By Brady Huggett

A year ago, Biogen Inc. returned rights to what was then called Ontogeny Inc. for its hedgehog protein products, breaking out of a deal that could have brought $90 million to Ontogeny.

Ontogeny and two companies then merged to form Curis Inc., which said Wednesday it is forming a joint venture with Elan Corp. plc to research and develop molecules that stimulate the hedgehog pathway.

The joint venture, called Curis Newco for now, revitalizes Curis¿ hedgehog protein platform and sets it on a path toward the clinic. Also, it gives an indication of how Curis will look to conduct business in the future and helps solve a problem Curis has been having, said Doros Platika, CEO and president of Curis.

¿In the past, people have been happy that we have such a good discovery engine, but wondered how will [products] be moved forward?¿ he said. ¿So one of the strategies that we have come forward with is to form a series of joint venture businesses. This is the third one we have formed this year.¿

In January, Curis aligned with Aegera Therapeutics Inc., of Montreal, in a license and research agreement valued at as much as $25 million, getting access to Aegera¿s skin-derived adult stem cell technologies. Earlier this month, Curis formed a joint research, product development and technology exchange alliance with Munich, Germany-based Micromet AG to find targets for antibody development. Curis will get $14 million up front sometime this year in connection with the deal. (See BioWorld Today, July 5, 2001.)

Curis, of Cambridge, Mass., will receive comparable compensation for its work with Elan. Curis gets about a $4 million equity investment through the agreement and another $10 million to fund research and development. Elan will contribute a similar amount of money to Curis Newco. Curis initially will have the majority stake in the joint venture, but Elan can increase its percentage over time. Curis Newco has the exclusive rights for the sale of any therapeutics, but if Elan wants to sell the therapeutics alone, it will need a license from Curis Newco to do so.

The hedgehog proteins are believed to induce the formation or regeneration of tissues. Curis works in the field of regenerative medicine, and Daniel Passeri, senior vice president, corporate development and strategic planning, said the hedgehog pathway plays a role in Curis¿ focus.

¿The pathways that are fundamental to the development of tissue in an embryo, that is what we are exploiting,¿ he said. ¿We can turn those pathways up when there is damage or trauma, or inhibit them in oncology.¿

The initial focus for Curis Newco will be in Parkinson¿s disease and diabetic neuropathy. The early work will be done in transgenic mice, supplied by Elan.

¿One thing Elan is putting in is a critical animal model that develops many of the manifestations of neurological disorders,¿ Platika told BioWorld Today. ¿The transgenic mice have a shorter life span so you see the manifestation of these diseases in an accelerated way.¿ The mice, Platika said, ¿make it more likely successful therapeutics come out of this joint venture.¿

Passeri said the goal is to pull solid data from the models and turn that into lead candidate status in a two-year period.

When Biogen returned rights to Ontogeny in July 2000, Lee Rubin, Curis¿ senior vice president, research and chief scientific officer, went to work, Platika said. (See BioWorld Today, July 10, 2000.)

¿Lee Rubin successfully found small molecules that mimic the activity of hedgehog proteins, and that made the program much more exciting and viable,¿ he said. ¿What we have done is modify the naturally occurring molecules to increase the half-life and increase potency.

¿We have a small-molecule agonist that has tremendous activity and that makes this far more attractive,¿ Passeri added. ¿We have more than one and they have various levels of activity.¿

Rubin¿s work paid off and Curis was able to reattach the hedgehog proteins to a respected partner. Platika said the joint venture is telling in several ways for Curis.

¿This allows us to regain momentum and move our extensive pipeline forward,¿ he said. ¿It demonstrates the value of our pipeline and the discovery engine in developmental biology we have. And it shows the template we will be using to develop our pipeline and still retain the significant value we created.

¿This is not just outlicensing the product for single-digit royalties,¿ he added.

The deal was disclosed after the market closed Wednesday. Curis¿ stock (NASDAQ:CRIS) rose 1 cent Wednesday, to close at $6.13. Elan¿s stock (NYSE:ELN) moved up 92 cents to close at $60.56.