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Bayer Invests $124M in Drug Development Deal with CuraGen, Pens Separate Deal for Obesity Drug

NEW YORK, Jan 16 – Bayer said Tuesday it had agreed to make an $85 million equity investment in CuraGen as well as provide an additional $39 million in funding in exchange for Curagen’s commitment to use its functional genomics tools to evaluate the pharmaceutical giant’s early-stage pipeline of compounds.

The collaboration is an expandable, five-year deal.

In addition, the companies also announced plans to work together to discover and commercialize small molecule drugs for treating obesity and adult onset diabetes.

Wolfgang Hartwig, head of global research for Bayer, said CuraGen's ability to evaluate Bayer's products would help to ensure the success rate in bringing new drugs to market.

"Through access to CuraGen's genomic technologies, we hope to improve the probability for success in the clinical stages of development by selecting the highest potential drug candidates early in the process," Hartwig said in a statement.

The companies said they would create a database of gene-based markers and information that would help researchers to predict drug toxicity, understand how a particular drug works, and identify new disease indications. CuraGen and Bayer will have the sole rights to the database, although CuraGen will be able to market the database and Bayer will be entitled to royalties.

Separately, Curagen has agreed to provide 80 drug targets for obesity and adult onset diabetes over five years. CuraGen will also give Bayer access to its functional genomic technologies, bioinformatics, and pharmacogenomic expertise.

Bayer will then use its high-throughput screening techniques, combinatorial chemistry, medicinal chemistry, pharmacology, and development expertise to create small molecule compounds against the targets.

The two companies have agreed to share expenses related to later stage preclinical and clinical compound development and have committed to bring 12 candidates in obesity and diabetes to clinical development. The companies will jointly fund the research, development and commercialization activities up to $1.34 billion over a 15-year period.

Bayer will cover 56 percent of the research costs and CuraGen will be responsible for the remaining 44 percent.

The companies will share profits for any resulting drugs based on their contribution to the development costs.

"Bayer's expertise in developing small molecule drugs in an industrialized manner is unprecedented in the pharmaceutical industry and is a perfect fit for CuraGen," said Jonathan Rothberg chairman and CEO of CuraGen. "Through this unprecedented collaboration with Bayer, CuraGen is now able to participate in the development and commercialization of small molecule drugs to treat diabetes and obesity."

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