The Year in Seattle Biotech: Lots of Acquisitions, Few New Startups
This was a great year for Seattle biotech if you measure success through sheer number of acquisitions. But if you prefer to measure the health of an innovation community by the number of exciting new startups it hatches, then this was most certainly a down year.
That’s the mixed bag of returns that I saw when looking back at the news of 2011 from the Seattle life sciences scene. This was the year of the acquisition for Calistoga Pharmaceuticals, Pathway Medical Technologies, Calypso Medical Technologies, SonoSite (NASDAQ: SONO), Amnis, Geospiza, and Pacific Biosciences Labs (the maker of the Clarisonic skin brush.)
While those companies got harvested, not a whole lot of new seeds got planted. The list of notable Seattle biotech startups this year includes Cardeas Pharma, Oncofactor, Blaze Bioscience, Aquedect Neuroscience and Cardiac Insight.
Who else made headlines in Seattle biotech in 2011? Seattle Genetics emerged. Dendreon crashed. Marina Biotech, Omeros, and AVI Biopharma all had years they’d like to forget. Cell Therapeutics somehow managed to stay in business. New leaders emerged at the global health nonprofits, as Alan Aderem moved in to run the Seattle Biomedical Research Institute, Stewart Parker took over at the Infectious Disease Research Institute, and Chris Elias created a vacancy at the top of PATH by leaving for a new gig at the Bill & Melinda Gates Foundation. The foundation’s head of global health, Tachi Yamada, left for a new venture capital gig, and was replaced by a former Novartis executive, Trevor Mundel.
Here’s a company-by-company rundown of the major events at Seattle biopharmaceutical and global health organizations we keep tabs on here at Xconomy. Tomorrow, I’ll follow up with the rundown of rundown of medical device, diagnostic, and others in fields like Bio-IT or Health IT.
Seattle Genetics (NASDAQ: SGEN). This was a transformative year for Seattle Genetics. The company broke through in August by winning FDA approval of its first product, a souped-up antibody for rare lymphomas. The drug validated a new target on the surface of cancer cells, CD30, and provided hard proof that Seattle Genetics’ proprietary chemistry can successfully link toxins to antibodies—a feat that has eluded scientists for 30 years. Big Pharma companies have beaten a path to Bothell to get licenses to the antibody-drug linking technology, and Seattle Genetics has exceeded Wall Street expectations in the early days of its drug rollout.
Dendreon (NASDAQ: DNDN). Dendreon was the star of local biotech in 2010, and this year it fell flat on its face. The company failed to live up to its first full year sales forecast with its immune-boosting drug for prostate cancer, and burned its shareholder base in the process. The company lost more than $3.5 billion in market valuation, and had to cut 500 jobs, largely because it sparked controversy and confusion by pricing its cancer drug too high—at $93,000 per patient. It remains to be seen this year whether Dendreon can pick up the pieces, as the disastrous screw-up of 2011 has created a gaping opportunity for emerging competitors like Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100.
Amgen (NASDAQ: AMGN). The Thousand Oaks, CA-based biotech company, which has significant R&D in Seattle, said at the end of the year that longtime CEO Kevin Sharer is retiring. Wall Street applauded. That speaks volumes. When I looked back at Sharer’s 11-year tenure, I gave it a “C.”
Cell Therapeutics (NASDAQ: CTIC). Cell Therapeutics, after 20 years, is still in business. Ha. Ha. I know. Not funny. How it can continue to raise money, and hand out management bonuses, while so many other companies with worthy ideas struggle to raise cash? For the investors out there with short memories, let’s not forget that an FDA advisory panel stomped on this company with golf spikes back in March 2010, and the FDA followed suit a few weeks later, when the company filed a half-baked application to start selling a new lymphoma drug.
Marina Biotech (NASDAQ: MRNA). Marina Biotech works in a field that has fallen out of favor on Wall Street (RNA interference), and most of its R&D is still too early in its development to impress public investors.
AVI Biopharma (NASDAQ: AVII). This company brought in a new CEO, Chris Garabedian, who in turn brought in a whole new strategy and new management team to this long-struggling developer of RNA-based therapies. Then this fall, AVI suffered a pretty big hit when it missed out on a potential $500 million government contract to make a pandemic flu treatment. The loss of the contract, and an unfavorable patent ruling, prompted it to lay off 28 percent of its workforce.
Gilead Sciences (NASDAQ: GILD). The world’s largest maker of HIV drugs continued its diversification push by acquiring Seattle-based Calistoga Pharmaceuticals, a cancer drugmaker, for $375 million upfront. Gilead integrated its new assets and people in its Seattle R&D center, which previously had concentrated only on respiratory drugs.
OncoGenex Pharmaceuticals (NASDAQ: OGXI). The Bothell, WA-based cancer drug developer didn’t make much noise this year, but when it talked in August about a delay in its clinical trial timelines, it got whacked by investors.
Oncothyreon (NASDAQ: ONTY). The big news at Oncothyreon is due to come out in 2012, as investors are waiting to see if its immune-booster for lung cancer, Stimuvax, was safe and effective in a pivotal-stage clinical trial. There’s a lot of bullish anticipation building in Oncothyreon stock, but like everything else in biotech, the proof will be in the pudding, and we can’t see it yet.
Bristol-Myers Squibb (ZymoGenetics). The big news was essentially no news—that Bristol-Myers Squibb said it planned to retain most of the people at ZymoGenetics after it acquired the Seattle biotech company in the fall of 2010. Former ZymoGenetics CEO Doug Williams, however, took this moment to leave town, finding a new gig as the head of R&D at Weston, MA-based Biogen Idec (NASDAQ: BIIB).
University of Washington. It’s hard to pick one event at an organization as big as the UW, but one key development for entrepreneurs came earlier this month when the UW Center for Commercialization secured a $5 million loan commitment from the state to help round out a $25 million investment fund for startups, called the W Fund. I expect we’ll hear more about this fund in early 2012.
IDRI. The Infectious Disease Research Institute has long kept a low profile around town, but that could change now that the global health nonprofit has brought in new leadership with CEO Stewart Parker. The institute on First Hill, which gets much of its $25 million annual budget from the Gates Foundation, got an extra boost this year when drugmaker Eli Lilly committed $4 million to its tuberculosis drug discovery initiative.
Institute for Systems Biology. The nonprofit research center led by biotech pioneer Leroy Hood moved into the heart of the action in Seattle’s South Lake Union neighborhood, taking space in the former Rosetta Inpharmatics/Merck facility that’s across the street from Amazon’s new headquarters. Few people may realize it, but a few scientists at the ISB have been pursuing an interest in health of environmental systems, which Nitin Baliga described in an interview back in May.
PATH. The global health nonprofit basked in the wake of its success with a meningitis vaccine in Africa, and promptly secured another $100 million from the GAVI Alliance to distribute it more widely after a successful initial rollout. But big change is coming to PATH as longtime leader Chris Elias announced he is leaving for a new job running anti-poverty programs at the Gates Foundation, creating a void at the top. Elias plans to stay at PATH as part of his transition until Feb. 1.
Bill & Melinda Gates Foundation. The Gates Foundation moved into its fancy new headquarters near Seattle Center this year, and it made its first ever equity investment in a biotech company—North Carolina-based Liquidia Technologies. But its biggest announcement of the year came in October when it held a global malaria conference, and GlaxoSmithKline announced that a Gates-supported malaria vaccine candidate was effective for about half of patients in a pivotal clinical trial, verifying what researchers had seen in smaller studies. The next steps in development, manufacturing, and distribution will all be tricky, and navigating that process will be partly up to the foundation’s new global health leader, Trevor Mundel, formerly of drug giant Novartis.
Allen Institute for Brain Science. Billionaire Paul Allen rarely gets much attention for his work as a benefactor of brain research, but he did get a guest op-ed published in the Wall Street Journal in which he used it as a model of open science (kind of interesting, given his history as a co-founder of that paragon of proprietary software, Microsoft). The Allen Institute made a significant personnel move this year as well, luring in former Caltech neuroscientist Christoph Koch as its chief scientific officer.
Fred Hutchinson Cancer Research Center. This was the first full year for the Hutch’s new leader, Larry Corey. One of Corey’s major projects is a collaboration to help establish the first comprehensive cancer center in Uganda.
Seattle Biomedical Research Institute. This nonprofit global health center made a big move in March when it lured Alan Aderem and his team from the Institute for Systems Biology. Aderem is taking over leadership of the center from Ken Stuart, the founder of Seattle Biomed.
Alder Biopharmaceuticals. The Bothell, WA-based antibody drug developer had a pretty quiet year in 2011, but back in March it revealed that it is working on a couple of novel uses for antibodies, as treatments against migraines and high cholesterol.
Resolve Therapeutics. Resolve, a startup led by former Eli Lilly dealmaker Jim Posada, crafted an unusual business model to try to capitalize on some University of Washington research into the treatment of lupus. It’s all about finding a way to build a company on a shoestring, and get a return without ever going public, or even striking a classic acquisition deal.
Emerald Biostructures. The Bainbridge Island, WA-based company continued to grow this year, securing a big extension of its contract with Belgium-based UCB. The company saw its revenue grow 40 percent, and it hired an additional 20 people, building its staff to about 60.
Allozyne. This Seattle-based company made a big strategic move when it struck a reverse takeover deal with San Francisco-based Poniard Pharmaceuticals (NASDAQ: PARD). The deal was essentially set up so that Allozyne, a private company, could go public by merging into the shell of what was left of Poniard, a company left for dead by investors. Shareholders were so apathetic about Poniard that Allozyne struggled to muster up enough votes to approve the deal for months. Poniard said before Thanksgiving that the deal was done. The companies have been mum ever since about what’s next.
Immune Design. This startup developer of vaccines continued to hit its milestones, and raise new venture capital. The big move of the year came when it hired CEO Carlos Paya, the former president of Elan.
Omeros (NASDAQ: OMER). This Seattle biotech company hit the wall back in March when it said it pivotal clinical trials of an anti-inflammatory drug for knee surgery failed to reach its goals. The company has tried to move on, pointing to a project that it says has great potential to open up drug discovery programs against hot drug targets known as G-protein coupled receptors. No major pharma company has yet stepped up and written a big check to say it wants to pursue these targets with Omeros.
Theraclone Sciences. Theraclone had a big year, as it struck a partnership with Pfizer, raised another $10 million in venture capital, and got some important HIV work published in Nature. The company also hired a new CEO, former Icos business development veteran Cliff Stocks.
Groove Biopharma. This company offers a sign of the times for biotech startup financing. Groove, the maker of microRNA drugs, hit its scientific milestones laid out in front of it at the Accelerator. But instead of graduating like portfolio companies, the company is staying in the nest a while longer, with $6 million in additional financing, instead of the usual $20 million or more that might have been invested in the past.
Cocrystal Discovery. This Bothell, WA-based company, led by former Icos executive Gary Wilcox, struck a partnership with Israel-based generic drugmaker Teva Pharmaceutical. That deal provided another $7.5 million in support for Cocrystal’s experimental drug programs against hepatitis C and other infectious diseases.
Blaze Bioscience. This startup, from the Fred Hutch lab of Jim Olson, is led by former ZymoGenetics business development executive Heather Franklin. The company is seeking to “paint” tumors so that surgeons can see in real-time whether they are actually removing an entire brain tumor, or not.
Cardeas Pharma. The brainchild of entrepreneur Bruce Montgomery raised $5 million this week to go after a drug/device combo treatment that Montgomery is licensing from one of his past companies. Montgomery is not saying much more than that, for now anyway.
Oncofactor. The latest company to get started at Accelerator is looking to find ways to spark the immune system to fight cancer, through developing new antibody drugs.
Light Sciences Oncology. This Bellevue, WA-based company failed in pivotal stage clinical trials, and resorted to layoffs, according to sources close to the situation who spoke to Xconomy in October. The company, which raised well over $130 million in its day, still hasn’t issued any press release or formal public communication that I can see about what happened in studies of its light-activated drug/device combo regimen for cancer. Patients, and researchers, deserve better.
VentiRx Pharmaceuticals. This was a pretty quiet year for VentiRx Pharmaceuticals, although the company did make news by closing its San Diego operations, and naming Seattle-based chief medical officer Rob Hershberg as president. VentiRx now has a lot of behind-the-scenes work to do on clinical trials of its experimental immune-booster for cancer.