Washington Editor

Curis Inc. said it intends to cut employees and expenses as part of its effort to realign research and development programs to focus on signaling pathways and stem cell technology.

The company also expects to suspend and terminate development of certain clinical programs, and to seek out partnerships to help offset costs associated with clinical development.

The company’s signaling pathways include bone morphogenic proteins (BMP) and the Hedgehog family of products (Sonic, Indian and Desert), known to be involved in the central nervous system, bone and cartilage, fertility, cancer and organs.

“Curis is generating therapies that regulate pathways used by the body to maintain and restore health,” Daniel Passeri, the company’s president and CEO, said in a conference call Friday. “We are focused on those pathways that the body uses to repair injury and disease tissues. The company primarily focuses on signaling pathways that govern the proliferation and differentiation of cells for the development of therapies in the fields of neurology, kidney disease and cancer.”

This decision to map out a focus for the company follows a year in which Cambridge, Mass.-based Curis and its partner, Stryker Corp., of Kalamazoo, Mich., won approval in the U.S., Australia and the European Union to market OP-1 (osteogenic protein) for nonunion fractures. It was approved in Canada Thursday, and in the U.S., it was given humanitarian device exemption (HDE) status for limited use in up to 4,000 patients annually. (See BioWorld Today, Oct. 22, 2001.)

Passeri said OP-1 validates Curis’ approach to development of therapeutics that use the body’s own reparative mechanisms.

Curis was formed two years ago upon the merger of Creative BioMolecules Inc., of Hopkinton, Mass; Ontogeny Inc., of Cambridge; and Reprogenesis Inc., also of Cambridge. (See BioWorld Today, Feb. 16, 2001.)

Of the realignment, Henry McCusker, director of communications for Curis, told BioWorld Today, “What we’ve done basically is focus the direction of the company. If you looked at Creative BioMolecules, Ontogeny and Reprogenesis that is an extremely wide group of technology platforms. It was willy-nilly before, but now we have a focus. We’ve put a huge amount of money into R&D, so what we will do now is look for partners to drive it forward.”

“Partnering is going to represent a focus for us in terms of subsidizing our clinical development and gaining access to additional expertise for clinical development and product development,” Passeri said. “At this juncture, we are obviously in discussions on various projects, but it is premature to roll out deliverables regarding partnering for 2002. We’ll be doing that at the BIO conference [this] week in New York.”

From a financial standpoint, Passeri said the realignment lowers Curis’ annual net burn rate by nearly 40 percent, from about $40 million in 2001 to about $26 million in 2002. He said the company ended 2001 with more than $50 million in cash and marketable securities, and currently projects that Curis will have sufficient capital to operate into the fourth quarter of 2003. The realignment will cost about $3.5 million.

Some of the financial goals will be achieved by reducing the staff from 137 employees to 102. Among those being cut are Andrew Uprichard, chief operating officer, and George Eldridge, chief financial officer and vice president of finance. Doros Platika will continue working as executive chairman until May, when he will serve in an advisory role.

On the clinical side of the business, Curis has been forced to make some difficult decisions.

The company will terminate clinical development efforts of Chondrogel, a cell-based minimally invasive tissue augmentation product being studied in the treatment of vesicoureteral reflux.

“The benefits of continued development of this product have been adversely affected by a recently approved non-cell-based product [Q-Med Inc.’s Deflux],” Passeri said. “If we study it for other indications, we will probably need a partner.”

Curis will suspend clinical development of Vascugel, a cellular transplant product, for coronary artery disease. The company had initiated Phase I trials last year. Passeri said the company will seek additional partners before furthering development.

Furthermore, the company will suspend the clinical investigational new drug (IND) program in oncology for basal cell carcinoma in favor of an improved topical formulation and a dermatology partnership before re-entering clinical development.

“We were conducting an IND of a [BCC] compound that was used in an injectable form. In re-evaluating the prospects of that candidate, it was clear to us that a viable BCC product needs to be topical,” Passeri said. “So rather than spend the money on Phase I with an injectable form, we’re going to reformulate it as a topical.”

The new business strategy, coupled with the job cuts, will not impact many of Curis’ ongoing projects.

For example, Stryker is testing OP-1 in spinal fusion.

And BMP-7, which is being developed for the treatment of kidney disease, has demonstrated some potential in the renal area. “I think that is a highly promising initiative for us and we are looking at partnerships for renal therapeutics,” Passeri said.

Finally, he said, Curis remains in a collaboration with Dublin, Ireland-based Elan Corp. plc to research and develop molecules that stimulate the hedgehog pathway. The research focuses on Parkinson’s disease and diabetic neuropathy. “We are looking at aggressive development in that program and I think we will be filing INDs over the next couple of years,” Passeri said. (See BioWorld Today, July 19, 2001.)

Curis’ stock (NASDAQ:CRIS) closed Friday at $3.30, down 20 cents.