and agricultural industries have not used genomics extensively to
develop new product opportunities primarily because:
. genomics technologies have been inadequate;
. discovery processes used by these industries have caused them to
underestimate the influence of genetic and environmental factors upon
disease; and
. uniform information systems necessary to drive genomics technologies have
been unavailable.
The treatment of complex diseases remains a major technological challenge and
will require an integrated set of genomics technologies, processes and
information systems. We believe that increased information about gene sequences,
variations in gene sequences, gene expression, biological pathways and the
proteins affecting these pathways, and about their interplay with drugs and the
environment, coupled with information systems that enable the comprehensive
understanding of this information, will accelerate drug discovery and
development. We have developed our technologies, processes and information
systems to generate this information and enable this understanding.
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OUR APPROACH TO GENOMIC BASED DRUG DISCOVERY
Our integrated genomics technologies, processes and information systems are
designed to overcome significant technological limitations present in existing
gene-based drug discovery and development methods. Our technology platform
rapidly generates comprehensive information about gene sequences, variations in
gene sequences, gene expression, biological pathways and the proteins affecting
these pathways, and about their interplay with drugs and the environment. Our
technology platform has been used by our collaborators and ourselves to analyze
many diseases and has led to the discovery of a number of disease-related genes,
drug targets and potential drugs.
Gene Discovery (Our SeqCalling and GeneCalling Technologies)
Our SeqCalling technology generates comprehensive sequence databases of
expressed genes from any species. Our GeneCalling technology measures
substantially all of the differences in gene expression levels between
biological samples in order to discover disease-related genes. Specifically, we
designed our GeneCalling technologies to:
. comprehensively measure the expression levels of 95% of the genes
expressed in any species; and
. be integrated into an efficient, automated, high-throughput process.
The combination of these traits enables us rapidly to generate large databases
of gene expression profiles. These technologies also permit us to pursue
research programs for many disease systems and process many samples in parallel.
As a result, we are able to discover and seek patent protection for many
commercially valuable disease-related genes and gene products.
Target Identification (Our GeneCalling and PathCalling Technologies)
We have developed our proprietary PathCalling technologies to reduce the time
and cost associated with the identification and functional understanding of
targets for therapeutic intervention. Our PathCalling system is an automated,
high-throughput process that tests for interactions between combinations of
proteins and assembles these protein-protein interactions into our PathCalling
database. By identifying such protein-protein interactions and comparing them
with known pathways within the PathCalling database, we can determine the role
of these proteins within a given biological pathway. We have designed our
PathCalling technologies to permit disease-related genes to be linked rapidly to
specific biological pathways, providing valuable information which can lead to
the discovery of new genes and additional targets for therapeutic intervention.
We believe that our PathCalling database has the potential to streamline target
identification. We further believe that the number of pathway-related protein-
protein interactions currently in our proprietary PathCalling database is
greater than the total number of interactions described to date in the
scientific literature.
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Pharmacogenomics (Our SeqCalling, GeneCalling and PathCalling Technologies)
Our SeqCalling, GeneCalling and PathCalling technologies can also be used in
preclinical and clinical trials to predict which drugs are more likely to be
effective by analyzing gene expression changes induced by drug treatment in
humans and animal models. We have generated our GeneCalling databases for
numerous drugs already on the market to accelerate the development of an
improved generation of drugs with fewer side effects and to assist in the
selection of appropriate patient populations. By correlating gene expression
levels and the activities of biological pathways following treatment with
specific drugs, we may be able to minimize the side effects of drugs, to
identify appropriate patient populations for existing drugs and to aid in the
development of safer, more effective drugs. In addition we use our SeqCalling
database to identify variations (SNPs) in genes that respond to drugs, and can
use these variations for identifying the most appropriate patients for a
specific drug treatment.
Technology Integration and Information Systems (Our GeneScape Platform)
We have integrated our SeqCalling, GeneCalling, and PathCalling technologies
under a single bioinformatics operating system we refer to as our GeneScape
platform. This system unifies all aspects of process management, data analysis
and visualization used in our technologies. Our goal is to establish our fully-
integrated technologies and GeneScape operating system as the preferred platform
for genomics, as well as drug discovery, drug development and pharmacogenomics.
We designed GeneScape to meet the needs of researchers for a single operating
system which integrates research requests, project management, database access
and data analysis and visualization. GeneScape provides the user with a web-
based standardized interface to our processes and databases, operating over the
Internet on any computer platform that supports a standard web browser. By
providing simultaneous, real-time access to our technologies, systems and
databases to researchers at multiple sites, GeneScape is a powerful tool that
permits researchers to work together on discovery and development projects. As
GeneScape is modular and may be expanded to incorporate other technologies,
systems and databases, we intend to continually enhance this technology
platform.
PRODUCTS AND SERVICES
We are marketing our genomics technologies and genetic information derived
from our technologies by establishing research collaborations with
pharmaceutical, biotechnology, agricultural, animal health and other life
science companies. Our research collaborations involve the application of our
SeqCalling, GeneCalling, and PathCalling technologies to a collaborator's
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projects. These technologies can be used in discovery efforts as well as
preclinical and clinical trials to predict which drugs are more likely to
succeed by analyzing gene expression changes induced by drug treatment in humans
and animal models. We may also provide certain support services necessary to
characterize gene and target discoveries, subscriptions to our databases and
integration with a collaborator's existing development pipeline of products. We
use our GeneScape software platform in such collaborations to manage our
processes and provide access to our databases.
SeqCalling and GeneCalling Systems: Gene Sequencing and Gene Expression Services
and Databases
We developed our proprietary SeqCalling and GeneCalling technologies to
overcome significant limitations of competing gene and gene sequence discovery
methods currently in use. Our GeneCalling system generates and analyzes gene
expression profiles and stores differences in gene expression profiles to
identify disease-related genes. The system permits sensitive detection of genes
that can control biological pathways when expressed at very low levels. Unlike
methods that use expressed-sequence tags, known as EST, our GeneCalling system
does not require repetitive sequencing to measure gene expression. Our
technology is comprehensive in detecting genes with novel sequences and is
therefore applicable universally to humans, animals, plants, and pathogens. In
comparison, hybridization-based methods are primarily limited to known genes and
do not readily discriminate between the many genes that share closely related
DNA sequences.
Our SeqCalling system generates comprehensive sequence databases of expressed
genes from any species and is used to identify new genes and human genetic
variations known as Single Nucleotide Polymorphisms (SNPs). This system may also
be used to identify cSNPs, which are located within the coding regions of genes.
cSNPs are of increasing value in research because they are believed to be useful
markers in the identification of disease genes and genetic differences, which
may determine the response of a patient to disease and to drug treatment. Our
GeneCalling system measures expression levels and determines gene expression
differences between biological samples (such as diseased and normal human
tissues) and enhances the ability to discover disease-related genes. Samples are
usually processed within a month of receipt, and profiles of gene expression
levels are available immediately thereafter for inspection and analysis.
PathCalling Systems: Pathway Analysis Services and Database
Once genes involved in a disease have been identified using our SeqCalling and
GeneCalling system, it is important to be able to determine how the proteins
that these genes encode interact in the complex biological pathways involved in
the disease. A particular disease-related protein might not always be the best
candidate for treatment or as a target for drug development. However, increased
knowledge of the other proteins in the same pathway may lead to promising
protein drug or target candidates. Our PathCalling technologies were developed
to provide a link between disease-related proteins and their biological pathways
to aid in the identification and validation of appropriate targets following the
discovery of a disease-related gene.
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Our PathCalling system consists of proprietary automated, high-throughput
biological operations that simultaneously test for interactions between pairs of
proteins. Our PathCalling system then assembles discovered protein-protein
interactions into connected biological pathways, including pathways discovered
previously by us or previously described in the scientific literature. Our
objective is to continue to build our PathCalling database to contain protein-
protein interactions that constitute the pathways that are relevant to disease.
Our PathCalling bioinformatics tools permit the graphical display of all
pathways contained in the database involving any particular protein and allow
these pathways to be queried for information in much the same way gene sequence
databases are queried today. We believe that this will allow disease-related
genes to be linked to specific biological pathways. We believe the linkage will
provide for crucial biological context for gene discoveries, which may lead to
the identification of potential targets for therapeutic intervention.
We seek patent protection on the utility of specific proteins or protein-
protein interactions as drug targets based on information provided by
PathCalling, in addition to composition of matter claims based on the sequences
of novel and non-obvious proteins and the genes encoding them.
CuraShop
We also offer services to our collaborators that will complement our
proprietary SeqCalling, GeneCalling, and PathCalling technologies. Our CuraShop
technologies can provide high-throughput, efficient and essential research
services, including confirmation of gene expression differences, gene
sequencing, delivery of full-length clones of genes, gene mapping and mutation
detection. These services and materials can all be requested, for a fee,
directly through our GeneScape software platform.
Our GeneScape Bioinformatics Platform
We designed GeneScape to meet the needs of researchers for a single operating
system which integrates research requests, project management, database access
and data analysis and visualization. GeneScape provides the user with a web-
based standardized interface to our processes and databases, operating over the
Internet on any computer platform that supports a standard web browser.
GeneScape is modular and may be expanded to incorporate other processes.
GeneScape currently consists of three components: Discovery, Study Management
and CuraTools.
Discovery. The Discovery component of our GeneScape system manages queries
to our SeqCalling, GeneCalling, and PathCalling databases. GeneScape provides
data analysis and visualization through a flexible, easy-to-use point-and-click
interface organized in three sections corresponding to the SeqCalling,
GeneCalling, and PathCalling databases. The GeneScape system provides the
answers to queries in visual format, organized according to the following
preferences set by the end user:
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. differential gene expression;
. expression in particular samples, tissues, or disease stages;
. participation in metabolic or signal transduction pathways;
. map position;
. functional role;
. interactions with proteins or small molecules; or
. other custom criteria.
We believe that the ability to respond to direct queries with the
comprehensive analysis of sequence variation, gene expression and biological
pathways may make GeneScape a preferred platform for discovering disease-related
genes and drug discovery targets.
Study Management. Our collaborators can manage processes and resources over
the Internet to meet their individual research needs. Separate links on the
Study Management page of our GeneScape software platform provide direct, up-to-
the-minute status reports for projects, individual processes within projects,
and resource allocation among projects and processes. The Study Management
component of the GeneScape software platform automates the operation of every
station in the SeqCalling, GeneCalling, and PathCalling systems and monitors
quality control at each processing step.
CuraTools. GeneScape also includes CuraTools, an easy-to-use, unified
bioinformatics software package which provides the following information:
. DNA and protein sequence analysis;
. sequence similarity to known genes, protein drugs and protein targets;
. three-dimensional structure prediction;
. identification of proteins participating in biological pathways; and
. custom literature searches.
CuraTools also provides users with access to publicly available sequence,
mapping and expression databases that we have imported, assembled, and annotated
for enhanced value. In addition, we have assembled proprietary sequence and
mapping databases for portions of the corn, mouse, rat and human genomes.
Collaborators can elect to have us link their own proprietary or third party
sequence databases into GeneScape and CuraTools for their own exclusive use.
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GeneScape Portal
GeneScape is also the name of our Internet portal that makes available a
subset of our bioinformatics analysis tools (known as CuraTools) and non-
proprietary gene sequence and expression data to non-collaborators, primarily
the academic research community. We believe the GeneScape Portal enhances our
standing among this influential group, aiding our employee recruitment effort
and generating referrals for future collaborations. The GeneScape Portal also
serves as a vehicle to aggregate all the public information on the Human Genome
Project with our internal efforts. In addition, we will use the GeneScape Portal
to release selected additional information on genes, sequence variations, and
biological pathways to current and future users.
RESEARCH COLLABORATIONS
As part of our business strategy, we establish research collaborations with
pharmaceutical, biotechnology, agricultural, animal health and other life
science companies. Our collaborations generally provide revenues in the form of
fees for work performed by our employees in the generation of gene sequences,
gene expression, or biological pathway data from samples provided by a
collaborator. The collaborator will have the ability to control how resources
are allocated to generate SeqCalling, GeneCalling and PathCalling databases and
to perform additional research services through our CuraShop technologies,
including the sequencing of gene fragments and the generation of full-length
clones. Collaborators typically have the right to license, for an up-front fee,
discoveries arising from a collaboration, including rights to novel genes, novel
uses of previously identified genes, protein drugs, antibody targets, small
molecule drug targets, as well as markers for prioritizing drugs and markers for
selecting patient populations. Collaborations typically include milestone
payments to us and royalty payments to us on sales of products developed using
discoveries made through the use of our technology.
We also seek to enter into research collaborations that provide us access to
complementary technologies to accelerate our own internal discovery and
development projects. To date, we have entered into significant collaborations
with Abgenix, Biogen, COR, Genentech, Glaxo-Wellcome, Roche Pharma and its
affiliate, Roche Vitamins, and Pioneer Hi-Bred.
Pioneer Hi-Bred
Effective June 1, 1997, we entered into a collaborative research and license
agreement with Pioneer Hi-Bred whereby we agreed to perform research funded by
Pioneer Hi-Bred for the selection, identification and development of improved
crops. In conjunction with the execution of this agreement, Pioneer Hi-Bred made
a $7,500,000 equity investment in us. Under the terms
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of the agreement, we will receive research funding and royalty payments if any
products emerge from this collaboration. Pioneer Hi-Bred has the right to
terminate the research program at any time upon a breach by us and at any time
after May 2000 on three months' written notice.
Genentech
In June 1996, we entered into a pilot research services and evaluation
agreement with Genentech. The pilot collaboration was superseded by the
evaluation agreement, signed and effective December 27, 1996, pursuant to which
we performed additional research services during 1997. We completed the research
within four months of the receipt of tissue samples from Genentech as required
by the evaluation agreement. In connection with the execution of the evaluation
agreement, Genentech made an $1,800,000 equity investment in us.
In November 1997, we entered into a research collaboration and database
subscription arrangement with Genentech to discover novel genes and therapeutics
across a range of Genentech-specified disease programs. Genentech has the right
to terminate the research collaboration, upon a breach by us of any material
obligation under the Genentech Agreement or on or after November 2000, on one
month's prior notice. Genentech has an option to acquire licenses to certain
discoveries arising from the collaboration. Pursuant to the agreement, Genentech
also purchased $5,000,000 of our Common Stock in a private placement concurrent
with our initial public offering at the initial public offering price of $11.50
per share. Genentech also agreed to provide us with an interest-bearing loan
facility. On October 15, 1999, we made a draw down of $16,000,000 under this
facility and simultaneously converted the loan into 977,636 shares of our non-
voting common stock, par value $.01 per share. The non-voting common stock is
convertible into common stock (a) at any time, at Genentech's option or (b)
automatically upon the sale or transfer of the non-voting common stock to a non-
affiliated party.
Biogen
In June 1997, CuraGen and Biogen entered into a stock purchase agreement,
pursuant to which Biogen made a $1,000,000 equity investment in the company in
anticipation of evaluating the application of CuraGen's technology to a
particular program of interest to Biogen.
In October 1997, we entered into a research collaboration and database
subscription arrangement with Biogen to discover novel genes and therapeutics
across a range of Biogen-specified disease programs. The parties also expect to
conduct pharmacogenomic analysis of selected products and product candidates in
Biogen's portfolio. The collaboration, which calls for payments by Biogen over a
five year period, will provide Biogen with access to our proprietary genomics
technologies, including the GeneScape bioinformatics software platform in order
to generate GeneCalling and PathCalling databases from Biogen-specified disease
systems. Biogen has an option to acquire exclusive licenses to certain
discoveries arising from the collaboration. Biogen has the right to terminate
the research collaboration upon any breach by us of any material obligation
under the Biogen agreement or at any time after October 1999, on 30 days'
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written notice. In addition, pursuant to the agreement, Biogen purchased
$5,000,000 of our common stock in a private placement concurrent with our
initial public offering at the initial public offering price of $11.50 per
share, and agreed to provide a $10,000,000 interest-bearing loan facility. On
October 15, 1999, we made a draw of $10,000,000 under this facility and
simultaneously converted the loan into 611,022 shares of our common stock.
Glaxo
In November 1998, we entered into a drug discovery collaboration with Glaxo to
use our integrated genomics processes for the study and selection of Glaxo
compounds for clinical development. This discovery and pharmacogenomics
collaboration, up to five years in duration, is intended to enable Glaxo to
select drug candidates with the highest likelihood of success in clinical
trials. Specifically, we will evaluate numerous compounds across Glaxo
therapeutic programs, identifying gene responses associated with compound
efficacy and toxicity. Under the terms of the agreement, we will receive
research funding and additional milestone and royalty payments if any drugs
emerge from this collaboration. Either party may terminate the collaboration
without cause at its sole discretion upon three months prior written notice to
the other party, however neither party may terminate the collaboration prior to
fifteen months after the effective date of the agreement.
Roche Pharma and Roche Vitamins
In March 1999, we signed a life sciences target discovery and pharmacogenomics
collaboration retroactively effective as of January 1, 1999 with F. Hoffmann-La
Roche Ltd., Roche Pharma and Roche Vitamins. This agreement outlines strategic
partnerships with F. Hoffmann-La Roche Ltd. and its affiliates and is designed
to discover new drug targets, evaluate existing product candidates and
facilitate the development of drugs and diagnostic tests for the purposes of
improving human and animal health. Under the terms of this agreement, we will
receive research funding and additional milestone and royalty payments if any
products emerge from this collaboration. The agreement is for an initial term of
two years and includes an option to extend for three additional one-year terms.
COR
In May 1999, we signed a product discovery and pharmacogenomics agreement with
COR. Under the terms of this agreement, we will apply our SeqCalling,
GeneCalling, and PathCalling technologies, related services, and
pharmacogenomics expertise to identify new drug targets and develop novel
cardiovascular drugs. This collaboration is for an initial term of eighteen
months with an option to extend the collaboration for three additional 12-month
terms. We will receive research funding, milestone payments and royalty payments
for products developed by COR as a result of this collaboration.
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Abgenix
In December 1999, we entered into a collaboration agreement with Abgenix to
develop and commercialize genomics-based antibody drugs using Abgenix'
XenoMouse/TM/ technology. This five-year alliance has been established to
identify up to 120 fully human antibody drug candidates intended for treating a
broad range of complex diseases including cancer and autoimmune disorders. Under
the terms of this agreement, we will provide research support payments to
Abgenix of $1,500,000 per year. Antibodies determined to have commercial product
potential will be allocated between the parties for further development. Abgenix
and we will receive reciprocating milestone payments and royalty payments for
products resulting from this drug development alliance. In addition, under the
agreement Abgenix purchased 418,995 shares of our common stock for $15,000,000.
CURAGEN INTERNAL PROGRAMS
We also use our integrated genomics technologies on our own behalf to pursue a
broad portfolio of research programs that encompass drug discovery,
pharmacogenomics and drug development. During the next five years, our objective
is to analyze systematically the genetic basis of many common diseases as well
as the mechanisms of action and adverse side effects of many commonly prescribed
drugs. We are focusing our efforts on programs that address unmet medical needs
and programs that we believe have the potential to yield products that can be
commercialized in a relatively short time. In particular, we select human
diseases and animal models of human diseases based on their potential to yield
protein drugs and antibody drugs, to identify novel small molecule drugs for
common diseases that lack effective treatments or to aid rational development or
marketing of existing drugs.
We have also developed an innovative approach to discover genes associated
with inherited diseases we call positional expression cloning. We combine our
proprietary analyses concerning gene expression with existing gene mapping
techniques to identify candidate genes that both show altered expression and can
be "mapped" to the chromosomal locations known to contain underlying disease
genes. Our positional expression cloning approach is particularly effective in
identifying and characterizing genes indicating susceptibility to and genes
providing protection against many common complex diseases. In addition, we use
systematic studies of existing drugs and our large scale databases of sequences,
sequence variation, gene expression profiles, and pathways to identify disease-
related targets.
We believe our technology for disease-related gene discovery has significant
advantages over competing and isolated approaches using positional cloning,
genome sequencing, gene expression, and pathway technologies. We use our methods
to pursue research programs for many disease systems in parallel. Each of these
programs has the potential to rapidly identify a large number of commercially
valuable disease-related genes and potential drug targets. As part of our
internal programs, we also seek patent protection for newly discovered disease-
related genes and proteins, as well as for novel uses of known genes and the
proteins they encode.
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Drug Discovery Programs
Our internal programs apply our integrated genomics technology platform to
drug discovery and drug development. The discovery programs focus on human
diseases that have the potential to yield protein therapeutics, monoclonal
antibodies and small molecule targets and seek to uncover variations of genes
that may predispose or protect individuals from susceptibility, onset or
progression of disease. Pharmacogenomics studies are also used to find
additional drug targets, to understand how current drugs work, and to prioritize
the development of our own drugs.
Metabolic Diseases. Within the field of metabolic diseases, we are analyzing
a variety of primary human disease tissues and genetic and cell-based models
relating to specific metabolic diseases, including obesity, adult onset
diabetes, and hypertension. We believe that our technology platform is well-
suited to identifying the genes and pathways involved in these diseases, which
are known to involve errors in signal transduction and the regulation of
metabolic pathways. To date, we have used SeqCalling and GeneCalling to discover
genes associated with these diseases and have used PathCalling to identify
disease-related pathways and additional targets for drug discovery. We believe
that this information may also lead to the discovery of protein and antibody
drugs.
Cancer. Cancer encompasses disease processes of almost every organ system
and involves the loss of control of multiple, diverse mechanisms of signal
transduction and pathway regulation. We are applying SeqCalling, GeneCalling and
PathCalling to identify the genes and pathways involved in the early development
of cancer and its step-wise progression to metastatic disease. We have analyzed
a number of models of cancer and have identified pathways incorporating proteins
common to many of the models. Genes specifically upregulated in cancerous tissue
may be excellent targets for the development of monoclonal antibody drugs.
Auto-Immune and Inflammatory Diseases. Although diseases of the immune
system, such as systemic lupus erythematosus and rheumatoid arthritis, are among
the most common and chronic, existing drugs for autoimmune diseases have
exhibited limited efficacy and debilitating side effects. We have filed for
patent protection related to potential drug targets in this area.
Disorders of the Central Nervous System. We are currently examining both
psychiatric and neurological disorders in order to identify potential targets in
these areas. Our efforts combine the understanding of currently marketed drugs
with the best human and animal models of the disease. To date we have studied
over 40 drugs with specific action in the central nervous system and uncovered a
number of novel genes, pathways and potential targets.
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Pharmacogenomics
We believe that the application of GeneCalling to identify genes that are
differentially expressed in response to treatment with preclinical and clinical
drug candidates and marketed drugs represents a significant commercial
opportunity. Using this approach, the tissues targeted by the drug, as well as
the organs that might exhibit side effects, including heart, liver and kidney,
can be studied in animal models thought to be indicative of human response. We
believe that this information may help pharmaceutical companies select and
optimize drug candidates based on improved efficacy and reduced side effects. We
further believe that this information will help the pharmaceutical industry to
significantly reduce the time and cost of drug development.
In addition to reducing the time and cost of developing drugs, we believe that
the understanding generated by our technologies may strengthen FDA applications.
For drugs already on the market, an understanding of the mechanism of action
through pharmacogenomics can help identify appropriate patient populations and
lead to an improved second generation of drugs.
We have analyzed drugs whose commercial viability or clinical indications are
threatened either by a lack of understanding of mechanism of action or by severe
side effects. Our goal is to continue to generate databases (CuraTox and
CuraMode) to provide pharmacology and toxicology information, to understand the
mechanism of drug action, to identify patient populations that are likely to
respond favorably to a particular medication and, potentially, to identify new
indications or more optimal targets.
Using this approach, we have identified candidate genes predictive of drug
efficacy and toxicity in model systems. Currently, we are studying over 140
marketed drugs, preclinical candidates and non-pharmaceutical toxins to identify
putative predictive markers of drug efficacy and toxicity that can be
prospectively used by us and our pharmaceutical collaborators to effectively and
efficiently triage novel drugs.
In addition to understanding the genes that response to drug treatment we are
linking these genes to our database of over 120,000 single nucleotide
polymorphisms (SNPs). The discovery of SNPs predicting efficacy or toxicity may
be of tremendous value in personalizing medicine at the genetic level:
expediting compounds through clinical trials, reducing toxicity by segmenting
patient populations, and giving the right drug to the right patient. To date we
have identified over 5,000 SNPs in potential drug targets, and drug response
genes.
Drug Development Programs
The goal of our drug development programs is to advance promising therapeutic
candidates into the clinic. We believe that we are leveraging the entire human
genome to do this more systematically than ever possible before. We are focusing
on two broad classes of therapeutics, secreted proteins and fully human
monoclonal antibodies raised against membrane-bound or secreted proteins. The
therapeutic candidates that show superior efficacy will be further evaluated
with our pharmacogenomics technology.
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Therapeutic Proteins. In order to determine the therapeutic potential of
genes encoding secreted proteins, we have implemented high-throughput protocols
for the production, purification and testing of these proteins. We have
established high-throughput cell-based assays for characterizing the therapeutic
potential of secreted proteins. We are currently evaluating the efficacy of a
number of secreted proteins as potential human therapeutics using animal models.
Protein candidates that have excellent efficacy and favorable toxicity profiles
will be selected as clinical candidates.
Therapeutic Antibodies. We are also employing a genomics based approach for
the development of monoclonal antibody therapeutics. We have identified 750
genes that make suitable targets for monoclonal antibody therapy, may be
associated with disease, and on which we potentially have a good intellectual
property position. These proteins will be used to make fully human monoclonal
antibodies. Antibodies are naturally occurring proteins used by the body's
immune system to combat many diseases. As therapeutic products, antibodies have
several potential advantages over other therapies. The highly specific
interaction between an antibody and its target may, for example, reduce unwanted
side effects that may occur with other therapies. Fully human antibodies are
desirable because they avoid the risk of rejection present with mouse or partial
mouse antibodies. The scale of our efforts in human monoclonal antibodies is
unprecedented. We will be systematically testing approximately 120 human
monoclonal antibodies for efficacy in human cell and animal models of disease.
Monoclonal antibodies that demonstrate excellent efficacy combined with a
favorable toxicity profile will be selected as clinical candidates for the
treatment of disorders.
COMPETITION
We face, and will continue to face, intense competition from one or more of
the following entities:
. pharmaceutical companies;
. biotechnology companies;
. diagnostic companies;
. academic and research institutions; and
. government agencies.
We are also subject to significant competition from organizations that are
pursuing technologies and products that are the same as or similar to our
technology and products. Many of the organizations competing with us have
greater capital resources, research and development staffs and facilities and
marketing capabilities. In addition, research in the field of genomics generally
is highly competitive. Our competitors in the genomics area include:
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. Affymetrix, Inc.;
. Celera Genomics Group;
. Human Genome Sciences, Inc.;
. Incyte Pharmaceuticals, Inc.;
. Millennium Pharmaceuticals, Inc.;
. major pharmaceutical companies; and
. universities and other research institutions (including those receiving
funding from the federally funded Human Genome Project).
A number of our competitors are attempting to rapidly identify and patent
genes and gene fragments sequenced at random, typically without specific
knowledge of the function of such genes or gene fragments. If our competitors
discover or characterize important genes or gene fragments before we do, it
could adversely affect any of our related disease research programs. We expect
that competition in genomics research will intensify as technical advances are
made and become more widely known. We believe that our future success will
depend in large part on our ability to maintain a competitive position in the
genomics field.
INTELLECTUAL PROPERTY
Our business and competitive position are dependent upon our ability to
protect our SeqCalling, GeneCalling and PathCalling proprietary databases,
proprietary software and other proprietary methods and technologies. We have
filed patent applications for our proprietary methods and devices for gene
expression analysis, sequencing, discovery of biological pathways and drug
development. As of the date of this offering memorandum, we had approximately
140 patent applications pending covering our technologies with the United States
Patent and Trademark Office, and had filed numerous corresponding international
and foreign patent applications. As of the date of this offering memorandum, we
have been issued six patents with respect to our technologies, discoveries and
products.
GOVERNMENT REGULATION
Prior to the marketing of any new drug developed by us or our collaborative
customers, that new drug must undergo an extensive regulatory approval process
in the United States and other countries. This regulatory process, which
includes preclinical and clinical studies, as well as post-marketing
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surveillance to establish a compound's safety and efficacy, can take many years
and require the expenditure of substantial resources. Data obtained from such
studies are susceptible to varying interpretations that could delay, limit or
prevent regulatory approval. The rate of completion of clinical trials is
dependent upon, among other factors, the enrollment of patients. Patient accrual
is a function of many factors, including:
. the size of the patient population;
. the proximity of patients to clinical sites;
. the eligibility criteria for the study; and
. the existence of competitive clinical trials.
We have not submitted an investigational new drug application for any product
candidate, and no product candidate has been approved for commercialization in
the United States or elsewhere. We or any of our collaborators may not be able
to conduct clinical testing or obtain the necessary approvals from the FDA or
other regulatory authorities for any products. Failure by us or our
collaborators to obtain required governmental approvals will delay or preclude
our collaborators from marketing drugs or diagnostic products developed with us
or limit the commercial use of such products and could have a material adverse
effect on our business, financial condition and results of operations.
Our research and development activities involve the controlled use of
hazardous materials and chemicals. We are subject to federal, state and local
laws and regulations governing the use, storage, handling and disposal of such
materials and certain waste products.
EMPLOYEES
As of December 31, 1999, we had 288 full and part-time employees, 81 of whom
hold Ph.D., M.D. or J.D. degrees. The employee group includes engineers,
physicians, molecular biologists, chemists and computer scientists. We believe
that we maintain good relationships with our employees. None of our employees
are covered by a collective bargaining agreement, nor have we experienced any
work stoppages. We believe that our future success will depend in large part on
our ability to attract and retain experienced and skilled employees.
PROPERTIES AND FACILITIES
Our principal administrative offices are located in New Haven, Connecticut in
a leased 36,000 square foot facility. We also lease a 46,000 square foot
facility in Branford, Connecticut, and a 13,000 square foot facility in Alachua,
Florida. We believe that our facilities are adequate for our operations and that
suitable additional space will be available as needed.
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LEGAL PROCEEDINGS
We are not party to any legal proceedings which would materially adversely
affect our business, results of operations or financial condition.
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