SV Feels Lonely at the Top, Canaan Finds Biotech Groove, Portola Gets Drug Back, & More in Bay Area Life Sciences News

3/25/11Follow @xconomy

This week seemed like as good a time as any to run a couple features on biotech VCs who are seeking to stay relevant as their business faces a serious identity crisis.

SV Life Sciences, the $2 billion diversified healthcare fund with offices in San Francisco, Boston, and London, is feeling pretty flush with a new $523 million fund it raised last year. But all the carnage in the VC business has created a new challenge for SV. It only has a few peer VCs that it can syndicate with to carry biotech companies through the long, lean years of product development.

—Another one of the healthcare VCs I’ve met lately, Menlo Park, CA-based Canaan Partners, is still getting by on a $650 million fund it raised in February 2008, right before the financial crisis. Fortunately for Canaan, it has seen a string of positive news stories in its portfolio in the first quarter, including three companies lining up for IPOs. General Partner Wende Hutton predicts that Canaan will generate a lot more hits than the usual 1-in-10 rule of thumb that VCs consider to be a success.

—South San Francisco-based Portola Pharmaceuticals is regaining the full rights to a cardiovascular drug after its partner, Merck, decided to let it go after doing a review of its portfolio. CEO William Lis said getting full rights to the drug is a “transformative” event for Portola.

—Emeryville, CA-based Tethys Bioscience secured some critical support from the U.S. Air Force to run a clinical trial that could go a long way toward making its diabetes test a commercial success. The Air Force will conduct a 600-patient clinical trial to see whether Tethys’ test, which predicts which people are most likely to get diabetes, is actually able to help prevent diabetes by motivating patients to change their behavior. No word on when results are expected to arrive from this important study.

—Palo Alto, CA-based Affymax (NASDAQ: AFFY), the developer of a new anemia drug, raised $50 million in a new stock offering.

—One year has gone by since President Obama signed the healthcare reform bill into law. Plenty of people feared it would stifle drug prices and take away the incentive to develop innovative new drugs, but it didn’t happen, as I point out in this week’s BioBeat column.

—Last week, we gathered biotech leaders for a lively conversation about the 20-year outlook for the San Francisco Bay Area’s life sciences cluster. This event, Bay Area Life Sciences 2031, drew about 150 people to UCSF’s Genentech Hall. Check the photo gallery here.

Stewart Lyman offered up a thorough analysis of biotech financing over the past couple years, which raises a very tough question on a lot of people’s minds: “Who will pay for drug development in the future?” Check out his first installment, and the second part. If you’ve got some biotech-related issue you want to get off your chest, we are always looking for guest posts like this. Just send them my way at ltimmerman@xconomy.com.

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