Genomics-based drug discovery company Curagen (New Haven, CT) forged a billion-dollar drug development alliance in January with Bayer (Leverkusen, Germany), in which it will share in the cost, and rewards, of developing drugs to treat diabetes and obesity. The deal illustrates analysts' belief that genomics companies—broadly, those using or selling gene-based information for drug development—must turn their focus to big market products like drugs if they are to remain viable businesses now that the excitement generated by the human genome project has died down. However, although the database and technology providers are at most risk in the post genomics era, not all companies are willing to adopt the costly and high-risk strategy of developing drugs.
Curagen will identify 80 gene and protein targets, while Bayer will provide its skills in chemistry and screening to deliver lead drug candidates. The companies have committed to taking 12 products to the clinic, which will require an investment of over $1.34 billion during the next 15 years. (It is a larger deal than Curagen's existing drug development deal with Abgenix, in which the two companies will invest $100 million each to jointly develop and test up to 250 antibody targets.) However, although Curagen has successfully bargained for a much greater slice of the profits (around 44%)—a departure from the usual 10–20% royalties that biotech companies receive for providing drug targets—it must contribute 44% of the drug development costs.
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