Receptos, a San Diego-based biotech startup formed by a number of Biogen Idec veterans, has nailed down $25 million in venture capital to develop a vivid new way to look at certain protein structures on cells that it hopes will ultimately take a lot of the guesswork out of drug discovery.

The cash infusion is coming from Venrock Associates, Arch Venture Partners, Flagship Ventures, and Lilly Ventures. Bill Rastetter, a partner at Venrock who was the CEO of Idec Pharmaceuticals before it merged into Cambridge, MA-based Biogen Idec, has joined Receptos as CEO.

The big idea for the fledgling company comes from the labs of Ray Stevens and Hugh Rosen at The Scripps Research Institute in San Diego. The Scripps scientists have developed a process for capturing the first high-resolution crystal structure images of certain spaghetti-like targets on cells, known as G-protein coupled receptors. These are highly complex proteins that snake inside and outside of cells. This architecture, and the lack of great 3-D imaging to see them in their full glory, makes them especially tricky to develop specific drugs against. Even so, an estimated 30 to 40 percent of all pharmaceuticals worldwide hit these GPCR targets, including best-sellers for depression, allergies, and high blood pressure. Because the new method of capturing images of these proteins holds the potential for creating more specific new drugs against these targets, it was called one of the top 10 breakthroughs of the year in 2007 by Science magazine.

“It’s sort of like if you can’t look under the hood of a car, how can you know what’s wrong?” Stevens says. “What Receptos does is enable scientists to see the binding sites on the targets, to develop more effective new drugs against them.” He adds that this has implications far beyond any one drug, that this method will be applied over and over against a number of targets. “The potential is enormous,” Stevens says.

Ray Stevens

Rosen, a co-founder and former Merck executive director, called the new technique a “quantum leap” that will clear the way for more data-driven discovery of new drugs.

This isn’t meant to say any of this will be easy. Part of the challenge with characterizing GPCRs is that scientists using current methods are required to have the natural occurring, or synthetic, ligand that binds with the receptor. Receptos still has to operate within that limitation. But what the company has developed of value is a 15-step, reproducible process to make high-resolution crystal images of the known GPCRs, which gives scientists much more information about the target they are developing drugs against, Stevens says.

Once drug developers have the crystal structure figured out, then they have a solid template to design drugs with the desired ability to turn on or off a certain function related to disease. While this ability to capture crystal structures has eluded scientists looking at GPCRs in the past, it’s a standard part of the toolbox for researchers looking at tyrosine kinases—which have since become one of the hot targets in cancer biology.

So what does Receptos plan to do with this new platform for discovering drugs? A few things. It plans to form partnerships with other drug companies that want this same kind of information at their fingertips, says Marcus Boehm, a co-founder and vice president of chemistry. That will help pay the bills …Next Page »

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[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm …Next Page »

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Few doctors knew much about a rare brain infection called PML back in 2005, when two patients on a hot new multiple sclerosis drug from Biogen Idec and Elan died from the side effect. The infection, at the time, was generally considered a death sentence. But now with three years of data from more than 60,000 patients worldwide who have taken natalizumab (Tysabri) under strict monitoring by physicians, a new picture is emerging that shows PML is still very much a serious threat, but that it isn’t nearly as deadly as first feared.

While each and every confirmed case of PML, known formally as progressive multifocal leukoencephalopathy, scares investors in Cambridge, MA-based Biogen (NASDAQ: BIIB) and Ireland-based Elan (NYSE: ELN), I sought to assemble a big picture view of exactly how deadly PML really is when I interviewed Al Sandrock last week. He’s the senior vice president of neurology R&D at Biogen, and an assistant clinical professor of neurology at Harvard Medical School.

Before diving too far into the numbers about the risk of Tysabri, a little background is required. This drug, an antibody treatment designed to block certain white blood cells that cause MS when they attack nerves, has a history of also making patients vulnerable to infection. Biogen and Elan yanked it off the market in February 2005 after two cases of the brain disease were confirmed among patients taking the drug; a month later, a third case was confirmed. But legions of patients still demanded the drug, considered to be the most effective medicine on the market at reducing the disabling nerve damage from multiple sclerosis flare-ups. The FDA allowed the drug to return to the market in July 2006 after determining its benefits outweighed the risks, but it also forced doctors into a strict monitoring program to keep an eye out for the early signs of PML.

This matters not just for doctors and patients, but for Biogen’s and Elan’s financial futures. The drug, Biogen’s fastest-growing product, generated $560 million in sales in the first nine months of this year. (The importance of this drug is one reason why investors get so ticked at Biogen when it isn’t exactly forthcoming about every newly diagnosed case, but that’s a bone to pick another day.)

When the drug came back on the market, its FDA-approved prescribing information contained a prominent warning that about 1 out of every 1,000 patients on the drug were likely to get PML. But that was really just a forecast, and the actual risk-benefit balance for this drug is really a moving target that shifts over time when a new case is confirmed. So I sought to build a simple chart when I spoke to Sandrock that provides a snapshot of PML cases in February 2005, when the drug was pulled off the market because of the PML risk, versus those confirmed as of yesterday. Here’s what I gathered:

The February 2005 figures came from clinical trial data and formed the foundation for the FDA-required warning of the 1-in-1,000 chance of getting PML. The more recent figures include all the experience of patients who have gotten the drug since it was returned to the market in July 2006. The thing that jumped out at me was the fact that only five of the 27 confirmed patients with PML have died—meaning that the current survival rate stands at over 80 percent.

That curious fact has been buried under a rash of scary headlines …Next Page »

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Virdante Pharmaceuticals is expanding development of its anti-inflammatory drugs with a second closing of what is now a $30 million Series A round of venture capital, the company’s CEO, John Ripple, said. The Cambridge, MA-based biotech startup has found potential ways to boost the anti-inflammatory effects of conventional antibody drugs and to create novel therapies to treat diseases in which the immune system attacks healthy tissue.

Investors have committed up to $47.75 million for the first-round financing, agreeing to add nearly $18 million to the $30 million already raised by Virdante if the company achieves certain milestones, Ripple said. Venture firm Thomas, McNerney & Partners led the second closing of the round, which included investments from new backer Osage Partners as well as previous investors Biogen Idec New Ventures, Clarus Ventures, MedImmune Ventures, and Venrock Associates. Eric Aguiar, a partner at Thomas, McNerney, is also joining the board of directors at Virdante as part of the financing, according to the company.

This large round of financing is a big boost for Virdante’s new method of adding a specific sugar molecule to antibodies to increase their ability to tamp down excess inflammation, while at the same time maintaining the immune system’s natural defense against infection. The first program under development is to increase the anti-inflammatory effects of antibody infusions used to treat diseases such as cancer, HIV, and a bevy of autoimmune diseases in which the body’s immune system goes haywire and starts attacking healthy tissue like it would a virus. These so-called intravenous immune globulin (IVIG) treatments grossed $4 billion in 2008 for drug makers such as Deerfield, IL-based Baxter Healthcare and King of Prussia, PA-based CSL Behring, Ripple said. Virdante wants to make these antibody infusions more potent to reduce how much of the treatments patients need to take and how long it can take to inject the drugs from a few days to several hours.

Virdante plans to make its IVIG with traditional supplies of the treatment derived from human blood, using an extra step in the manufacturing process that incorporates an enzyme that improves the potency of the antibodies. The demand for IVIG is bigger than many people realize. Ripple said that while the therapy is approved by the FDA for several disorders, the antibody infusions are used to treat more than 100 different diseases including non-approved uses such as treating multiple sclerosis and Alzheimer’s. A concern is that demand will eventually exceed supply. “One of the exciting opportunities for [our IVIG product] is that it promises to significantly reduce the therapeutic dose,” he said, “so we can use the same current supply of IVIG and treat many more patients with that same supply.”

Virdante’s technology is based on the discoveries of Jeffrey Ravetch at …Next Page »

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Europe’s drug regulators were not kind to a couple of Massachusetts biotech firms this week, but other New England life sciences companies had happier news to report.

—European drug regulators turned down Lexington, MA-based Antigenics’ bid for approval to market vitespen (Oncophage), a “cancer vaccine” for patients with kidney cancer. Shares of Antigenics (NASDAQ: AGEN) tumbled on the news.

—Ryan made a visit to the yeasty-smelling labs of Lebanon, NH-based Mascoma, where researchers are aiming to engineer microbes that can more efficiently produce ethanol from cellulose-rich materials such as wood chips, switch grass, and corn stalks. Mascoma is currently ramping up pilot production at a facility in Rome, NY, and hopes to complete one of the first commercial-scale cellulosic ethanol plants—in Kinross, MI—by 2012.

—Nuclea Biotechnologies raised $3.4 million in new equity financing. The Pittsfield, MA-based startup is developing genomic tools for cancer research and diagnosis.

—Ryan made the rounds of the big healthcare IT symposium put on by Partners HealthCare’s Center for Connected Health. The field is currently riding a wave of interest tipped off in part its inclusion in the economic stimulus bill, he explained, and the event attracted a mix of physicians, entrepreneurs, hospital administrators, academics, and technology executives. Ryan gave a great run-down of highlights from the event.

—Natalizumab (Tysabri), the multiple sclerosis drug from Cambridge, MA-based Biogen Idec (NASDAQ: BIIB), has reportedly come under fresh scrutiny from European regulators now that a total of 23 patients on the treatment have been diagnosed with a rare, potentially fatal brain infection called PML. According to Reuters, the European Medicines Agency has initiated a review to discuss any additional measures necessary to ensure the safety of the drug, which is also approved for Crohn’s disease. Shares of Biogen, and its partner Elan (NYSE:ELN) fell on the news.

—Wellesley, MA-based BioAssets Development Corporation inked a $30 million deal granting Frazer, PA-based Cephalon (NASDAQ: CEPH) to acquire the company. BioAssets will be eligible for various additional payments if Cephalon exercises the option and certain regulatory and sales milestones are reached.

—Boston-based American Well, provider of a Web-based system for remote medical consultations, raised $10 million in new equity funding, according to a regulatory filing. Investors in the round were not named.

—Luke gave a sneak peak of next week’s Xconomy Forum, which will explore how Big Pharma is seeking to boost its pace of innovation—and chances of success—in a notoriously risky industry. We’re all really excited about the event, which will include keynoters Deborah Dunsire, the CEO of Millennium: The Takeda Oncology Company, and Christoph Westphal, the CEO of Sirtris, and the senior vice president of GlaxoSmithKline’s Centre of Excellence for External Drug Discovery.

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[Update: 10/23/09, 1:10 pm Eastern] Shares of Biogen Idec and its Irish partner Elan dropped this morning after European regulators said they are taking a new look at the risk and benefit of natalizumab (Tysabri) for multiple sclerosis, now that 23 patients on the drug have been diagnosed with a rare, potentially fatal brain infection called PML.

Cambridge, MA-based Biogen (NASDAQ: BIIB) fell 5.5 percent to $44.61 at 11 am Eastern time today, while Elan (NYSE: ELN) dropped 21 percent to $5.11. The European Medicines Agency said it has initiated the review to discuss any additional measures necessary to ensure the safety of natalizumab, according to a Reuters report.

The new report was bound to alarm some investors, because 23 cases of progressive multifocal encephalopathy, or PML, is significantly more than the tally of 13 cases the FDA counted last month. Cases of PML been adding up since the drug was re-introduced to the U.S. market in July 2006 after it was previously withdrawn because of the risk. Despite the chance of the infection, which the FDA pegged at about 1 in 1,000, patients have continued to seek out the treatment, which physicians say is the most effective therapy on the market for multiple sclerosis. (Natalizumab is also approved as a treatment for Crohn’s disease.) More than 46,200 people worldwide were taking the drug at the end of September, Biogen said earlier this week.

Biogen finance chief Paul Clancy told Dow Jones earlier this week that the company will discuss how to communicate the link between long-term use of the drug and increasing incidence of the dangerous side effect.

Regulators might choose to recommend that patients who take the drug for long periods of time take breaks, or “drug holidays,” said analyst Christopher Raymond of Robert W. Baird & Co., in a note to clients this morning. Since so many patients depend on the product to control their symptoms, it’s unlikely that regulators would force it off the market, he said.

“We deem it highly unlikely that either FDA or EMEA would pull Tysabri from the market,” Raymond said. “With PML risk well known, we think the most likely scenario would be additional labeling restrictions suggesting perhaps a drug holiday after an extended treatment period.”

[Updated comment from Biogen Idec.] There isn’t any data that suggests imposing a drug holiday would reduce the risk of patients getting PML, but there is data that shows symptoms of multiple sclerosis return quickly once patients quit taking natalizumab, says Biogen Idec spokeswoman Naomi Aoki. The company is talking with regulators about the best way to update the drug’s prescribing information to reflect the increased risk with extended usage, but even so, the incidence of PML still appears within the stated range of 1 in 1,000 patients, she says.

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Seattle has more than its share of brilliant biologists for a medium-sized American city. But if people and ideas are going to properly mix to create a thriving local biotech industry over the next two decades, we could use a few more common places with intellectual sparks—like bars. At least according to one of the region’s top life sciences entrepreneurs.

When in Boston and San Francisco, Stephen Friend says he gets most of his work done by socializing with scientific colleagues he meets for coffee or a drink. Not so here.

“The way Seattle is currently set up, I don’t have a place I go for a coffee or a drink. A place where I run into the people who are ready to try a new idea. That’s an important anchoring ingredient that we’re missing, and should be happening,” says Friend, the former senior vice president of cancer research at Merck, and co-founder of Seattle’s Rosetta Inpharmatics.

(Coffee itself is certainly easy to find, but Stephen may want to check out Xconomy’s handy Greater Seattle Coffee Cluster guide for the spots that are best known as innovation mixing pots.)

That was one of the many insights that emerged during Seattle Life Sciences 2029, a sold-out event Xconomy organized on Monday night at Seattle Biomedical Research Institute (see the photo gallery here). This event brought together a group of industry visionaries who have rarely, if ever, appeared on the same stage in front of a local audience: Ben Shapiro, the former executive vice president of basic research at Merck; Steve Gillis, the managing director of Arch Venture Partners who co-founded Immunex and Corixa; and Friend. The panel was moderated by Carl Weissman of Accelerator and OVP Venture Partners, and biotech pioneer Leroy Hood offered his thoughts in a video message on how Seattle can make strides to get bigger and better at biotech over the coming two decades.

This came up during a freewheeling audience Q&A, which covered a lot of ground. I’m not going to recap everything here—I think with some of the jokes, you probably just had to be there—but here were some of the best little acorns that that I squirreled away with my digital recorder, which are edited as always for length and clarity:

Steve Gillis

Steve Gillis on what entrepreneurs need to do to adapt in today’s financial climate: “Entrepreneurs need to be open to combining their ideas with existing organizations. Or combining those ideas with like-minded new proposals from other folks, as opposed to always wanting to have what I call their own pie. In the world in which we live, in which money is quite tight, people have to be open to joining forces earlier in evolution. That will result in everyone having a smaller slice of the pie, but it will also result in the possibility of someday eating pie. Instead of just dreaming about it. It’s a fundamental mind-set that needs to change.”

Stephen Friend on how universities need to relax rules on how inventive faculty spend their time: “The concept that you are either inside or outside of the university, and that some fraction of your time has to be spent inside the university, and that some percentage of your time has to be spent in your role as a tenured professor at the university, that has to go away. It’s the concept that someone could teach courses, and can be a role model for education, has to be kept separate from someone who’s actually running a company. The best example I know of is what MIT is trying to do. That organization, the person who leads it, she [Susan Hockfield] feels the university has to become, in a broad sense, the incubator. I don’t think many people, particularly at some universities in this town, are ready to think that creatively. It’s a mistake.”

Ben Shapiro on how Seattle ranks as a hub for life sciences innovation: “It’s worth …Next Page »

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New England has a deep pond with many of the very biggest fish in the global life sciences industry, but it also has its share of minnows, and they are getting eaten alive in the downturn.

That finding leaped out at me after I scoured through financial data on 85 publicly traded life sciences companies in greater Boston, Seattle, and San Diego as part of our regular Biotech Survival Index feature. The final numbers aren’t pretty for Boston. Just 15 of the 46 public life sciences companies we follow in Massachusetts had more cash on their balance sheet at the end of June 2009 than they did on New Year’s Day, based on a review of the most recent round of quarterly financial filings with the Securities and Exchange Commission. (Companies were included if they were listed on the NASDAQ or NYSE, and had market capitalization of at least $100 million).

Even though jobs have been cut, drug candidates have been shelved, and some last-ditch partnerships have been struck, all that frenzied activity didn’t really add up to a strengthened financial future for a majority of the region’s money-losing companies. The cash crunch has prompted a couple of Massachusetts companies to fold this year (Altus Pharmaceuticals and Epix Pharmaceuticals), a couple more to sell out for a pittance (Targanta Therapeutics and NitroMed), and one company that actually improved its financial position to move to Wisconsin (Exact Sciences).

While those companies were vanishing, there was some good news to be found in the filings. Some of Boston’s anchor tenants took advantage of their financial strength to beef up their cash balances, pay down debt, or otherwise tidy up financial matters. Essentially, the rich (Biogen Idec, Genzyme, Thermo Fisher Scientific, and Millipore, to name a few) got richer.

But what really shocked me the most was how poorly Boston’s life sciences companies have coped with the downturn compared with peers in the two other cities where Xconomy follows life sciences—Seattle and San Diego. Granted, neither of those cities has anywhere near the number of profitable life sciences companies that Boston does (18). And many of the little biotechs in those cities were backed into a corner in the first half of 2009, and either had to do or die—and things don’t appear quite that dire yet at many companies in Boston. But a majority of companies in Seattle (7 of 12) actually strengthened their balance sheets during the first half of the year. The same pattern emerged in San Diego, where 15 of the 27 companies built up their cash reserves in the same period.

If you combine those two hubs into a West Coast cluster that has a sample size similar to Boston’s (39 companies versus 46), the Bay State doesn’t look so resilient in comparison. About 56 percent of companies on the West Coast (22 of 39) strengthened their financial position in the first half of the year, while just 33 percent of the companies in Boston (15 of 46) did that well.

Read on for a complete rundown of the financial position for all 46 Massachusetts companies, listed in alphabetical order. To purchase a much expanded version of this report, in PDF format, click the “Add to Cart” button below. The expanded version, available for $95,* includes an assessment of each company’s financial position at the end of June compared to six months earlier, the projected length of time it can survive on its existing cash reserves, and an analysis of the strategic moves it has made to stay afloat in the current environment. Click here to see a sample entry. *Price is subject to change without notice.

We intend to repeat this analysis regularly to monitor the financial health of the life sciences companies we follow in San Diego, Seattle, and Boston. Please send feedback to editors@xconomy.com.

Abiomed (NASDAQ: ABMD)
Cash on hand: $54.5 million
Related Xconomy coverage:
“Abiomed Wins FDA Approval of Heart Pump”

Alkermes (NASDAQ: ALKS)
Cash on hand: $380.4 million
Related Xconomy coverage:
“Alkermes Knocks on Door of Biotech Big Leagues, Aims to Make Drugs of its Own”
“Alkermes, Swinging for the Fence, Touts New Anti-Addiction Drug”
“Alkermes’ Ambitious Builder, Richard Pops, Grabs Reins to Re-Ignite Growth Phase”

Alnylam Pharmaceuticals (NASDAQ: ALNY)
Cash on hand: $473.8 million
Related Xconomy coverage:
“Alnylam Takes Time to Mull Over RSV Game Plan”
“Alnylam, With Tekmira and New Northwest Firm Alcana, Look to Push Borders of RNAi Delivery”
“Alnylam Pushes First RNAi Drug That Circulates Through Body Into Human Test”
“Alnylam’s In the Money, Expects $500 Million in Bank At Year End”
“Alnylam Looks to Spinoffs to Unleash RNAi Technologies for Stem Cells, Vaccines“ …Next Page »

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Harvard Business School professor Gary Pisano is considered a leading scholar of biotech industry economics, and has developed a reputation for providing treatises on how biotech firms have been unable to generate profits throughout history. Steven Burrill gives his own critiques in his life sciences banking and investment firm Burrill & Company’s industry reports. These two top minds in biotech united—and at times clashed—during a segment of the MassBio Investors Forum in Boston this week.

Both Burrill and Pisano agreed that the biotech industry is in for some dramatic changes. Burrill, CEO of San Francisco-based investment firm Burrill & Company, forecasted that new diagnostics would outperform new drugs as moneymakers for life sciences firms as the U.S. healthcare system evolves from a system of reactive care to preventive care over the next decade or so. And sounding a familiar drumbeat from his deep analysis of biotech in his book “Science Business,” Pisano said the industry needs further integration to remove some of the inefficiencies that have made developing biotech drugs such a costly and risky business.

But the two collided over how biotech startups should think about building the value. People in the industry should ask themselves how they can create the greatest amount of perceived value of biotech inventions in the shortest amount of time, and then cash in on that value, Burrill said. “It’s never going to be as good as we hope it will be,” he said. This sparked a brief debate between Burrill and Pisano about the merits of perceived versus actual value in the biotech industry. Pisano took the stance that focusing on perceived value could cost the biotech business loss of confidence among investors if they lose money because the promise of a life sciences invention fails to deliver.

“I think over time perceived value and real value have to match up or investors will get wise and stop buying,” Pisano said.

This debate is timely because many biotech companies are desperate for more dollars to continue operations. But the sinking value of companies and other market forces has made fundraising particularly difficult for life sciences firms over the past year. The big elephant in the room for the industry is that there are some 135 public biotech companies with less than a year’s worth of cash in their coffers and 70-odd firms valued at less than the amount of cash they have in the bank, Burrill said. It’s tough to argue with that point. For private venture-backed biotechs, the strained values of their public counterparts are contributing to the poor evaluations for their own fledgling operations.

The good news for biotech entrepreneurs, Burrill said, is that the life sciences industry is …Next Page »

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Biotechnology companies who’ve taken time to focus on politics over the last few years have focused most of their attention on national-level issues. That’s understandable given the renewal of the Prescription Drug User Fee Act that controls FDA deadlines for reviewing new drug applications, legislation that would make it possible for makers of cheaper “biosimilar” drugs to compete with innovative companies, and now proposals to extend healthcare coverage to all Americans.

Each of these issues has an obvious impact on future business and biotech executives have significant lobbying support on these issues. National and state-level business organizations like the Biotechnology Industry Organization (BIO) have identified key issues, provided access to key lawmakers, and created plug-and-play messaging suitable to their respective issues.

That sort of assistance crumbles when the focus shifts closer to home, at the city level. Most biotech executives don’t spend any significant time concentrating on local issues, and I happen to think this is a dangerous trend that must be reversed.

Here in Seattle, city leaders have extolled the virtues of biotech. Seattle’s South Lake Union neighborhood has been given particular attention, with goals of creating a hub for scientific research, biotech companies, and global health to compete with other such clusters across the country.

That sounds great, until you look at the specifics. Local developers have done a good job of building and/or planning buildings for this purpose. However, the city is behind on infrastructure spending and there is not enough electrical power infrastructure in place to support all the lab space being created. That’s an obvious operational problem that Seattle’s city hall missed, but not all local issues so clearly affect biotech companies.

Here in the greater Seattle area we haven’t figured out how to fund and operate convenient transit service, even within the city limits. Traffic in the main east/west arterial (Mercer Street) in our future biotech center is miserable and has been miserable for decades. The current plan to address this will make the streetscape more attractive, which is a good thing since drivers will be spending more time looking at it. The current plan actually increases east/west traffic time on the corridor. Seattle schools perhaps can no longer be termed in “disarray,” but nobody is satisfied with the quality of education, particularly science education, across the system.

These issues are important because if biotech executives want their companies to grow, they have to be able to attract and retain great people. Seattle already has a recruiting handicap …Next Page »

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Personnel moves usually make for boring news, but sometimes they carry deeper meaning. I couldn’t help but wonder about the deeper meaning when Cambridge, MA-based Ironwood Pharmaceuticals said last month it had recruited David Ebersman, the former chief financial officer of Genentech, to join its board.

Ebersman, a boyish-looking guy just 39, took the chief financial officer job earlier this year at Facebook, joining its more famously boyish CEO, Mark Zuckerberg. But Ebersman is well-known as well for his remarkable 15-year career climbing the ladder to become CFO at Genentech until the company was acquired by Switzerland-based Roche last spring. Ebersman was one of the reasons Genentech had the most respected biotech management team on Wall Street for years. His appointment to Ironwood’s board made me wonder if the privately held enterprise wants a little more help opening some doors with deep-pocketed biotech investors who can take the company to a new level, and maybe even help it go public.

Why say that? I’ve interviewed Ebersman several times and know he has exceptional command of facts and how they fit into company strategy, but even more than that, I remember seeing Ebersman in action at a Genentech analyst day at the Mandarin Oriental Hotel in New York two years ago. In front of at least 500 fairly stressed analysts and fund managers watching every word for market-moving news, he stepped up to the microphone after some heavy scientific presentations and broke the tension. Ebersman said he couldn’t really start into his presentation without first admitting how awed and intimidated he was that day to bump into one of his boyhood heroes in the elevator—former New York Knicks center Patrick Ewing.

David Ebersman

Just the mental image of Ebersman, who’s about 5-foot-6, looking straight up in the elevator at a 7-foot former NBA basketball star like Ewing, had the room break out laughing. Genentech CEO Art Levinson, a science nerd to the core, added to the humor when he admitted he had never heard of Ewing and asked who he was, and why people seemed to think he was a big deal (which prompted some gentle ribbing from Ebersman).

So when I had a chance to talk by phone with Ironwood CEO Peter Hecht a couple weeks ago, I asked him whether he reached out to Ebersman to add his credibility and deep reservoir of good will on Wall Street. Might Ebersman be able to help Ironwood go public?

The short answer from Hecht was no. “We didn’t add David Ebersman to the board with any one transaction in mind. I’ve been working on him for three years to join our board,” Hecht says. But he didn’t disagree with how Ebersman’s affiliation can benefit Ironwood. “David has terrific credibility with investors,” Hecht says, adding that even before Ebersman joined the board, he introduced Hecht to a contact at Morgan Stanley, who led a $50 million financing for Ironwood a year ago.

Even if Hecht doesn’t have any direct comment about IPO possibilities, other people …Next Page »

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[Clarified Oct. 1---see below] Directors of Facet Biotech (NASDAQ:FACT) have unanimously recommended that its shareholders reject Biogen Idec’s $14.50 per share takeover bid, an all cash deal worth some $355 million, the California company announced today. Biogen (NASDAQ:BIIB) had proposed acquiring Facet, its partner in developing an antibody drug for multiple sclerosis, in early September. After Facet’s board rejected that deal, Biogen on September 21 launched its tender offer. “The offer is substantially lower than our company’s current market value…and attributes insufficient value to the attractive pipeline and assets of the company…” Facet Biotech CEO Faheem Hasnain said in a statement. Biogen could not be reached for comment this morning. Facet shareholders have until Oct. 19 to decide whether they accept or reject the tender offer.  [This article was amended to make it clear that despite its board stated rejection of the deal, Facet's shareholders still have to vote on the tender offer.]

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Richard Pops is not the sort of guy to sit still and patiently wait for good things to happen. He took the CEO job at Cambridge, MA-based Alkermes when he was just 28 years old, built it from 20 employees to more than 400, and made it profitable by the end of his 16-year run at the helm in 2007. But when we had breakfast earlier this year at the JP Morgan Healthcare conference in San Francisco, he made it clear he wouldn’t be satisfied until Alkermes cracked the top tier of biotech companies with multi-billion dollar valuations, like Amgen, Genzyme, and Biogen Idec.

So when Alkermes’ stock (NASDAQ: ALKS) turned in an anemic performance this year, sliding down 11 percent in the first nine months, it shouldn’t have come as a surprise that a shakeup was coming. Pops—a still youthful and energetic age 47—swooped back in from the chairman’s role on Sept. 10 and replaced his onetime operations deputy, David Broecker, as CEO. When I spoke with Pops by phone a few days later to ask him why he did that, he essentially said the company needed an operations guy two years ago to manage global supplies and manufacturing for partners, but now it needs to get back to its roots and build itself up some more.

“David was well-suited to the strategy of the company at the time,” Pops says. “Now we’re going back into building mode again.” At the Morgan Stanley healthcare conference a few days after he took over, Pops elaborated a bit, telling investors, “you’ll see more energy around building our proprietary platform and doing business deals, and action around building the company.”

Alkermes (ALK-er-meez) was founded in 1987, and like the usual biotech company, it lost money for its first 20 years. The company’s forte has always been its expertise in making existing drugs more stable and longer-lasting in the bloodstream, allowing for less frequent dosing. Instead of betting the company on one in-house compound, a common boom-or-bust strategy in biotech, Pops struck deals with various partners who could help pay the R&D bills along the way, and mitigate the company’s risk.

Richard Pops

That strategy had its benefits in making Alkermes profitable by 2006, but all those partnerships mean that Alkermes today isn’t as independent as some of its biotech peers. Alkermes’ biggest cash cow, risperidone (Risperdal Consta), is marketed by a partner, Johnson & Johnson. The next big thing in the pipeline, which Pops calls “maybe the most important diabetes drug ever developed,” is an injectable treatment for diabetes called exenatide once-weekly. Alkermes provided key enabling technology, and stands to collect a 7 percent sales royalty on the drug. But how much cash that generates for Alkermes will depend on marketing decisions made by Eli Lilly and Amylin Pharmaceuticals—if those companies can win FDA approval.

Alkermes has the full commercial rights to a treatment to help people kick alcoholism, naltrexone (Vivitrol), but it has never become a big seller. The company is hoping to re-ignite Wall Street enthusiasm for that drug by proving it works to help people kick addictions to opioid-based narcotics.

Alkermes was put on the defensive by Wall Street on Aug. 26, and it was partly due to a decision by one of its partners. That was when Alkermes disclosed in a regulatory filing that Johnson & Johnson decided to quit developing a once-monthly version of risperidone, which could potentially offer even greater convenience than the existing Risperdal Consta, which patients take twice a month. J&J made the decision to drop the less frequently dosed Alkermes drug after it won FDA approval in July for a different treatment, paliperidone palmitate (Invega Sustenna), that is also dosed once a month. JP Morgan analyst Cory Kasimov, who has an “overweight” rating on Alkermes stock, called J&J’s termination decision”disappointing” …Next Page »

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The big news this week was obviously the A123Systems IPO, but quite a few other New England tech and life sciences firms had deals to report as well.

—Mansfield, MA-based PrimeraDx—a developer of automated lab equipment spun off by Providence, RI-based Sention four years ago—raised $20 million in a Series C financing round. New investor CHL Medical Partners of Stamford, CT, led the round; existing investors Abingworth, Burrill & Company, InterWest Partners, the Invus Group, Malaysian Technology Development Corporation, and MPM Capital participated as well.

—Biogen Idec (NASDAQ: BIIB) of Cambridge, MA, launched a $14.50-per-share tender offer for Facet Biotech (NASDAQ: FACT). The board of the Redwood City, CA-based company rejected Biogen’s $355 million offer earlier this month; the tender offer will expire October 19.

—Cambridge-based online game maker Conduit Labs raised $3 million in new equity financing. The new funds were reportedly from the same investors who put $5.5 million into Conduit in August 2007: Charles River Ventures of Waltham, MA, and Prism VentureWorks of Westwood, MA.

—Waltham, MA-based Inverness Medical Innovations (NYSE: IMA), a diagnostics maker and avid acquirer of other firms, picked up Seattle-based Free & Clear for $100 million in cash, plus up to $30 million more, depending on the Seattle firm’s 2010 revenues.

—Battery maker Boston-Power of Westborough, MA, inked a deal with Dr. Battery, of Vancouver that will put Boston-Power’s long-lasting laptop batteries on the market as …Next Page »

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New England’s diagnostics developers provided more than their fair share of life sciences news this week.

—Rick Jones, CEO of Cambridge, MA-based Ascent Therapeutics, talked with Ryan about his startup’s progress developing new cancer drugs using so-called pepducin technology. Ascent’s lead candidate is emerging in recent tests as a potential rival to Genzyme’s plerixafor (Mozobil), which is used to aid the process of stem-cell transplantation in patients with certain types of blood cancer.

—3PrimiR, a Yale University spinoff based in Westport, CT, raised $2.1 million of a proposed $4 million round of equity financing from unnamed investors, according to an SEC filing. The startup is developing new cancer diagnostics based on research into mutations in a type of molecule called micro RNA.

—Genetic analysis instrument maker Helicos Biosciences (NASDAQ: HLCS) of Cambridge raised $10 million from new and existing investors, after announcing earlier this month that it was running low on cash and exploring “strategic alternatives.” Atlas Ventures, Flagship Ventures, Highland Capital Partners, Versant Ventures, and CEO Ron Lowy contributed to the financing.

—A private family investment firm poured $30 million into Seaside Therapeutics, a Cambridge-based startup aiming to translate research from the lab of MIT neuroscientist Mark Bear into treatments that address the underlying neurological causes of Fragile X syndrome and autism. Founded in 2005, Seaside has never needed venture capital, according to CEO Randy Carpenter, having raised a total of $66 million from the family, the National Institutes of Health, and disease foundations like Autism Speaks and the Fragile X Research Foundation.

—New Haven, CT-based Optherion collected $5 million of a planned $9.5 million convertible notes and warrants offering, according to an SEC filing. The startup is developing a treatment for age-related macular degeneration as well as other drugs and diagnostics for eye and kidney diseases.

—Mansfield, MA-based PrimeraDx raised $20 million in a Series C financing round led by new investor CHL Medical Partners and joined by existing investors Abingworth, Burrill & Company, InterWest Partners, the Invus Group, Malaysian Technology Development Corporation, and MPM Capital. A spinoff of Providence, RI-based Sention, PrimeraDx is developing technology it says can speed up a host of medical tests.

—Having been turned down by the board of Redwood City, CA-based Facet Biotech (NASDAQ: FACT), Cambridge-based Biogen Idec (NASDAQ: BIIB) went straight to the California firm’s shareholders, commencing a $14.50-per-share tender offer for Facet. The offer, which expires October 19, could be worth $355 million in total.

—Diagnostics behemoth Inverness Medical Innovations (NYSE: IMA) of Waltham, MA, acquired Seattle-based Free & Clear for $100 million in cash, plus up to $30 million in potential follow-on payments, depending on the Seattle firm’s 2010 revenues.

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The Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) today began a $14.50-per-share tender offer for Redwood City, CA-based Facet Biotech (NASDAQ: FACT). Biogen initially proposed to acquire the California company, its partner in developing a new antibody drug for multiple sclerosis, on September 4, but Facet’s board rejected the deal, which is worth about $355 million in total, on September 8. Under the terms of the tender offer, Facet shareholders will have until October 19 to decide for themselves if they think Biogen’s offer is a good one.

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Biogen Idec and Elan’s fast-growing multiple sclerosis drug, natalizumab (Tysabri), has been connected to 13 cases of a potentially fatal brain infection, according to an FDA notice reported on today by Bloomberg News.

Cases of progressive multifocal encephalopathy, or PML for short, have been adding up since the drug was re-introduced to the U.S. market in July 2006 after it was withdrawn because of the risk. Despite the chance of infection, which the FDA pegged at about 1 in 1,000, patients have continued to seek out the treatment, which physicians say is the most effective therapy on the market for multiple sclerosis. More than 40,000 people worldwide were taking the drug at the end of March, according to Cambridge, MA-based Biogen (NASDAQ: BIIB).

Behind the scenes, researchers have intensified efforts to find out what it is about natalizumab that might be making people vulnerable to this particularly dangerous brain infection, and how to treat it. One Harvard Medical School neurologist, Igor Koralnik, presented research last week at at a European medical meeting that suggested patients’ immune system T cells didn’t work as well against the virus linked to PML when they were on the MS treatment, according to a separate Bloomberg report. Biogen said the results weren’t definitive.

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The buyout of Sepracor was probably the biggest piece of New England life sciences news this past week, but it certainly wasn’t the only one.

—Cambridge, MA-based Quanterix named David Okrongly its new CEO. Founding CEO Nicholas Naclerio will continue to server as chairman of the company, which is developing single-molecule analysis tools for diagnosing cancer and other diseases. Quanterix has its roots in the Tufts University chemistry lab of David Walt, the co-founder of Illumina (NASDAQ: ILMN).

—An FDA panel recommended that the agency approve romidepsin, a drug developed by Cambridge-based Gloucester Pharmaceuticals, as a treatment for a rare form of lymphoma. The agency has until November 12 to decide whether to clear the drug.

—Ryan had a fascinating chat with Richard Gliklich, CEO of Outcome Sciences, about his Cambridge-based firm’s efforts to track the real-world safety and effectiveness of drugs and other medical technologies. Gliklich also talked about how the company, a Harvard spinoff, is benefitting from the focus on such data spurred by the stimulus package pushed by President Obama.

—Thermo Fisher Scientific (NYSE: TMO) of Waltham, MA, acquired German diagnostics maker B.R.A.H.M.S. for €330 million (US $470 million).

—Marlborough, MA-based drugmaker Sepracor (NASDAQ:SEPR) said yes to a $2.6 billion buyout offer from Japanese drug firm Dainippon Sumitomo Pharma; the deal is slated to proceed via a tender offer to begin no later than September 15.

—Ryan profiled Cambridge-based Daktari Diagnostics, which just scored $2.8 million in Series A financing to support the development of cheap, portable technology for performing blood tests for HIV patients. The technology, based on work from Massachusetts General Hospital and Purdue University, could dramatically improve the treatment of HIV in places like remote African villages where standard lab techniques are impractical.

—A federal judge ruled that Irish drugmaker Elan breached its multiple sclerosis drug agreement with Cambridge-based Biogen Idec (NASDAQ: BIIB) by proposing a deal with Johnson & Johnson that would have given J&J an option to acquire Biogen’s stake in the drug, natalizumab (Tysabri), if some other company acquires Biogen.

—In other Biogen news, Redwood City, CA-based Facet Biotech (NASDAQ: FACT), rejected the Massachusetts firm’s $355 million hostile takeover bid.

—Bedford, MA-based Spire sold off its dialysis catheter business to Bard Access Systems for $15 million. Following the sale’s completion, Spire will focus exclusively on photovoltaics manufacturing.

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There were some striking highs and lows in Seattle biotech this week.

—Seattle-based Targeted Genetics (NASDAQ: TGEN), the stalwart of gene therapy, needed a lifeline if it was going to survive any longer, and it got one at the last minute this week from Cambridge, MA-based biotech giant Genzyme (NASDAQ: GENZ). Targeted is handing over some intellectual property on gene therapy manufacturing for $7 million—enough to keep the doors open through 2010.

—Many biotechs have been known to overhype groundbreaking new therapies, but this week the SEC charged one Seattle-area company with crossing the line into investor fraud. The SEC leveled the charges against Bothell, WA-based CellCyte Genetics, and its former executives.

—The guys who created the Sonicare toothbrush have another hit on their hands with the Clarisonic. This is a $195 device that uses sonic wave technology as a new way of skin cleansing. Clarisonic, led by entrepreneur David Giuliani, topped $40 million in sales last year, has grown to 150 employees, and is turning consistent annual profits, he says.

—Seattle-based Theraclone Sciences and its collaborators made international headlines with the discovery of two antibodies with broad ability to neutralize HIV. This groundbreaking work helped Theraclone pick up some precious funding for its research from the International AIDS Vaccine Initiative.

—Seattle-based Trubion Pharmaceuticals (NASDAQ: TRBN) struck a deal last month with Redwood City, CA-based Facet Biotech (NASDAQ: FACT). But one of the world’s biggest biotech companies, Cambridge, MA-based Biogen Idec, which was looking to take over Facet, said in a statement it didn’t like the new deal with Trubion. Biogen is now mounting a hostile takeover bid for Facet.

—Seattle Genetics (NASDAQ: SGEN), the Bothell, WA-based developer of antibody drugs for cancer, said this week it achieved a milestone with Bayer Schering Pharma AG, one of the companies that has bought a license to its technology for linking antibodies to toxins that can make them more potent.

—Complete Genomics, the Mountain View, CA-based company that has a goal of sequencing entire human genomes for $5,000, said it has completed 14 full genomes for customers since March. Kirkland, WA-based OVP Venture Partners is one of the founding investors in this company.

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Facet Biotech (NASDAQ: FACT), the Redwood City, CA-based biotech company, said today that its board has rejected Biogen Idec’s hostile takeover offer of $14.50 a share, or about $355 million. The two companies are partners in developing daclizumab, an antibody for multiple sclerosis. Facet says Biogen is seeking to buy full rights to the drug after it passed a key hurdle in development which increased its value. Investors are wagering that Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have to raise its bid to buy Facet, as they drove shares up to more than $16 today.

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