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CuraGen Corporation (NASDAQ:CRGN) has announced that it is considering strategic alternatives to enhance shareholder value including selling or licensing CR011, acquiring additional assets or business lines, or selling the company.

We started following CRGN on January 20 this year because it is a net cash stock with an investor, DellaCamera Capital Management, disclosing a 5.6% holding in January. We estimate CRGN’s net cash value to be around $62M or $1.07 per share. The company is not generating any operating cash flow as it is a “biopharmaceutical development company,” so the challenge for DellaCamera Capital Management is to persuade the company to pay a special dividend or liquidate before it dissipates its remaining cash.

The company’s press release (via Earth Times) is as follows:

CuraGen Corporation (Nasdaq: CRGN) announced today that it is undertaking a review of a broad range of strategic alternatives to enhance shareholder value.

Robert E. Patricelli, Chairman of the Board of CuraGen commented that “The Board believes that management is making exciting progress as CR011 moves through the current Phase II clinical trials and that it has taken the necessary actions over the past two years to ensure that CuraGen is a well capitalized organization in a difficult external financing environment. The Board further believes we should consider strategic alternatives that could enhance shareholder value. These alternatives range from selling or licensing CR011, to acquiring additional assets or business lines, to selling the company. The company will retain an investment bank to assist the Board with its strategic review. During our evaluation process, management will remain focused on executing our current business plan.”

Dr. Timothy M. Shannon, President and Chief Executive Officer, also announced that CuraGen has retained JSB-Partners to identify potential acquirers of CR011-vcMMAE. “In an ongoing multi-center study in heavily pretreated patients with breast cancer, CR011 is well tolerated and there is early evidence of activity. Our Phase II program in melanoma also continues to show promising activity”, commented Dr. Shannon. “The potential to move CR011-vcMMAE into more advanced development in both patients with breast cancer and patients with melanoma makes this a good time to seek strategic interest in the marketplace.”

There is no assurance that this process will result in any changes to the Company’s current business plans or lead to any specific action or transaction. While the process is underway, the Company does not intend or expect to disclose any developments regarding the process until, if ever, a definitive agreement is entered into or the board determines to terminate the process.

“We ended 2008 with $88 million of cash and investments on hand, have a clinically active attractive Phase II development asset, and over $500 million in net operating loss carryforwards (NOLs). Yet, our stock price does not reflect the intrinsic value of our assets and we continue to trade at a deep discount to our cash.” commented Dr. Shannon. “We seek to address these value disconnects through the strategic review process.”

The Company also recently completed a privately negotiated transaction with a holder of the Company’s 4% Convertible Subordinated Notes due February 2011 (the “2011 Notes”) in which the Company retired a total of $4.8 million of the 2011 Notes for an aggregate purchase price of $3.8 million or a 21% discount off of face value. This transaction added $1.0 million of net cash to the Company’s balance sheet. The Company now has $14.1 million of the 2011 Notes outstanding. The Company’s burn guidance for the first half of 2009 remains unchanged at $7.0 to $8.0 million and the Company now expects to end the second quarter of 2009 with between $76 and $77 million of cash and investments.

[Full Disclosure:  We do not have a holding in CRGN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]