BRANFORD, Conn.—June 19, 2007—Despite earning more than $150 million with the sale of its 454 Life Sciences subsidiary to Roche, CuraGen announced it would close its pilot manufacturing plant effective July 27, 2007. The closing will be coupled with a staff reduction of 40 preclinical and manufacturing researchers, as well as some support staff. "This strategic decision was difficult but necessary to ensure that CuraGen focuses its resources and invests appropriately into velafermin, belinostat, and CR011-vcMMAE, which represent the most significant value to CuraGen, its employees and its shareholders," says Dr. Frank Armstrong, CuraGen president and CEO.
BRANFORD, Conn.—May 29, 2007—454 Life Sciences announced its acquisition process had been completed by Roche Holdings, with the company's 167 employees to remain in Connecticut as part of Roche Diagnostics. Manfred Baier, head of Roche Applied Sciences, said that with the acquisition completed, the company can move ahead to strengthen its sequencing business.
BRANFORD, Conn.—Late last month, CuraGen Corp. and Roche announced that the two companies had reached agreement whereby Roche would acquire 454 Life Sciences Corp., a majority-owned subsidiary of CuraGen for approximately $154.9 million in cash. When the sale officially closes—currently expected sometime in the second quarter—Roche will move from being a marketer and distributor of 454 products to its owner and CuraGen will turn its attention fully to its pipeline of oncology products.
"This (agreement) marks a successful implementation of our strategic initiative," says Dr. Frank M. Armstrong, president and CEO of CuraGen. "I have been one year in this position and we have dedicated substantial time to this and made progress in the CuraGen business. 2007 is a big year as it is expected we will generate significan data on three of our compounds and should allow us to bring two or three into Phase III trials in 2008."
After the sale is completed, Armstrong notes, CuraGen anticipates it will receive approximately $85 million before fees and expenses from the sale of 454, money the company will now use to "lengthen its runway" as it looks to bring its late-stage oncology products to market.
CuraGen is playing a high-stakes game by selling a business that was both growing and profitable, for what it sees as the future potential of its three oncology candidates, velafermin, belinostat and CR011-vsMMAE.
Velafermin and belinostat are currently wrapping up Phase II trials for a multiple indications including T-cell lymphoma, multiple myeloma (in combination with Velcade), ovarian cancer, colorectal cancer and oral mucositis prevention and treatment.
"Already in 2007 we have strengthened our balance sheet by paying off our outstanding 2007 convertible debt of $66.2 million and we are now monetizing our investment in 454 Life Sciences," says Armstrong.
Wall Street, however, didn't treat the news kindly, sending shares of CuraGen down about 20 percent on the announcement. Now, it is up to CuraGen to show investors over the next couple of years that it can continue to progress its lead candidates.
For Roche, the opportunity to acquire 454 was nearly a no-brainer. For the better part of the past two years, CuraGen has engaged Roche as the exclusive marketer and distributor of its sequencing tools and related reagents. As CuraGen's new direction under Armstrong took shape and it became apparent that the company would shed the 454 business, Roche was naturally first in line.
"We have been very happy with the worldwide distribution rights and the collaboration program we had with CuraGen," says Manfred Baier, head of Roche Applied Science. "When CuraGen decided to change ownership of 454, what we wanted to do was continue our commitment to the products and not endanger that by new owners."
With the company, Roche acquires the GS FLX and Genome Sequencer 20 high-throughput sequencing tools, related consumables and a contract sequencing services business.
Currently, Baier estimates, 454 derives two-thirds of its revenue from the sale of its equipment and related kits and accessories and another one-third from its contract services offerings. In the coming years, he anticipates the equipment side of the business will make up an even greater share of overall sales. That's because while pharmaceutical and biotech companies, especially those involved with oncology research are prime prospects, another segment for sales of 454 equipment are companies, such as Clinical Data (see sidebar) that are looking to set up their own contract sequencing operations.
Plans are for Roche to retain all 160 plus employees at 454's main offices in Connecticut and to keep the 454 Life Sciences name operating in the Roche Diagnostics division. "Our focus in integration will be to keep that company pioneering and in its own spirit," says Baier. "They have a true success story and they are all dedicated to sequencing. All we want is that they continue to provide us with new products in sequencing."