It started out business as usual at the Personalized Medicine Coalition’s East Coast reception at The Broad Institute last week. People were touting the big steps that have been taken to advance the vision of personalized medicine, in which the best treatments are chosen for each patient based on molecular tests, imaging tools, software, and other sophisticated tools. Then, venture capitalist Mark Levin sauntered up to the podium (in his typical casual style, sporting high top sneakers and a fleece jacket) and said “I’m thrilled by the advances, but at the same time I’m frustrated and disappointed by the level of progress.”

Levin’s got a good point. While the PMC itself has been very active, amassing about 120 members—including local firms Helicos BioSciences, BG Medicine, and Boston Millennia Partners—since its formation a few years ago, there is still a lot of foot dragging going on by others, particularly in the pharmaceutical industry and in Washington, DC.

One notable sore point is GINA, the Genetic Information Nondiscrimination Act that personalized medicine proponents believe is crucial to advancing the field. That bill has still not passed despite 12 years of effort. But that’s not the only problem. Big pharma companies have been reluctant to adopt the personalized medicine model, which involves drugs aimed at smaller patient populations than the massive ones that coveted blockbuster drugs target.

Levin was himself confronting the challenge of smaller markets for personalized medicines around the time he hatched the idea of the PMC in his office at Millennium Pharmaceuticals, based on discussions with Millennium cofounders Eric Lander and Raju Kucherlapati. Now a partner at Boston’s Third Rock Ventures, Levin was Millennium’s founding CEO; that company was built around the idea of personalized medicine, but (at least so far) failed to turn the idea into suite of products. Levin argued in a 2001 interview that personalized medicine would allow companies to get more, higher-value drugs approved more quickly, offsetting the fact that the market for each one might be smaller.

“We were so excited about [personalized medicine] when we started 12 or 13 years ago,” Levin said. But since things haven’t moved fast enough, he’s now calling for leadership from the highest political level to help speed the field along, arguing that personalized medicine could even help cut the deficit because it leads to better health care at lower cost.

Speaking before Levin, Kucherlapati, the scientific director of the Harvard Medical School–Partners Healthcare Center for Genetics and Genomics, said one big thing holding back personalized medicine is that so many of the players (e.g. doctors, insurers, and biotechs) are focused on their own interests. We can’t “continue to operate in our separate worlds,” he admonished. “We need to present a common vision.”

But Levin and Kucherlapati’s frustration was balanced by Lander, the evening’s first speaker and director of the Broad, who deftly described the “miraculous” advances that have taken place over the last few years in large-scale genotyping—the process by which genetic variations are quickly detected in many parts of the genome. “This is the most remarkable period in genetics,” Lander said. Those genetic variations, most of which are so-called single nucleotide polymorphisms (SNPs), are one of the key genomic tools for sorting out individual responses to drugs.

Genotyping has truly rocketed ahead. As PMC head Edward Abrahams said, you can already “take out your iPhone, Google ‘SNPs’, and get access to databases of more than 10.5 million SNPs.” And that message is finally reverberating into the business world, leading to a small flurry of new companies using those tools to develop new diagnostics and drugs.

Levin’s call for political support for the field notwithstanding, with so much activity on the tech side, personalized medicine could end up being of those areas where the technology pulls us to our destiny, rather than our leaders pushing us there.

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Back when I was starting out in some lowly jobs at the Longwood Medical area, I was constantly reminded of the greatness of certain of the people around me. But one of those people—Judah Folkman—stood out, not only because of his contagious delight and fascination with science, but because of his kindness and unassuming manner.

Folkman, who died yesterday in Denver at the age of 74, was a remarkable human being as well as a brilliant scientist and revered mentor. A surgeon by training, he was a Harvard professor leading the vascular biology program at Boston’s Children’s Hospital at the time of his death.

Folkman’s breakthrough theory about the crucial role of new blood vessel formation (angiogenesis) in cancer growth and spread was one of the most important new biological ideas to emerge in the last 50 years. Today some of top new cancer drugs (including Genentech’s Avastin) are so-called anti-angiogenics that block new blood vessels from forming and thereby deprive tumors of the oxygen and nutrients they need to grow.

The full impact on medicine of Folkman’s angiogenesis research is only beginning to be felt. The Associated Press reported that it has already led to 10 new drugs, helping more than a million patients, and forming the basis of billions of dollars of research worldwide. Angiogenesis turns out to play a critical role in such diverse conditions as arthritis and blindness, in addition to cancer; anti-angiogenics are already being used to treat age-related macular degeneration, one of the most common causes of blindness.

Folkman’s impact was felt locally as well. His work and that of protégés spawned scores of new Boston-area companies and new projects at established companies. MIT’s Robert Langer, for instance, entered Folkman’s lab in 1974 as a chemical engineer highly sought by the likes of oil companies, and emerged as one of Boston biotech’s most prolific inventors and startup founders. In a remembrance of Folkman, Langer writes: “That job changed my life… Dr. Folkman was the greatest role model a young scientist could have. He was a fantastic mentor, a superb role model, one of the nicest human beings I’ve ever met, and a truly great man.”

Most recently, Cambridge-based SynDexRx was formed in 2007 around a broad patent portfolio developed in Folkman’s lab; the company’s lead drug candidate is an anti-angiogenic called Caplostatin. SynDexRx’s just announced, eye-popping advisory board, includes oncology heavies Rakesh K. Jain, Daniel Von Hoff, and Roy Herbst—a testament to Folkman’s influence on his peers.

Naturally, Folkman’s theory about angiogenesis didn’t catch on immediately, but he championed it tirelessly and with remarkably good humor. Even during the inevitable “backlash stage,” when critics were pointing to early anti-angiogenic drugs that were not showing much effect, he was unperturbed. He had clearly anticipated rough spots. But his optimism was fueled by both a firm conviction in his science and a determination to help patients.

In a talk he gave in 2005, for instance, Folkman described how he had gathered a list of already approved drugs that were now also known to be anti-angiogenics, and was trying to give terminal cancer patients a last chance by helping them get access to those therapies.

The last time I saw Folkman it was on the Amtrak from DC to Boston about two years ago. Recognizing him immediately, I boldly put my hand out and said “Dr. Folkman, do you remember me?” (The circumstances of our previous meetings had been entirely forgettable of course.) He greeted me with his typical warmth, inquiring about my work, and then we were quickly talking about science.

“Next time you’re in the neighborhood, you must come to the lab,” he said with characteristic glee. “We’re doing some really amazing things.”

That was Judah Folkman.

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It wasn’t apparent, but when I spoke to him just before Christmas, Stephen A. Hill might have been mentally packing his suitcase. In any event, Woburn, MA-based biotech ArQule (NASDAQ:ARQL) announced today that Hill will soon be leaving his CEO position for an as-yet-undisclosed destination. Hill “can’t reveal where he’s going yet, but it will probably be public within weeks rather than months,” says ArQule spokesperson William B. Boni.

While Hill will remain ArQule’s CEO for an unspecified time, COO Peter S. Lawrence will take operational responsibility for the company and will be among those considered for the CEO post. Lawrence is a former venture capitalist who joined ArQule in April 2006 and was appointed COO last October.

Boni says Hill is leaving ArQule at “as good a time as you could hope for, if you are an early-stage biotech.” The company has $100 million in the bank and this year anticipates important new data on its most advanced candidate drug, ARQ 197, one of the front runners among a keenly anticipated new class of cancer therapies called c-Met inhibitors.

Hill came to ArQule in 1999 from pharma giant F. Hoffman-La Roche, where he was Global Head of Drug Development. When I spoke to Hill last month he didn’t spill the beans about his move but made some interesting observations about the biotech industry.

According to Hill, one of the biggest challenges facing biotech now is that “the balance has tipped dramatically in favor of avoiding safety issues rather than rapidly getting drugs to patients. That increases the riskiness of drug research programs and directly affects biotech’s ability to raise capital.” At the same time, he said, “little companies are always faced with the challenge of feeding the beast—they need revenue and so must improve productivity.”

Safety problems have indeed been bedeviling the pharmaceutical industry lately. ArQule is itself currently living that dilemma: just last month the company announced that it may be facing side-effect problems around one of the new cancer compounds it has been developing with Roche. That collaboration (around a molecular pathway called E2F1) is potentially worth more than $250 million to the little biotech.

Hill has led ArQule for nine years, helping the company transform itself from a specialized chemistry services provider into a pharmaceutical company. ArQule has initiated a nationwide search for his replacement, according to Boni. “We need someone with great business acumen who can lead the company through the development phase to where we have products on the market,” Boni said.

ArQule’s stock closed today down $0.58 (about 10.4 percent), at $5.00.

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Massachusetts became even more firmly established as the preeminent center of commercial RNAi activity last year when two more such companies were founded here—Worcester-based RXi (a spinout of CytRx) and Boston-based startup Dicerna. The study of RNAi—a natural mechanism for blocking, or silencing, genes—is a relatively young field in scientific terms. But the process is so simple and powerful that its discovery led quickly to a spate of commercial activity. Investors hope that RNAi will offer a quick route to new types of RNA-based treatments. RNAi has also become a leading research tool for drug discovery.

To get a bird’s eye view of what might be ahead in this dynamic field, I recently spoke to John Maraganore, CEO of Cambridge, MA-based-Alnylam (NASDAQ: ALNY), arguably the dominant commercial force in RNAi at this time. Maraganore was formerly an executive at two other major local companies—Millennium Pharmaceuticals and Biogen Idec.

“It’s been an amazing year for RNAi,” Maraganore says. “There are six RNAi therapeutics already in clinical trials, and given how young the field is, that is remarkable.” What’s most encouraging is that those candidate drugs are spread out over several companies, and one of these products (from Philadelphia-based Opko) is already in Phase 3 human trials.

And Maraganore thinks there will be more companies forming around both RNAi and the related emerging field of microRNA, which exploits other types of RNA molecules that the body uses for gene silencing.

“Venture investment has increased, and we’ll see more startups in both RNAi and microRNA,” Maraganore says. That prediction is a bit ironic, since he also says Alnylam “tries to enter [a field] with a lot of intellectual property built up, which has made it difficult for competitive efforts.” Some experts, such as Dicerna co-founder John Rossi, charge that Alnylam’s fortress of patents stymies commercial growth of the field.

But even Alnylam didn’t start out with all the patents it needed. It made key in-licensing deals with California-based Isis Pharmaceuticals, a pioneer in antisense—another RNA-based method of gene silencing that’s been around for much longer than RNAi. Recently Isis and Alnylam took their relationship further, teaming up to launch the first microRNA firm—Carlsbad, CA’s Regulus Therapeutics.

“We were the first movers in RNAi and now microRNA,” Maraganore says. But Alnylam isn’t keeping the lid on these fields, according to him, because the company has such an aggressive licensing program. Alnylam has granted about 25 licenses to its technology so far, and “I would not be surprised if over the next five years we saw a doubling or tripling of our licenses,” he says. (Of course, licensees don’t necessarily get their first picks of target applications of RNAi through such arrangements. They get what Alnylam and its partners are willing to part with.)

Maraganore also predicts that companies creating real breakthrough medicines, as RNAi therapeutic firms aim to do, will find “unparalleled” opportunity in 2008 to partner with, and sell those drugs to, big pharmaceutical companies. Until recently, pharmas were largely focused on growing their profits by using business tactics, such as direct-to-consumer advertising and by trying to block generic copies of their drugs, Maraganore says. Now, he says, they are realizing that “the only way to succeed in the future is to have access to innovative medicines.”

With its lead drug, a potential treatment for respiratory syncytial virus, headed into Phase 2 human trials, Alnylam faces a critical year itself. From the looks of it, the company at least has plenty of cash to contend with the year’s likely challenges. In an announcement today, Alnylam said it ended 2007 with more than $450 million on hand (exceeding the expected $435 million) and expects to end this year with some $390 million. The company also indicated it intends to form at least two more major alliances this year. “We’ve had a significant number of new alliances in 2007; I expect 2008 to be equally strong,” Maraganore says.

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With its aim of growing replacements for injured or ailing body parts, tissue engineering is a field that at first seemed spectacularly promising. (Anyone remember the mouse with a human ear growing on its back?) But it has ended up being a bit of a boondoggle. Although researchers have made important scientific advances in areas such as skin and bladder repair, overall too few projects panned out. What’s more, the business model for tissue engineering is awkward because, in most cases, donor cells must be harvested from each individual patient. These and other challenges have sent most investors scurrying away from the field.

Lincoln, RI-based InCytu is a brand new player in the tissue engineering arena with high hopes of reversing that trend, drawing on new technology from Harvard bioengineer David Mooney’s lab. InCytu is developing a suite of “smart” materials that help the body grow new tissues and repair itself—using its own stem cells right in the body—rather than requiring that cells be harvested, treated in a lab, and then returned to the patient. InCytu won’t try at first to rebuild very complex organs or structures, however. The company’s initial aim is to create simpler products such as dressings that can coax new blood vessels to grow into skin badly damaged by diabetes and injectable gels to help repair hernias and perhaps even shrapnel or bullet wounds.

Founded in April 2007, InCytu is now part way through a Series A funding round, which is expected to close this summer. CEO Alfred Vasconcellos says he’s not ready to reveal the initial backers or how much funding the company has, but he and Mooney were brought together by Venzyme Venture Catalyst, a matchmaker for new technologies and management teams. Venzyme’s managing director, Richard Berenson, is a co-founder of InCytu, along with Vasconcellos and Mooney.

The startup already has about 20 staff on board, and it plans to hire another 23 people by the end of 2008. And those new hires will be busy; InCytu hopes to have at least one product in human studies within 18 to 24 months, and something approved by 2011.

InCytu’s technology stems from Mooney’s work on the interaction between materials and living cells, particularly stem cells—undifferentiated cells able to develop into a variety of tissues. Hoping to boost the body’s own healing process into hyperdrive, Mooney developed materials embedded with biomolecules that “talk” to cells, coaxing them toward one particular fate or another.

InCytu uses these materials to build what it calls “Cellariums”—implants, dressings, gels, and other devices that function as solariums for cells, providing each type of cell with what it needs to grow, thrive, and replicate. As Vasconcellos explains, “they hold onto the cells, amplify their numbers, amplify their functionality, and then release them in an organized pre-programmed manner.” By customizing the mix of materials and biomolecules in each type of device, InCytu hopes to be able to grow or repair blood vessels, brain tissue, tendons, spinal cords, and more. The target market numbers in the business plan are whoppers, of course, with several offering blockbuster potential.

But what makes Vasconcellos think his team can succeed in a field where so many others have failed? For one thing, the technology, part of a whole new field referred to as “bioactive medical devices,” avoids the problem of how to get the engineered tissues or organs to reintegrate with the body properly. With Mooney’s approach, the new tissue is being engineered right at the point of damage or disease, rather than in a lab—there’s no need for any re-implantation procedure.

In addition, Vasconcellos says, InCytu won’t be caught up in a service model, where it has to grow cells or tissues for each new patient. The company will be mainly selling devices, including gels and dressings, that can be stored at room temperature and transported easily. The manufacturing process is also straightforward. “We can make large batches easily,” he says.

Finally, Vasconcellos thinks his experience with another former Rhode Island startup, Cytotherapeutics (now Stem Cells Inc.), will be invaluable. “I firmly believe cells will revolutionize medicine,” he says. (InCytu is Vasconcellos’s sixth startup overall.) Another alumnus of Cytotherapeutics, Dwaine Emerich, will be on InCytu’s scientific advisory board with Mooney.

Based on my recent conversation with Harvard Stem Cell Institute’s Brock Reeve, InCytu is just one of several new companies that isn’t looking to sell cells per se, but rather is developing products that encourage certain behaviors from the body’s own cells. Another player in this game is the high-profile Seattle startup Fate Therapeutics. Vasconcellos says InCytu is not in direct competition with Fate, though. Rather, he says, “we think we can help each other.”

And with any luck, the combination of new technology and simpler business models will help investors warm back up to tissue engineering.

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Idera Pharmaceuticals (NASDAQ:IDRA) has netted its third major deal in about as many years. This one, potentially worth upwards of $400 million to the Cambridge, MA-based biotech, is a collaboration with Germany’s Merck KGaA around cancer-fighting compounds that might boost the body’s ability to fight tumors. This type of immune-based therapy has pretty much been a disappointment against cancer, but there’s hope that new approaches will change all that.

The deal also heats up a long-standing rivalry between Idera and Wellesley, MA-based Coley Pharmaceuticals, which Pfizer recently agreed to buy. Along with California’s Dynavax Technologies, Coley and Idera are the world’s leaders in developing molecules against this target, and until recently, Coley seemed to have the most traction.

Under the terms of the agreement, Idera receives $40 million up front, then is eligible for milestone payments of up to $381 million, plus royalties for commercialized products. The deal covers two prospective drugs already in development, as well as possible new ones aimed at the same target.

Idera was originally founded in 1989 as Hybridon. The company was renamed in 2005, when management decided to focus on molecules that either turn on or turn off Toll-Like-Receptors: these receptors, of which there are several types, are thought to help rally the body’s own disease-fighting immune response. Things started heating up for Idera in May 2005, when it inked a deal potentially worth $141 million with Novartis for treating asthma and allergies. Then, in December 2006, Idera netted a vaccine development deal with Merck & Co. (the U.S.-based drug giant) around cancer, infectious diseases, and Alzheimer’s.

The deal announced yesterday hinges on what are called Toll-Like Receptor 9 agonists, the most popular of the Toll-Like Receptor molecules. In fact, “No. 9″ was a red hot target until last summer, when a compound in that class did poorly in a critical trial. Pfizer and Coley were collaborating on that one, and after the setback Coley’s shares plunged, bringing competitor Idera’s down significantly as well. Not long after that, Pfizer agreed to buy Coley for $164M.

Idera CEO Sudhir Agrawal says the Coley trial failure was just “a blip” and has no substantive ramifications for the field. He also says it had no effect on his negotiations with collaborators. “I think they [Pfizer/Coley] probably had a problem with dose and dose scheduling,” he says. Because of their complex actions, molecules that stimulate the immune system have to be very carefully dosed: too much drug can actually lead to less of an effect, he says.

Pfizer is still working with Coley, but the companies have switched their strategy. Instead of using Toll-Like Receptor 9 agonists in combination with traditional cancer therapies, which was the original approach, they are now matching Coley’s compound with some of the newer ‘targeted’ cancer drugs that are designed to home in more specifically on tumor cells. Agrawal says Idera and its new partner, Germany’s Merck, will pursue both strategies. “Our studies show you can combine these with chemotherapies and targeted agents,” he says.

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2007 has been an outstanding year for stem cells—those much-ballyhooed cells with the ability to develop into numerous tissues in the body and ultimately, researchers hope, repair the damage in ailments such as Parkinson’s disease or spinal cord injury. Scientific papers have been flying fast and furious, but which of the year’s developments are the most important, and how will they affect Massachusetts’ nascent stem cell industry in the year to come?

For answers to these and other questions, I turned to Brock Reeve, executive director of the Harvard Stem Cell Institute (HCSI). The former COO of Life Science Insights, a Framingham, MA-based research firm, Reeve has a unique perspective on stem cells and their potential to affect medicine and medical research—his brother was the late actor Christopher Reeve, who became one of the field’s most vocal advocates after he was paralyzed in a horseback riding accident.

Brock Reeve took up his post at HSCI in 2006. The institute, which was founded in 2004, now includes 19 member institutions, including Harvard University, Harvard Medical School, and area teaching hospitals and research organizations.

HSCI researchers from some of those member institutions played important roles in what Reeve says was the biggest news in stem cells this year: the development of ways to turn back the developmental clock on adult cells. The technique, called somatic cell reprogramming, could yield embryonic-like stem cells without destroying embryos in the process. Such cells could be vital research tools and, because they could theoretically be custom-made from a patient’s own cells, might ultimately provide a source of genetically matched replacement tissues and organs that would avoid rejection by the body.

Reprogramming developed “a lot faster than anyone thought,” Reeve said, moving from initial mouse studies (pioneered at Kyoto University and expanded upon at HSCI and elsewhere) into studies with human cells within the course of the year. But the current technique employs viruses that insert special genes into the adult cells—such genetic methods can themselves cause cancer and other problems, meaning that cells produced via this type of reprogramming are likely too dangerous to transplant directly into people. Which leads me right into my next question for Reeve.

Xconomy: What are the most important things you expect to see happen in 2008?

Brock Reeve: One big question is how to get reprogramming of human stem cells without methods like retroviruses, which is what those labs used. Can you do that with chemical compounds? I think that will happen within a year.

In one way or another, we will also achieve somatic cell nuclear transfer [editor's note: aka "therapeutic cloning," another proposed means of creating stem cells genetically matched to an individual] in human cells.

Another key area that will get more sophisticated this year is imaging. We need to be able to track the cells used better and know where they are going and what they are doing. In medical trials, doctors inject the cells and hope they go to the right places. That’s what FDA is really going to worry about: If you put in these embryonic stem cells in the body, are they really turning into adult cells? Or, are they just disappearing and having some unexplained effect on surrounding cells?

Finally, I think Massachusetts itself will see three or four new stem cell startups.

X: Speaking of stem cell startups, why aren’t there more of them here? Just-launched Fate Therapeutics, for instance, seems to be making its home in Seattle.

BR: Well, part of it is just circumstances. With Fate Therapeutics, David Scadden and Leonard Zon [of HSCI] are involved, but so are scientists from Stanford and Scripps. It’s a national network.

Historically, the returns have not been great and VCs, overall, have been hesitant about stem cell startups. But now, things are moving more quickly. I have seen …Next Page »

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At a conference yesterday, Millennium Pharmaceuticals (NASDAQ: MLNM) presented positive clinical data that could boost the Cambridge, MA-based company’s chances of gaining a broadened approval for cancer-drug Velcade, Millennium’s only marketed product. Velcade’s rival, Celgene’s Revlimid, also did well, but analysts seemed more impressed with Velcade. Shares of Millennium rose yesterday to a high of $16.62, but were trading back down around $15.50 this afternoon.

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Waltham, MA-based Inverness Medical Innovations (AMEX: IMA) has agreed to pay $170 million in stock for BBI Holdings, a UK company that specializes in lateral-flow tests, such as those used for fertility monitoring or pregnancy tests. Inverness has been on buying spree, which appears likely to continue.

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As I wrote in Wednesday’s post on Aveo’s deal with Eli Lilly, the biomarker business is finally having a growth spurt, at least in oncology. Another intriguing company trying to cash in on this trend is The DNA Repair Company (or DNAR), a Boston-based startup co-founded by Human Genome Sciences’ founder and former CEO Bill Haseltine.

DNAR was founded a year and a half ago, and is just now coming out of stealth mode. Based on science from co-founders Alan D’Andrea of the Dana-Farber Cancer Institute and Michael Yaffe of MIT, DNAR is developing tests to determine which patients respond to particular cancer drugs. Both scientists are Harvard Medical School professors and specialists on DNA repair mechanisms—the tools that cells have evolved to undo potentially devastating damage to their genetic material from sources such as radiation or toxins. (Such mechanisms go haywire in tumors.) Yaffe, who is both a molecular biologist and a trauma and critical care surgeon in the intensive care unit, previously co-founded Medford, MA-based Consensus Pharmaceuticals and Cambridge, MA-based Merrimack Pharmaceuticals.

Haseltine got involved because “Alan [D'Andrea] was one of my protégés and the technology is interesting,” he says. “One of the most exciting developments in cancer therapy now is the ability to find the right drug, for the right patient, at the right time.” Haseltine was a professor at Harvard Medical School and Dana-Farber before founding Human Genome Sciences; he left the high-profile Rockville, MD-based biotech in 2004.

DNAR President and CEO Daniel W. Paterson says the company’s tests will be run in its own lab, and will be useful for both regular patient care and to guide drug development. The format is convenient. Paraffin-embedded formalin-fixed tumor samples—just like those produced in most biopsies—are tested using antibodies that detect specific markers of DNA repair pathways. DNAR’s scientists are currently seeing how the company’s markers predict patients’ response to the main drugs used to treat common solid tumors as well as to a handful of new emerging drugs.

Paterson says the company is already in talks with several pharmaceutical companies who want to use the technology. DNAR also has IP around some novel targets for drug development, but that is for a “later stage” he says. DNAR received an undisclosed amount of initial funding from Mohr Davidow Ventures in Menlo Park, CA. “We’ll probably go for the next round within the next six months,” Paterson says. During that time, the company will also move to larger headquarters while staying close to MIT and Dana-Farber, he says. About 20 hires are planned over the 12 to 18 months.

DNAR is hoping to join just a handful of companies that have so far launched tests to guide the use of cancer drugs; most of those companies are out West. According to Haseltine, over the last year or so, DNAR has “made outstanding progress.” And he believes the market is primed for such tests—both as clinical tools and as drug-development tools. Because of criticism about drugs that work in too few patients, and a growing need for better drugs, “The pharmaceutical industry is eagerly seeking biomarkers to prove specificity and improve outcomes,” he says.

DNAR has the distinction of being both one of the first companies Haseltine started up after leaving HGS, and its the only one to be located on the East coast. And most of his other startups involve energy, not biomedicine. “I’m very interested in using biology to develop alternative energy sources,” he says.

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Until recently it seemed like the only thing big pharmaceutical companies wanted from the little guys was their drugs—as many of them as the pharmas could get their hands on. Things have changed, however, as yesterday’s deal between Cambridge, MA-based Aveo Pharmaceuticals and Eli Lilly demonstrates. Now, there is something else those pharmas desperately want from biotech—biomarkers, or molecular tests that drugmakers can use during development to understand exactly how their drug candidates work in people.

Aveo and some other local companies are finally starting to benefit from that trend. Eli Lilly, for instance, is paying Aveo an undisclosed amount to help the pharma figure out which patients respond best to a new cancer drug Lilly is developing.

At stake is millions of dollars in research money spent on drugs that stumble and fall before reaching the finish line. Failed drugs have cost big pharma dearly recently, and more than anything right now they’d like to staunch the bleeding. Companies like Aveo are concentrating on making better tools to sniff out biomarkers—proteins, metabolites, and other molecules in the body that give clues about whether a would-be drug is reaching its target, having the desired effect, or causing toxicity—early. Aveo’s particular strength is an ingenious new mouse model of cancer that provides a much better facsimile of human tumors that do conventional experimental systems, as David Stipp described in his profile of Aveo this summer.

Indeed, the lion’s share of biomarker work is going on in oncology, where new science has opened up a goldmine of new targets for drugs. Here, the FDA has made it pretty clear that if a company is going to claim it has a drug targeted at a specific molecule or mechanism, the agency wants to see data from biomarker tests showing how the drug affects that target. If the drug is only working in a specific subset of patients—or if it causes unacceptable side effects in a subset of patients—the FDA wants to the biomarker data on that phenomenon as well.

Aveo has so far been a big winner in this burgeoning market for biomakers, inking deals with Merck, OSI Pharmaceuticals, and Schering Plough as well. But it is not the only one cashing in; I’ve heard from many of my sources that they’re seeing a bump in the biomarker business. At a conference just a few weeks ago I was talking to Daniel W. Paterson, president and CEO of The DNA Repair Company (or DNAR), a low-profile Boston-based startup that Paterson says is already discussing deals with several pharmas around biomarkers for cancer drugs. “In oncology, companies have to have these markers,” he said. “It’s the first time I’ve been at a company where big pharma is calling us.”

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What if within the next decade or so the U.S. healthcare system was completely transformed? Hospitals like Boston’s Beth Israel were all replaced by retail clinics and medical centers specializing in specific procedures, such as hernia repair or hip replacement. Diagnostics companies finally started reaping the big profits while pharmaceutical companies, biotechs, and device makers took their place as underdogs. And a newly hatched Center for the Determination of Comparative Efficacy was the most feared gauntlet anyone had to navigate to get a new test or treatment to market.

That’s the vision I heard from Clayton Christensen, Wayne Rosenkrans, and other notable speakers at last week’s personalized medicine meeting sponsored by the Harvard Medical School-Partners Healthcare Center for Genetics and Genomics.

In case you’ve already started to roll your eyes, let me assure you this is not the same “personalized medicine” we have been hearing about for the last decade or so. The term once meant matching patients to therapies based on fancy new gene tests. But now its meaning has become intertwined with “evidence-based medicine,” according to Rosenkrans, who is president and chairman of the Personalized Medicine Coalition (PMC) and director of Personalized Medicine at AstraZeneca.

Now, when people talk about personalized medicine, they likely mean “Segmenting patients so that care makes sense,” he said. “It’s not individualized, it’s just stratified.” And it’s no longer just about genomics, but more about assigning a treatment based on evidence from lab tests, imaging, and IT tools such as decision-support software.

Lawmakers like this idea, because it should mean we can stop paying so much for unnecessary care: The more quickly and accurately we can determine who needs what, the more efficiently we should be able to dole it out. As healthcare costs soar, lawmakers are becoming more and more drawn to this new vision.

But back to some of the possible radical transformations I heard about at the meeting.

Rosenkrans predicted that by 2010 there will be between six and 12 new tests approved that guide the prescription of specific drugs, in addition to the few that have been approved to date. VC funding for this new expanded version of personalized medicine …Next Page »

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One of the most controversial drugs ever made could disappear if a new marketing plan can’t save it.

Widely known as the “race-based” medicine, BiDil (isosorbide dinitrate and hydralazine hydrochloride) was launched in July 2005 by Lexington, MA-based NitroMed (NASDAQ: NTMD) for treatment of heart failure in black patients. The wording of that approval caused quite a fuss, as people debated the up- and down-sides of prescribing drugs based on skin color.

But despite having lots of free publicity and remarkable clinical trial results, the pill has made a dismal showing. NitroMed did not come close to its original 2006 guidance of $20 million in sales. Instead, it earned a paltry $12 million or so from BiDil last year, and its doing only slightly better now. Things are so bad, NitroMed’s stock is currently hovering just above the dreaded $1 mark. The company has ditched all R&D, except work on a once-daily version of BiDil, and last year it completely retooled its marketing plan to try and rescue the drug.

Ironically, NitroMed says part of the problem was that BiDil was approved faster than anticipated. Pressed to start marketing before they were fully prepared, management turned to a contract sales force. “That is not ideal,” says Gerald Bruce, senior vice president of commercial operations. NitroMed was also slow to get the drug onto key formularies, making it too expensive for many patients.

Bruce came on in early 2006 to lead the new charge. A pharma veteran who has worked at Bristol Myers Squibb and Johnson & Johnson, Bruce says, “Our focus now is on growth. We will meet our targets and go from there.” There are promising signs. The company has finally gotten the drug onto enough formularies that about 80 percent of patients should have affordable access, per a company press release. Management also dumped the contract sales team for “A small but experienced internal specialty sales force focused on key hospitals and the high-prescribing doctors,” says Bruce.

But will that be enough to save the drug? One odd thing about BiDil’s predicament is that no one has ever disputed that it works. It makes such a huge difference, decreasing the rate of death among heart failure patients’ by about a half, that the Phase III trial (called A-HeFT) was stopped early so all patients could be switched to the new drug.

What riled people about BiDil was that, for one thing, it is a combination of two generic pills. So why can’t doctors just prescribe the two cheap pills instead of BiDil? NitroMed argued that there was an advantage to BiDil, and the company recently served up published clinical data that show that BiDil releases the two drugs into the system at a different rate and concentration. “This shows you can’t just substitute the generic components and get the same effect as the fixed dose combination,” says Welton O’Neal, vice president of Medical Affairs at NitroMed.

Then, there’s the race issue.

Some people charged the company with exploiting a tragic racial health disparity to make quick money. Heart failure is one of the many diseases that kill blacks at a much higher rate than whites. NitroMed was able to speed BiDil to market because its components are already approved, and there was earlier data on the combination’s effects. In fact, a careful review of that data pointed to a new use for the drug: In a mixed race trial, the combination showed no benefits overall. Blacks, however, seemed to do better on the drug.

NitroMed decided to pick up that data and run with it, all the way to FDA, which gave them approval to conduct A-HeFT — the first ever black-only trial for heart failure. The company also rallied many minority organizations, including the Association of Black Cardiologists, which co-sponsored A-HeFT. Within just a few years after that crucial first FDA meeting, BiDil was approved for use in “self-identified” blacks.

Support from minority groups didn’t spare NitroMed the barbs, however. Critics charged that race-based medicine would deepen the racial divide and that the company should have spent the time and money to find a better marker of who would benefit from the drug than self-determined race. “I realize it’s all they have now, but I’m just concerned that skin color is not a good enough measure of who responds,” says Stephen B. Liggett a professor at the University of Maryland, School of Medicine. African Americans are really a diverse population, he argues, and “Race-based medicine is a very tiny step, and one that could give the wrong message.”

Liggett and others are pioneering the use of new genetic markers to more accurately guide prescribing. NitroMed has done a little looking for such markers itself, but the genetics underlying response to the drug are still murky. In fact, it’s not even clear yet exactly why the combination works, let alone who responds best to it.

In the end though, the debate about race is probably not the root of BiDil’s woes. “Those issues are raised at academic conferences, but the medical community is driven by data and what the FDA says,” says Ken Bate, who became NitroMed’s new CEO in early 2007. “That’s not something our sales people confront with any frequency whatsoever.” Among the factors that could be impairing BiDil’s market uptake are side effects. Although the company calls these effects manageable, the drug does cause more headaches and dizziness than traditional therapy.

NitroMed also knows that “BiDil is promotionally sensitive,” says Bruce. If the company gets its message out to doctors, prescriptions should go up, he says, “Because the number-one driver physicians focus on is mortality benefit.”

That message should now be getting to the right people. But if the drug still misses the mark, it’s unlikely NitroMed will get many more chances to rescue it. And marketing muscle alone doesn’t make a product, as Pfizer and Nektar recently learned with their multi-billion dollar bomb Exubera, the inhaled insulin.

Unless NitroMed can snag a partner for the drug, BiDil’s fortunes—and those of NitroMed—will rise or fall along with the trajectory of the next few month’s sales figures. “I expect to see some impact [of the new program] at the end of this quarter,” says Bruce.

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Cambridge, MA-based Ariad Pharmaceuticals (NASDAQ: ARIA) has made three key new appointments in anticipation of the launch of its first product and the growth of its pipeline. Matthew E. Ros is vice president, oncology marketing, Virginia R. Dean is vice president, human resources, and Frank G. Haluska is senior medical director. Ariad’s deforolimus is in Phase 3 trials for bone tumors and Phase 2 for several other types of cancer. This summer Ariad inked a deal worth potentially $1B with Merck around this targeted cancer drug.

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Waltham, MA-based Inverness Medical Innovations (AMEX: IMA) netted a tidy $806.4 million by selling 13,634,302 shares at $61.49 in a public offering that closed yesterday. All told the deal—which included an over-allotment of 1.8 million shares that was exercised in full—wound up being about twice the size as originally planned. Inverness will likely use the cash to continue its remarkable recent acquisition streak.

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Cambridge, MA-based Vertex Pharmaceuticals (Nasdaq: VRTX) yesterday announced a potentially serious setback in its program to develop novel cancer drugs aimed at a family of enzymes called the Aurora kinases. Vertex and its partner Merck have one of the most advanced drug candidates (MK-0457) in this category, which is part of an emerging “targeted” approach to cancer therapeutics that experts hope will deliver a wave of highly effective, and hugely profitable, new drugs. (Novartis’ Gleevec, for example, is a targeted cancer drug, aimed at a related enzyme, that rakes in about $2.6 billion annually.)

But Vertex’s hopes of being one of the first out the gate with a blockbuster Aurora-kinase inhibitor dimmed with yesterday’s news: Partner Merck has suspended enrollment in clinical of trials of MK-0457. The company is examining safety data because one patient showed signs of potentially dangerous heart-related side effects. This may sound like extreme caution, but this type of heart problem (called QTc prolongation) has led to many drugs being abandoned, and we are in an era of what some pharma types believe is hypersensitivity to drug-safety problems. If MK-0457 doesn’t get back on track, Vertex and Merck could be left far behind their competitors in this field. Then again, those competitors will now have to examine their data as well, to see if this problem heralds a trend.

This is the second time this month Vertex has gotten potentially bad news about a key program. Earlier, the company found itself unexpectedly sharing the limelight with a possible new competitor (Romark Labs’ Alinia) to its highly-anticipated hepatitis C drug telaprevir.

Hepatitis C is hard to treat, and many people skip treatment altogether because of side effects. Both Vertex and Romark appear to have drugs in hand that could get much better results in many more patients, possibly increasing the market size for hepatitis C drugs substantially. It’s a key race for Vertex, which has spent many years developing telaprevir. Romark, meanwhile, originally developed Alinia to treat parasite-related diarrhea. Its effects against hepatitis C are an unexpected bonus.

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It’s not the Massachusetts deal everyone was waiting for—as all eyes have been on Biogen Idec and, more recently, Genzyme. But Pfizer (NYSE: PFE) finally pounced again today, announcing it’s buying former partner Coley Pharmaceutical Group (NASDAQ: COLY) of Wellesley for $164 million in a move aimed at bolstering the pharma giant’s position in vaccine development. Pfizer’s yearning is not surprising. Vaccines, Coley’s speciality, are undergoing a revitalization, and Pfizer trails competitors like Merck and GlaxoSmithKline, which have gotten a big boost from major recent vaccine launches.

In a statement, Pfizer CEO Jeffrey B. Kindler called the all-cash Coley acquisition, which is expected to close early next year, “an important component of Pfizer’s vaccine strategy…” He added that Coley’s products “have the potential to significantly enhance future vaccine and immunotherapeutic approaches to a broad range of diseases…where we have strong collaborative research in place.”

Coley is a pioneer in what’s called TLR (toll-like receptor)-based drug development: The goal here is to stimulate a specific type of immune response. (See this great New York Times article.) Besides regular therapeutics, the company also makes adjuvants that help vaccines work better. Coley’s been very successful in that field, netting partnerships with pharma giants Merck, Novartis, and GlaxoSmithKline around its Vaximmune TLR9 adjuvant. TLR9 is a hot target, and Coley seems to have a strong intellectual property position related to it. For example, Dynavax’s Heplisav hepatitis B vaccine, which was just licensed to Merck, is produced under a license from Coley. That product is now in Phase 3 trials.

On the therapeutic side, Coley’s pipeline was seriously dented when its lead product, called PF-3512676, turned in poor Phase II results. PF-3512676 was being jointly developed with Pfizer as a combination therapy (with chemotherapy) against non-small cell lung cancer. It’s no longer pursuing that approval, but Pfizer may keep the drug alive, testing it in combination with a new antibody (a CTLA4 antagonist called tremelimumab) that is now in Phase 3 trials. That drug is one of Pfizer’s emerging bright hopes in oncology. And Coley’s technology might neatly complement Pfizer’s. Pfizer scientist Dmitri Pavlov recently told me that, “In the past, immune therapies, whether they were vaccines or therapeutics, have not shown strong responses. But by targeting CTL4 you can sustain the immune signal. I think it supplies a much-needed addition.”

The acquisitions are bound to continue at Pfizer, which is desperate for new products, particularly biotech ones—another key area where it is weak. Ever since it was revealed in August that activist investor Carl Icahn had taken a large stake in Biogen Idec and was pushing for a sale of the company, speculation has been rampant that Pfizer was the most likely purchaser. Pfizer’s name has also come up as a potential bidder for Genzyme, and there’s been even more speculation since SEC filings released this week showed that Icahn had also purchased a large piece of that company.

When asked at an MIT forum last month if Biogen Idec might be the next acquisition, new Pfizer R&D head Martin McKay said it was “as good a prospect as any other biotech.” He added that, “We have a stated goal to be a top-tier biotech.”

Today, though, the Coley deal was front and center. When the market closed, Pfizer’s stock up $0.10 to $23.39. Coley was up $4.81 (160 percent), to $7.81.

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With a fast-tracked drug in one hand and too little money in the other, Cambridge, MA-based Molecular Insight Pharmaceuticals (NASDAQ: MIPI) recently settled on a bond financing to get one last big cash infusion before that final dash to market. The company has been around since 1997 and is working on about half a dozen targeted radiation-based imaging agents and cancer drugs. Three of those are in trials now, and the goal is to get one to market by 2009.

Management calculated Molecular Insight would need $100 million more to reach that milestone. At the end of last week, it priced $150 million in bonds with a syndicate of institutional investors. “We had several options, but we didn’t want to have to go back to the market again before we launched,” says CEO David Barlow, “Now, we have enough money to last even beyond our first product launch.” The bonds are due in 2012.

Molecular Insight specializes in hitching radioactive particles to small-molecule drugs that are highly targeted to specific cell types. The drugs are basically vehicles to transport the radiation. The company is developing these “hot” drugs both as imaging agents that light up the target cells when viewed with a special camera and as super-precise radiation treatments for cancer. The latter application fills an important niche because “once a tumor has spread, you can’t do external beam radiation,” Barlow says.

Molecular Insight’s lead drug candidate, Azedra, is a new twist on an old treatment that combines a molecule called MIBG (metaiodobenzylguanidine) with radioactive iodine. Azedra is different because, thanks to the company’s proprietary labeling technology, it contains less unnecessary “cold” or non-radioactive drug. According to Barlow, that means it delivers a bigger payload with fewer side effects.

MIBG homes in directly on neuroendocrine tumors—a rare form of cancer that secretes hormones—where it delivers its radioactive payload. The old MIBG/iodine treatment has long been approved in Europe, but no one has ever tried to sell it in the U.S., probably because it addresses such a small market and because the patent is old. A small amount of the treatment was formerly available here for compassionate use, Barlow says, but even that source dried up 2005, leaving U.S. patients with no access at all. Not surprisingly, Azedra has been given fast track status by the FDA. And because there are relatively few patients with neuroendocrine tumors it has also been given orphan status which means, among other things, that the clinical trials of the drug may involve as few as a dozen subjects.

So why bother to develop an old drug (or at least a new version of one) for a rare disease?

Well, Genzyme and others have shown there is money to be made in orphan diseases. Patients with advanced neuroendocrine cancer have no existing treatment options (which means Molecular Insight has a clear market opportunity), and the firm has plans to test the drug in other cancers too. Barlow says it is also protected from competition should anyone finally decide to market the old version of the drug here in the U.S., because Molecular Insight’s labeling technique is covered by newer patents and because Azedra should, he says, outperform the older drug.

The drug is only in Phase 1 U.S. trials now, but is scheduled to move quickly. “Our charge is just to show [Azedra] has the same performance as the approved drug,” says John Babich, president, chief scientific officer, and one of the company’s founders. Given that it’s fast tracked, if the drug truly works better than the old version it should be reasonable to get it approved by 2009.

But the real payoff will be if Molecular Insight can build momentum for its entire pipeline of radiolabeled small molecules. Cancer is probably the most crowded market out there for new drugs right now, but a couple of recently approved radioactive antibodies, Bexxar (GlaxoSmithKline) and Zevalin (Biogen Idec), have shown the targeted radioactivity approach can be remarkably effective. Those drugs only treat blood-born cancers, however, and Babich thinks that in most other cancers, small molecules will work better than the much larger antibodies.

“To get into solid tumors, drugs have to find their way out of circulation into the tissue, and the vasculature creates pressures that push large molecules back,” Babich explains. “Using an antibody is like trying to launch a Hobie Cat into the wind. Meanwhile, we’re just throwing a football into it.”

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Boston-based RNAi therapeutics startup Dicerna is finally officially out of the gates with a finalized $13M Series A financing led by Oxford Bioscience Partners and Skyline Ventures. (I profiled Dicerna last week.) Co-founder Doug Fambrough of Oxford Bioscience Partners is Chairman and Skyline Ventures’ Stephen Hoffman is also joining the board. Dicerna’s CEO is James C. Jenson, and SVP of Pharmaceutical Development is Roberto Guerciolini, both of whom are also co-founders. Dicerna’s core “Dicer substrate technology” was discovered by co-founders John Rossi, of City of Hope’s Beckman Research Institute, and Mark Behlke, at Integrated DNA Technologies. The company claims its novel approach to RNAi opens up new avenues for drug discovery and development previously shut off by other companies’ intellectual property claims.

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It’s been buy, buy, buy, for the last couple of years. Then last Thursday, Waltham, MA-based Inverness Medical Innovations (AMEX: IMA) announced it plans to sell 7 million new shares—the second such offering the company has made this year. (In January, Inverness sold 6.9 million shares at $39.65 apiece.) It’s all part of a plan to reach $3 billion in annual revenues within the next five years by focusing largely on “timely, data-driven” tests, CEO Ron Zwanziger told investors during the company’s October 31 earnings webcast.

In particular, Inverness wants to get more tests out of centralized labs and into doctors’ offices. It also wants to sell more diagnostics for home use, like the pregnancy and fertility-monitoring tests for which the company is already well known. The plan relies heavily on buying other diagnostics firms, distributors, and anyone else that can help Inverness expand its product offerings or its reach. In the last year alone, Inverness has bought about a dozen companies (see table on page 2).

It all sounds very intriguing, and investors must like it because the company’s stock has risen from about $25 in spring of 2005 to a recent high of $65. But the particulars don’t sit well with some observers.

In August, Motley Fool’s Brian Orelli commented that Inverness would no doubt grow, but, he mused, “The biggest question is whether it overpaid for that privilege.” After all, last spring Inverness paid a premium price of $1.6 billion for Biosite—a hot property in cardiac point-of-care (POC) testing that it snatched away from Beckman Coulter in a bidding war. Orelli warned investors to stay away from Inverness for a few more quarters.

Then early this month, David Trainer, president of independent research firm New Constructs, came out with a scathing report that placed Inverness among his company’s “dangerous” stock picks. “[Acquisition sprees] have been a popular strategy on Wall Street to make everyone a lot of money except investors,” Trainer says. “What I see with IMA is a bomb about to go off. You have a terribly unprofitable business with a valuation that is way beyond what the company can meet.”

Despite the question marks around Inverness, though, Zwanziger is painting a particularly rosy picture of his company’s outlook. During that last webcast he said, “We have never been better positioned for growth and profitability,” that management gets better at integrating new companies “with each new acquisition,” and that Inverness may reap maximal cost savings from its recent acquisitions by 2009—earlier than originally anticipated.

Much of that savings will come from having a consolidated sales force, which Zwanziger called the largest …Next Page »

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