New England life sciences firms have been making some fascinating strategic moves recently, and a lot of our coverage this last week was focused on understanding these new strategies.

—Alnylam Pharmaceuticals (NASDAQ: ALNY) made its name with technology for turning genes off with a technique called RNAi, but now the company is also working on tools for turning genes on. The Cambridge, MA, firm’s CEO, John Maraganore, told Luke all about the new technology, called RNAa, and how it fits into Alnylam’s strategy.

—Luke took a closer look at one of the tacks Vertex Pharmaceuticals (NASDAQ: VRTX) is taking to try to beat big-pharma competitors in the race to develop the next big drug for hepatitis C. The Cambridge, MA-based biotech is aiming to prove that its drug, telaprevir, can help patients for whom other treatments have failed—the hardest cases of all.

—Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) and partner firm Elan of Ireland launched a human trial of Tysabri—already approved for multiple sclerosis and Crohn’s disease—as a cancer treatment.

—Ryan interviewed the CEO of Antisoma (LON:ASM) and learned about the British biotech company’s strategy in buying Cambridge, MA, drug developer Xanthus Pharmaceuticals this past spring. Antisoma first walked away from merger talks with the Massachusetts firm in 2007, but now is planning to capitalize on Xanthus’ drug-development and clinical-trial management expertise to try to bring cancer treatments to market.

—Innovative Spinal Technologies, a Mansfield, MA-based maker of, you guessed it, devices for spinal surgery, raised $18 million in a Series C round. Investors were not disclosed.

—Zafgen of Cambridge, MA—a startup aiming to battle the bulge by blocking the formation of blood vessels in fatty tissue—emerged from stealth mode and hired its first permanent CEO. The new head of the startup, which is backed by Atlas Venture and Third Rock Ventures, is the former vice president and global head of cardiovascular and metabolism research at the Novartis Institutes for Biomedical Research in Cambridge, Tom Hughes.

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Glyn Edwards, CEO of British biotech firm Antisoma, has found just the tonic for both the particularly gloomy weather in London this year and the business risk his company once faced with only one experimental drug close to market approval: Cambridge, MA, drug developer Xanthus Pharmaceuticals.

Xanthus, which Antisoma (LON:ASM) acquired in May for $52.2 million in Antisoma stock, provides Antisoma with two more prime commercial drug candidates. Now Edwards—who notes that one perk of the deal is the sunnier weather he enjoys during regular trips to this side of the Atlantic—plans to begin building a commercial team in Cambridge with a first hire later this year, in anticipation of hoped-for approvals of his firm’s anti-cancer treatments over the next several years. He also talked to me about how Antisoma first walked away from merger talks with Xanthus in 2007, but returned to the negotiating table after privately held Xanthus later reached two key milestones.

“Obviously, drug-development is a risky business; you can’t predict with absolute certainty what the results of these trials will be,” Edwards says, “but we have a high probability that at least one of these drugs is going to get through its Phase III.”

When M&A talks began between Antisoma and Xanthus last year, Antisoma’s only late-stage commercial drug prospect was its lead product candidate, called ASA404, which is in Phase III clinical trials to treat non-small cell lung cancer. (Swiss drug giant Novartis (NYSE:NVS) has licensed exclusive rights to ASA404, but Antisoma retains the option to become Novartis’ U.S. commercialization partner for the drug.) Now, with Xanthus’ pipeline in the Antisoma fold, the British biotech has added AS1413 (formerly Xanafide), which is in Phase III trials to treat secondary acute myeloid leukemia (AML), and oral fludarabine, which is pending FDA review and which could be approved by early 2009 as a secondary treatment for chronic lymphocytic leukemia. (For you science-minded folks, Antisoma gives details on the mechanisms of action of each drug here.)

Xanthus also gave Antisoma a ready-made drug development organization in the U.S., with internal expertise to manage the late-stage clinical trials and earlier-stage work on drugs in its pipeline. Antisoma has retained most Xanthus employees. For example, Mike Boss, who was chief business officer of Xanthus prior to the acquisition, has become general manager of the firm’s autoimmune program. Yet Richard Dean, former CEO of Xanthus, left the company shortly after the buyout. Antisoma has also folded an operation it launched in Princeton, NJ, last year into the 30-person Cambridge office, Edwards says. Though most of the firm’s workers, about 90 employees, are now housed in its London office, the CEO says he foresees the Cambridge outpost employing an equal number of people within the next several years. (Novartis projects potential approval of AS1413 in the U.S. by 2011, he says, and Antisoma would like to build a sales force here by then to handle its part of the joint-commercial effort for that drug.)

Though I hadn’t heard or read this before, Xanthus had been running a dual effort last year to consider whether to seek an initial public offering or find a buyer of the firm. Antisoma, searching at the time for a deal to bring it more late-stage product candidates, entered initial buyout talks with Xanthus yet walked away because the FDA had not yet accepted the New Drug Application for oral fludarabine or cleared secondary AML as an indication for the Phase III trial of ASA1413. But the regulatory agency later accepted both the NDA and the secondary AML indication. “So we got back in touch with (Xanthus) once we saw that both these events had happened,” Edwards says, “and we said, ‘You were right and we were wrong. How about getting married?’”

As Antisoma details in its announcement of the May 2008 acquisition, Xanthus shareholders—including such Boston-area venture capital firms as Oxford Bioscience Partners, HealthCare Ventures, and Still River Funds—exchanged their Xanthus shares for Antisoma stock. Michael Lytton, a general partner at Oxford who represented the VC firm in the deal, says that Xanthus investors decided after testing the IPO and M&A waters that they could get the best returns on their investments by converting theirs shares into stock in a consolidator in the field of oncology, which turned out to be Antisoma. Lytton says his firm maintains a 4-5 percent stake in Antisoma, and plans to sell its stock once its price (which was 43 cents on September 4) triples in value.

“We see ourselves being shareholders for a couple of years,” Lytton says, “through the point where Antisoma becomes a commercial organization.”

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For-profit firms are the bread and butter of the New England biotech startup scene, but it was nice to see a new non-profit getting a little love last week. Here’s that and the rest of the week’s life sciences news.

—A non-profit venture aimed at providing cheap, portable, easy-to-use diagnostics tools for healthcare workers in the developing world took the prize at the MIT $100K Entrepreneurship Competition. The venture, called Diagnostics-For-All, is built around paper-based diagnostics technology developed in the lab of Harvard professor (and Xconomist) George Whitesides.

—Continuing to bounce back from technical setbacks that last summer resulted in the layoff of half its staff and the stepping down of its CEO, Cambridge, MA’s Greenfuel Technologies raised $13.9 million in new venture funds. The financing—from Polaris Venture Partners (whose general partner Bob Metcalfe is Greenfuel’s interim CEO), Access Private Equity, and Draper Fisher Jurvetson—is an extension of the firm’s Series B round. Greenfuel is developing algae bioreactor systems to convert carbon dioxide from fossil-fuel plants into clean-burning biofuels

—Xanthus Pharmaceuticals of Cambridge, MA, a developer of therapies for cancer and autoimmune diseases, was acquired by British drug company Antisoma in a $52 million stock transaction.

—Boston’s Beth Israel Deaconess Medical Center became one of the first two healthcare facilities to partner with newly launched Google Health. Eventually all 40,000 monthly users of BIDMC’s PatientSite portal will be able to export their records on their diagnoses, medications, and allergies to Google Health’s database, which is designed to help consumers manage their own medical records in a secure online environment.

—The Massachusetts Biotechnology Council teamed with the American Cancer Society to challenge MBC member companies to fund postdoctoral fellowships in cancer research. AstraZeneca Pharmaceuticals and Novartis have each already promised to fund one of the $140,000, three-year fellowships; the goal of the “MBC Cancer Research Challenge” is to get an additional 10 such fellowships funded in 2008.

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There was a steady flow of Boston-area deals last week—not to mention a couple of nice ones for our fellow tech-media companies.

—The One Laptop Per Child Foundation forged an agreement with Microsoft to make versions of the foundation’s XO laptop that run Windows XP (even as former OLPC president of software and content Walter Bender established a new foundation to further development of the open-source graphical interface originally created for the XO). OLPC hopes the Microsoft deal will help ease acceptance of the laptop among government officials.

—Malden, MA-based computing blog Ars Technica was snatched up by Condé Nast, the owner of Wired, for a reported $25 million. The popular blog will effectively become part of Wired.

—Cambridge, MA’s Greenfuel Technologies extended its Series B financing round with an additional $13.9 million from existing investors Polaris Venture Partners, Access Private Equity, and Draper Fisher Jurvetson.

—OmniGuide, a telecom company turned medical device firm in Cambridge, MA, closed a $25 million Series E financing round. The deal was led by Psilos Group and joined by existing investors Ray Stata, Stata Venture Partners, 3i, Argonaut Ventures, ESI, Gainesborough Investments, Jeff Swartz, and Westbury Partners.

—Our fellow neighborhood online media firm, Greentech Media of Cambridge, MA, closed a Series B financing round worth $2.75 million led by EGORA Holding and the Massachusetts Green Energy Fund.

—Search engine optimization and marketing firm Hubspot of Cambridge, MA, raised $12 million in a Series B round led by Matrix Partners.

—Xanthus Pharmaceuticals of Cambridge, MA, was bought by the U.K.’s Antisoma for about $52 million in stock.

—Boston’s Iron Mountain, an information protection and storage firm, bought DocuVault of Denver, CO, for an undisclosed sum.

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British drug company Antisoma reported today that it has picked up Cambridge, MA-based Xanthus Pharmaceuticals for about $52 million in shares. Xanthus focuses on therapies for cancer and autoimmune diseases and has five drugs in clinical development. One of them is an oral cancer drug that is already marketed outside the U.S. by Bayer-Schering Pharma.

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