Curis and Genentech Unleash the Hedgehog to Fight a Deadly Skin Cancer

6/28/11Follow @arleneweintraub

Curis was founded in Lexington, MA, in 2000 with the intention of exploiting a disease-causing mechanism curiously named the hedgehog signaling pathway. Three years later, the startup attracted the attention of biotech pioneer Genentech, whose scientists believed hedgehog might offer a brand new way to fight cancer. Now the development deal that the two companies formed back then is approaching a major milestone: Armed with positive results from a pivotal trial that it released June 21, South San Francisco-based Genentech (now owned by Roche) will apply this year for FDA approval to market the drug, called vismodegib, in patients with advanced basal cell carcinoma (BCC).

Vismodegib is proving to be a promising option for patients with BCC—a common and sometimes life-threatening form of skin cancer for which there are few treatment options. In the trial, the drug healed cancerous lesions, shrank tumors, or prevented them from growing further in more than 75 percent of patients. The median duration of response ranged from eight to 13 months, and 54 percent of patients whose cancer had not spread prior to the treatment showed no residual cancer in biopsies taken afterwards. “The data was very profound in terms of the drug being able to hold this cancer at bay,” Curis CEO Daniel Passeri says. Passeri hopes the FDA will grant the drug fast-track approval status and that it will be approved in 2012.

For Curis (NASDAQ: CRIS), the FDA filing will mark a welcome milestone in a startup journey that has been far from easy. The hedgehog signaling pathway, named after the funny-looking mutant fruit fly in which it was discovered, is a network of proteins that cells use to send signals to each other. The company, which came together through the merger of three small biotechs, was founded on the idea that hedgehog could be turned either off or on to treat a wide range of conditions—from serious diseases like cancer, to less serious but intriguing market opportunities like hair loss.

Yes, that’s right—Curis once seemed to have the miracle cure for baldness. The hedgehog signaling pathway is one of the biochemical processes that controls organ generation in embryos, and promotes tissue regeneration in adults. Curis had evidence that turning the pathway on with a drug would prompt the body’s stem cells to congregate around hair follicles, which in turn would cause hair to sprout from bare heads. The evidence was so compelling that in 2005, consumer-products giant Procter & Gamble (NYSE: PG) formed an R&D partnership with Curis that could have brought the biotech as much as $100 million in milestone payments.

But hedgehog experts also suspected that turning the pathway off could be a powerful inhibitor of cancer. That begged the question: Could the quest to cure baldness by flipping the hedgehog pathway on unwittingly raise the cancer risk for millions of men? Add to that the FDA’s increasingly tough stance on the potential for side effects from lifestyle drugs—those used to treat non-life-threatening conditions—and the baldness venture proved too risky for P&G and Curis. P&G pulled out of the partnership in 2007 because “the collaboration did not demonstrate an acceptable safety profile,” according to a statement. Curis abandoned the baldness program shortly thereafter.

Passeri says the hair-loss saga drove home some important lessons for Curis. “You need to be prudent in making your investments. You need to think about the practicalimplications,” he says. In the end, he adds, focusing on cancer—where side effects can be tolerated because of the gravity of the disease itself—made much more sense for the cash-starved biotech.

Mutations in the hedgehog signaling pathway have been implicated in 90 percent of BCC cases. Vismodegib inhibits hedgehog by targeting a protein with a similarly cute name: smoothened. The whole business of snagging smoothened to antagonize hedgehog has proven so promising that Genentech is working with the National Cancer Institute to determine whether manipulating the pathway might work in other types of cancer. Because of Curis’ relationship with Genentech, any expansion of the market could ultimately benefit Curis in the form of milestones and royalties, Passeri says.

Although the financial details of the Genentech alliance have not been spelled out in detail, Passeri says the FDA filing on vismodegib will trigger a “significant” milestone payment, as will the approval and any subsequent regulatory filings overseas. Royalties will be in the “mid to high single digits,” he says. Shareholders are optimistic: Curis’ stock has risen from $1.21 a share to $3.56 in the past year.

Passeri says the Genentech partnership has been essential to Curis’ development. “It has provided us much-needed capital, but more importantly, it gave us access to Genentech’s internal competencies,” he says. Curis’ scientists meet with Genentech’s scientists on a quarterly basis, and they trade phone calls in between. During the clinical trials, he says, Curis benefited from Genentech’s expertise in determining the best methods for collecting data.

After Roche acquired Genentech in 2009, the R&D process improved even more, Passeri says. “With Roche, we see a further formalizing of the clinical development process,” he says. And the European drug giant has supported Genentech’s efforts to explore the potential for manipulating the hedgehog pathway to treat other cancers.

Curis is now looking beyond hedgehog to build out its oncology pipeline. The company is currently in the early stages of testing a combination drug that inhibits three well-known cancer targets: HDAC, EGFR, and Her2. “It’s a chemical scaffold designed to inhibit multiple targets, so you get a more durable response,” Passeri says. “Our rationale is that cancer should be treated like HIV—you should hit it with one drug.”

Curis has 40 employees in Lexington, and it outsources some of its basic science work to 30 chemists in China. The company, which brought in $16 million in revenues last year, has yet to turn a profit, but Passeri is confident the royalties and milestones from vismodegib will be a strong lifeline. “This represents a substantive de-risking of the business model,” he says. “It will be a non-dilutive revenue source that will allow Curis to continue to build out its model.”

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