Ironwood Pharmaceuticals is gearing up for the possibility of an IPO. The Cambridge, MA-based developer of a new treatment for bowel disorders like for irritable bowel syndrome and chronic constipation said it may raise as much as $172.5 million from investors through the deal, according to a prospectus filed late today.

The proposed offering would be underwritten by JP Morgan Securities, Morgan Stanley, Credit Suisse, Bank of America/Merrill Lynch, and Wedbush PacGrow Life Sciences. The prospectus doesn’t list how many shares it hopes to sell, or what the price range will be. Its proposed ticker is (NASDAQ: IRWD).

The proposed IPO filing doesn’t come as a surprise—we raised this question to the company last month when it added Genentech’s former chief financial officer, David Ebersman, to its board of directors. Ironwood has certainly put itself in a position to go public. Earlier this month, it passed the first two of four pivotal clinical trials, demonstrating that its drug is an effective new treatment for chronic constipation. The company has racked up a deficit of $290 million since its founding in 1998, yet it had $98.9 million left in the bank at the end of September according to today’s filing, so it’s not in urgent need of cash. Its lead drug candidate, linaclotide, treats chronic constipation that affects an estimated 26 million Americans, there are few available therapies for it, and the Ironwood drug has a way of working that’s unlike anything on the market. The U.S. healthcare system spends an estimated $25 billion on treating irritable bowel syndrome.

“We believe that linaclotide could present patients and healthcare practitioners with a unique therapy for a major medical need not yet met by existing therapies,” the company wrote in its prospectus.

Ironwood has no products currently on the market, but it has secured partnerships with three organizations to help commercialize linaclotide around the world. They are Forest Laboratories in the U.S., Laboratorios Almirall in Europe, and Astellas Pharma in certain Asian countries. The company has 167 employees.

Who stands to make the most money if Ironwood can complete an IPO? Ridgeback Capital Investments has the biggest stake in the company at 13.4 percent prior to the offering, followed by Venrock Associates with 11.3 percent, Polaris Venture Partners at 8.1 percent, and Morgan Stanley with 6.9 percent. Ironwood’s founding CEO, 46-year-old Peter Hecht, has a 5.5 percent stake, while Fidelity Biosciences has a 4.8 percent holding.

Ironwood still has a way to go before it can start generating cash flow from its first product. Results are expected from the additional two clinical trials of linaclotide in the second half of 2010, and the company will need time after that to submit its application to U.S. and European regulators and wait for them to complete their reviews.

If Ironwood can pull off this IPO, plenty of other biotech companies will to it as a bellwether to rekindle investors’ appetites for speculative biotech companies developing new products. Last month, Seattle-based Omeros (NASDAQ: OMER) completed the first IPO of a traditional U.S. biotech in the development stage since February 2008. While the company raised $62 million, it was a flop for investors. Omeros stock is down 25 percent from its IPO price of $10.

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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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Seattle-based Dendreon (NASDAQ: DNDN), the developer of what it hopes will be the first FDA-approved treatment to actively stimulate the immune system against cancer, said today the U.S. regulatory agency has received its amended application and set a deadline of May 1, 2010 to complete its review. The company is seeking clearance to start selling sipuleucel-T (Provenge) for men with prostate cancer that’s no longer controlled by standard chemical castration therapies. The application includes data from a 512-patient study which showed the drug could extend lives by a median of four months when compared with a placebo.

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Dealmakers appear to be getting their business done before the week of Thanksgiving—because we’ve seen a decent stream of deal closings involving Boston-area life sciences and tech companies over the past week or so.

—Framingham, MA-based Punchbowl Software, which operates the party planning website MyPunchbowl.com, said it acquired technology assets of a group vacation website called I’m In. Punchbowl founder and CEO Matt Douglas provided details on why the transaction made sense for his startup.

—After months of operating quietly, seed-stage venture fund Founder Collective officially debuted last week. Eric Paley, a managing partner and co-founder of the firm, told us why he and other software entrepreneurs came together to form the new venture outfit, which has offices in Cambridge, MA and New York City. Here’s a hint: They were a bit frustrated with the status quo in the venture industry.

—Fate Therapeutics, the San Diego-based biotech startup focused on developing techniques that make stem cell research practical for the pharmaceutical industry, reeled in $30 million in a Series B round of venture financing. Kirkland, WA-based OVP Venture Partners led the new round of investment in Fate, which was founded by top academics at Harvard University, Stanford University, The Scripps Research Institute, and the University of Washington.

—ImmunoGen (NASDAQ:IMGN), a Waltham, MA-based biotech firm, reported this week that the firm sold a second license to its technology—which is for linking targeted antibodies to cell-killing molecules—to industry giant Amgen (NASDAQ:AMGN) for $1 million upfront, plus potential milestone payments.

—Corindus, a Natick, MA-based startup developing a robotic system for implanting vascular stents, collected $5.3 million of a planned $10 million in venture dollars, according to a filing with the Securities and Exchange Commission.

—Cambridge -based Ligon Discovery found $1 million in a seed round of financing from incTANK Ventures, with plans to validate its small molecule microarray system for drug discovery that was developed at Harvard. The company was founded by folks from Harvard Medical School and the Broad Institute of MIT and Harvard.

—We spotted Angus Davis, a co-founder of Microsoft’s voice-based Internet search subsidiary Tellme Networks, at Polaris Venture Partners’ Dogpatch Labs recently and wondered what he was up to. It looks like he’s been working on a new Providence, RI-based startup called Swipely, which quietly swept up a cool $1 million from First Round Capital.

—Jealous? Highland Capital Partners, the Lexington, MA-based venture powerhouse, closed its eighth fund, worth a whopping …Next Page »

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We hope to make this a regular feature in our Xconomy cities. It’s a look at small financings of private companies in tech, life sciences, and cleantech. These are deals in the roughly $100,000 to $1 million range, and they’re increasingly where the action is for local entrepreneurs, yet they’re often harder to track than the bigger deals we tend to report on.

And there were at least 12 of these smaller financings in the Northwest in October (see table below), according to ChubbyBrain, a New York-based information services company tracking VC, angel, and other investments in private companies. ChubbyBrain gets its data from regulatory filings, user submissions, and other sources, and this is the second monthly installment of “under the radar” deals in the Seattle area (you can see the previous deals for September here). The data didn’t include the investors or the stage of financing.

A few quick observations: Like the previous month, most of the financings were in Washington (7 out of 12), but a significant number (5) were in Oregon. Most were equity deals (7), with the rest (5) being debt financings. The majority of financings (9) were in software, Internet, or tech, while a much smaller number (3) were in life sciences and healthcare, and no cleantech or energy deals made the list.

If nothing else, these lists are a cool way to hear about emerging startups we otherwise wouldn’t know about. For example, I’ve heard of Teranode, Nearlyweds, and 1000Museums before, but Zapproved and Intellisist are completely new to me.

Here are the 12 “under the radar” deals from last month:

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Seattle-based Omeros expects to apply for FDA clearance to start selling its first product by the second half of next year, and it also hoping to strike at least one partnership over the next couple of years with a bigger drugmaker, CEO Greg Demopulos said today in his first quarterly update running a public company.

Omeros (NASDAQ: OMER) is “on track” to finish enrollment next year of more than 1,000 patients in clinical trials of its lead anti-inflammatory drug candidate that’s supposed to help patients recover faster from arthroscopic knee surgery, Demopulos said on a conference call with analysts. Results from those pivotal studies should be available by the middle of 2010, and if the results are good, the company will ship off an application to the FDA to start marketing the product before the end of 2010, he said.

The clinical trial update was an important point for Omeros to make in the first week it has been legally allowed to make public statements since the 15-year-old company completed its initial public offering on October 7. Omeros raised about $62 million through the transaction, but its shares lost more than a third of their value in the first two weeks, earning it the dubious distinction of having the worst performing IPO of the year. Omeros has rebounded a bit since then, although its shares are still down 23 percent. Now the company is setting up expectations of events in the year ahead—like an FDA filing or a big corporate alliance—which could entice more investors to lift its stock out of the doldrums.

If the clinical trials go well, “we’ll have the first commercially available drug delivered directly to the surgical site to improve recovery” of knee surgery patients, Demopulos said.

The treatment, called OMS103HP, combines a couple of generic anti-inflammatory drugs into an injection designed to reduce post-operative swelling and speed up recovery time, Demopulos said. The clinical trials aren’t designed to see if the Omeros drug can wean patients off opioid-based pain relievers that circulate throughout the bloodstream, but it’s possible that could be one of the benefits, Demopulos said in response to a question from analyst Mark Monane of Needham & Company. Omeros is also looking at health economic analyses that might help justify the drug’s expense by showing how it speeds up recovery time, reducing rehab costs, and allows people to get back to work sooner than they otherwise would, Demopulos said.

While investors are certainly interested in the knee surgery drug candidate, Omeros has made plain that it isn’t putting all its eggs in that basket.

One key piece of the strategy is based on scientific work that it hopes will enable the company to hit a whole new class of targets on cells that have long been considered “undruggable.” This is the group …Next Page »

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Waltham, MA-based ImmunoGen (NASDAQ: IMGN) said today that Amgen has purchased a second license to develop a treatment that uses ImmunoGen’s technology for linking targeted antibodies to cell-killing agents that make them more potent. ImmunoGen will get $1 million upfront and could receive $34 million worth of milestone payments over time if Amgen is successful in developing a drug against an undisclosed target on cancer cells. Amgen bought its first such license to the ImmunoGen technology in September.

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As startups developing next-generation biofuels emerge in San Diego, Boston, and elsewhere, a business model for rapidly expanding to commercial-scale operations already can be found in the biotech industry, experts said yesterday. The premise of presentations organized by Biocom, San Diego’s life sciences industry group, is that collaborations being formed between biofuel startups and big energy are comparable to the partnerships formed between biotech startups and big pharmaceutical companies.

Biofuels development partnerships will be crucial to meeting renewable fuel standards that the federal government set in the Energy Independence and Security Act of 2007. Wain Fishburn, a founding partner of the Cooley Godward law firm’s San Diego office, said the standards require the U.S. biofuels industry to increase its production fourfold—from 9 billion gallons in 2008 to 36 billion gallons in 2022. Fishburn, who introduced the speakers at the Biocom event, said the ability to meet the federal goal depends on a variety of factors, including the ability to lower the cost of biofuels to be competitive with petroleum-based crude, and the scalability of feedstock, production facilities, distribution, and related infrastructure.

But what it really comes down to, as Verenium (NASDAQ: VRNM) executive William Baum told the audience, is capital.

Baum, who became Cambridge, MA-based Verenium’s executive vice president of business development in 2007 (following the 2006 merger of San Diego’s Diversa and Cambridge’s Celunol) said the need for capital was the theme he heard “over and over again” during a recent meeting that focused on the biofuels industry. “We’ve got hundreds of biofuel companies that are trying to get to the next stage. If you don’t have a big brother with deep pockets, like a BP, Exxon, Shell, or a Chevron, it’s going to be very difficult.”

A number of partnerships already have been established between biofuels startups and major energy conglomerates, Fishburn noted. He listed the following collaborations:

—BP, the London-based global energy conglomerate, has formed two strategic partnerships with Verenium, which has been developing technology to produce cellulosic ethanol using proprietary microbes to accelerate the breakdown of non-edible, high-cellulose plant material into ethanol. Baum described the first collaboration, announced in August 2008, as a technology joint venture for IP. (BP agreed to put up $90 million to develop “low-cost, environmentally sound cellulosic ethanol production facilities in the United States.”) Through a second deal announced nine months ago, BP agreed to provide an additional $45 million and to form a …Next Page »

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San Diego-based Ligand Pharmaceuticals (NASDAQ: LGND) said today it has received $2 million in milestone payments as part of research collaboration with Merck that is due to expire next month. The partnership started with Organon, which was later acquired by Schering-Plough, which was then acquired by Merck.

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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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Drug development programs got extended at two San Diego life sciences companies, while others had some good news on the fund-raising front. We wrap it all up for you here.

—Fate Therapeutics, a startup working to supply “industrialized” stem cells for the pharmaceutical industry without using embryos, said it raised $30 million in venture capital. That brings the total amount raised by the San Diego-based company to about $50 million since its inception two years ago.

—Cadence Pharmaceuticals (NASDAQ: CADX) said the FDA has delayed its review of the San Diego company’s intravenous pain reliever by three months, to Feb. 12. Cadence provided additional data to the FDA after an advisory panel raised concerns about liver damage from excessive doses of acetaminophen. But Cadence said it remains confident it will win FDA approval of its drug, which contains acetaminophen.

—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS) and its Big Pharma partner, Genzyme (NASDAQ: GENZ), have extended the timeline for their much-anticipated cholesterol-lowering drug by nearly a year. The companies reported encouraging results from a clinical trial, but noted that four out of 34 patients saw their liver enzymes increase to three times normal, a sign of potential liver damage. The companies plan to tinker with the dose of the injectible drug in future trials.

—San Diego-based NextImage Medical, a developer of a Web-based system for scheduling and managing diagnostic imaging services, reporting raising $5 million in a venture round led by Chrysalis Ventures of Louisville, KY.

—San Diego-based Altair Therapeutics, a company developing inhalable drugs to block inflammatory proteins involved in asthma and other respiratory diseases, has closed on the second part of a Series A venture financing, bringing the total amount raises this year to $17 million.

—San Diego-based Cyntellect, which makes work stations used by biotechs for cell analysis, purification, and processing, raised $15.5 million so far in a secondary round that aims to raise a total of $18.6 million, according to a recent regulatory filing.

—GenVault, a Carlsbad, CA-based company that markets dry-storage technologies that allow scientists to store biological samples at room temperature, said it expects to break even by the end of next year. The startup has raised about $32 million so far.

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Three years have gone by since the region’s top biotech company was taken over by Eli Lilly, so it seemed like a good time to find out where all that talent migrated around the Northwest.

—Icos was once the great hope for Seattle biotech, but now three years have passed since the Bothell, WA-based company agreed to be sold to Eli Lilly for $2.3 billion. I wanted to find out where most of that scientific and business talent went in the wake of the mass layoffs that ensued, so I found a few Icosahedrons (as I’m told some of them like to be called) to help me put together a fascinating list of 270 alumni who have moved on to new opportunities.

—Seattle-based Trubion Pharmaceuticals (NASDAQ: TRBN) said this week that its co-founder and CEO, Peter Thompson, has resigned. He’ll be replaced on a temporary basis by Arch Venture Partners’ Steve Gillis while the company searches for a permanent replacement. I also recapped some of Trubion’s latest tribulations, to give a sense of what Thompson is leaving to his successor.

—Kirkland, WA-based OVP Venture Partners wanted a bigger piece of the original action in San Diego-based Fate Therapeutics, and now it grabbed some of that by leading a $30 million Series B venture round in the stem cell company. Carl Weissman, an OVP managing director and the CEO of Accelerator, will take a seat on Fate’s board as part of the deal.

—Seattle-based Oncothyreon (NASDAQ: ONTY) said it has decided to advance one of its experimental cancer drugs, PX-866, into mid-stage clinical trials next year. This is another sign of the company’s improving financial health, and its shift from cancer vaccines to cancer drugs, which I described in an in-depth feature earlier this year.

—Seattle-based NanoString Technologies earned a golden word of mouth endorsement this week from the Broad Institute of MIT and Harvard, which agreed to buy a couple of NanoString’s gene-expression tools to use them for a three-year research collaboration. Broad director Eric Lander, one of the big names in biology, said NanoString has “exciting” technology.

—People who work in Seattle’s global health cluster love to tell anecdotes about how certain projects can make a difference in people’s lives, but there hasn’t been as much effort to really catalog all the projects going on here and where they extend around the world. That was the goal of the Washington Global Health Alliance, a nonprofit led by Lisa Cohen, who wrote about it in this guest editorial. You can read more about the alliance in a profile I did of Cohen and her fledgling association in January.

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The threat of global infectious disease was already a significant humanitarian concern when Ken Stuart set up his independent research lab in 1976. Now known as Seattle Biomedical Research Institute, Stuart’s lab directed the research spotlight on tropical diseases, such as malaria, at a time when few others had shown interest.

Fast-forward more than 30 years later: the Seattle region and Washington State have become known throughout the world as a nexus of global health innovation and entrepreneurship.

Original efforts decades ago by SBRI, PATH and the University of Washington have been joined by Fred Hutchinson Cancer Research Center, the Institute for Systems Biology, the Infectious Disease Research Institute, Seattle Children’s Research Institute and its Global Alliance for the Prevention of Prematurity and Stillbirth program, Battelle/Pacific Northwest National Laboratories, Washington State University and, most significantly, the Bill and Melinda Gates Foundation. These groups together now form a regionally based, yet powerful, alliance in the interest of global health. And as a result of their collaboration, this state has become the symbol of the United States’ compassion and goodwill to millions of people whose lives have been improved or saved.

This is not a statement we make lightly. It takes more than personal anecdotes of success to paint an accurate picture. So, we have created a map—a preliminary but precise accounting for the broad and deep impact that our state’s health research organizations have on global disease.

Researchers and health care workers in Washington state directly run 480 health projects in 92 countries, according to a study commissioned by the Washington Global Health Alliance, which examined nine of the state’s global health institutions.

These organizations are responsible for, among others, 183 different projects focusing on emerging and epidemic diseases and 105 vaccine and immunization programs. They work with 593 unique partners, including 44 foreign government entities, 60 corporate partners and 245 hospitals and universities.

To catalyze more effective and successful collaborations, researchers will leverage this study data to increase efficiencies and create new opportunities in their work. Businesses and philanthropists can see the direct impact of their investments and partnerships. Policymakers can use this information to demonstrate the strength of our state’s global health sector in the face of increasing competition. We will make the case for more federal funding and recruiting new global health researchers and organizations to the state, boosting our economy in the process.

This study measured data from all the organizations mentioned above with the exception of the Gates Foundation, which funds projects, but does not implement programs. Not included in those figures are the significant education and training programs spearheaded by our universities and community colleges, other state research organizations and humanitarian and relief organizations, such as World Vision or Mercy Corps. We expect to broaden the scope in future studies mapping global health efforts.

All told, it is clear the magnitude of Washington State’s impact on infectious disease and suffering is significant and exceptional. Ultimately, we hope this study leads to even greater progress toward our common vision-improving health for people regardless of where they may live. You can see the more detailed survey results at www.wghalliance.org.

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Another day, another piece of bad news from Genzyme. The Cambridge, MA-based biotech giant (NASDAQ: GENZ) said today it is scrapping development of a next-generation drug for kidney disease after it was unable to beat its existing treatment on the market.

Genzyme’s experimental drug, called an advanced phosphate binder, didn’t appear any better at getting rid of excess phosphorus from the blood of kidney dialysis patients than Genzyme’s sevelamer carbonate (Renvela) in a clinical trial of 349 patients, the company said in a statement. Genzyme had been hoping that the new drug would be more potent.

Those following the Genzyme story know about what’s become a brutal year. Some of the big setbacks were the viral contamination at its Allston, MA factory in June that created shortages of its top-selling products, the failure to win FDA approval of large-scale manufacturing for a Pompe drug, and the rejection of a leukemia drug for elderly patients.

But this kidney drug failure is another serious body blow. The company generates $850 million a year in sales from its two phosphate binder treatments. Patents that protect that franchise from competition from cheaper generics will expire in September 2014, according to Christopher Raymond, an analyst with market research firm Robert W. Baird. The next-generation kidney drug was supposed to help the company extend the patent life of its kidney drug market, Raymond said.

The failure is “a very significant negative in our view,” Raymond said in a note to clients today. He added that he had been starting to warm up to the company, as it has been inching closer to resolving the Allston manufacturing problems, but he called today’s halting of the kidney program a “game-changer.” Raymond has a $54 price target for the stock.

Shares of Genzyme dropped 1.3 percent to $49.65 at 9:39 am Eastern time today after the news was announced. The stock has dropped 25 percent this year.

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GenVault wants to bring biological samples in from the cold. For decades, the biological samples used to diagnose or study disease have been stored in freezers, which use a lot of electricity. GenVault markets dry-storage technologies that allow scientists to store samples—such as DNA from a blood test—at room temperature.

GenVault CEO David Wellis argues the company’s technologies free up lab space and are better for the environment. He says that one of GenVault’s desktop storage units can hold as many samples as an average-size lab freezer, which has the same carbon footprint as five automobiles. Freezers have another major drawback: a single power failure can destroy years of work.

Wellis says the time is right for his company. The use of genomic analysis for disease diagnosis, scientific research, and forensic criminal investigations is exploding, thanks in part to technical advances that enable the swift decoding of genes. All these genetic tests start with biological samples, such as blood, urine, or spit. The RAND Corp. recently estimated that more than 307 million tissue specimens are stored in the United States, with more than 20 million specimens added each year. That means more and more freezers are taking up lab space, and running up electricity bills.

GenVault, which is based about 26 miles north of San Diego, in Carlsbad, CA, estimates that sample transport and storage represents a $4.5 billion business opportunity. It is also an area in which innovation has been lacking. “All the technical development has occurred in sequencing and informatics,” says Wellis. “The management of samples has seen no innovation. It is a gaping hole.”

GenVault got started in late 2001 to fill that perceived hole. The venture-backed company has raised more than $32 million to date, and has numerous customers, including the national Centers for Disease Control and Prevention, Genome Québec, and Amgen. The company expects to soon announce a new diagnostic lab customer that expects to store 750,000 samples using GenVault’s technology. Wellis says GenVault, which has 40 employees, could breakeven by the end of next year.

The company markets two products. One is a chemically treated paper that preserves bits of whole samples, such as blood or spit; the other a salt-like mineral matrix that preserves purified DNA. Here is how GenVault says …Next Page »

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NanoString Technologies, the maker of a machine that lets scientists digitally analyze how genes are turned on or off in a tissue sample, just won a glowing endorsement from one of the biggest names in biology—Eric Lander of the Broad Institute of MIT and Harvard.

The Seattle-based company has nailed down a three-year research collaboration with the Cambridge, MA-based Broad Institute to look at how networks of hundreds of genes work in concert to form immune defenses against foreign invaders. Financial terms aren’t being disclosed, but NanoString has sold the Broad a couple discounted nCounter machines that normally retail at $235,000 apiece, and will provide proprietary reagent chemicals to operate them, according to acting CEO Wayne Burns. In return, NanoString gets certain intellectual property rights from the collaboration, advice on how to improve its tool, and some golden word of mouth.

NanoString, a private company founded in 2004 with technology from the Institute for Systems Biology in Seattle, has been building stronger ties to the Broad over the past year as people there have started using one of the first commercially available machines, Burns says. The mounting enthusiasm at the institute was instrumental in helping NanoString nail down a $30 million venture capital round in June. The round was led by Clarus Ventures, which has an office just a couple blocks from the Broad. Word has spread to the point that 15 researchers at the Broad are now involved in 20 separate collaborations to see whether the NanoString technology can yield biological insights that couldn’t realistically be attained with competing instruments, Burns says.

“NanoString offers the ability to look at hundreds of genetic markers across many samples at relatively low cost and with high sensitivity. They have developed exciting technology with potential applications to a wide range of scientific problems,” said Lander, the director of the Broad Institute, in a NanoString statement. “We look forward to working together to explore new ways of using of this technology.”

That kind of endorsement is sure to carry weight in the biomedical research community, and can’t hurt a fledging company trying to increase sales. “If you’re in the industry you know exactly who Eric Lander is, the reputation he has, as well as that of the Broad. We have the best of the best endorsing our technology,” Burns says.

For those who are new to the NanoString story, the idea is to allow researchers to look at a large number of genes, with digital precision, to see the extent to which they are turned on or off in a given sample. It’s the sort of technology that’s supposed to help researchers do …Next Page »

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[Update: 12:30 pm Pacific, 11/20/09] Icos was once the great hope for Seattle biotech. Founded in 1990 with an investment from Bill Gates, it went on over the next 15 years to create a $1 billion molecule for treating erectile dysfunction, and employed about 700 people nationwide at its peak. For a while, it looked like it would carry the torch as the only big, independent, profitable biotech company with growth potential and staying power in the Seattle area.

That hope was dashed about three years ago, when Icos agreed to be acquired by its partner, Eli Lilly, ultimately for about $2.3 billion. Many readers will remember the controversy over this deal, which I covered with intensity through the fall of 2006 for The Seattle Times. Employees who had worked together for years and built a great camaraderie were deeply upset with CEO Paul Clark, who enriched himself with a $23 million golden parachute through the transaction while kicking most of them to the unemployment line. Shareholders objected to what they saw as a sweetheart deal for management, and ultimately forced Lilly to raise its bid before they handed over their shares.

Even Icos’s founding CEO and legendary leader, George Rathmann, who was not in good health at the time, objected to what had become of the company he created. It had essentially squandered an entire pipeline of drug candidates in the wake of its hit with tadalafil (Cialis), leaving no real opportunity for an encore, and no real strategic alternatives other than getting bought by Lilly.

About 550 people were employed locally at Icos at the time the Lilly acquisition closed in January 2007, and about 350 high-paying local jobs were cut. All that was left was a contract biotech drug manufacturing facility, which Lilly didn’t want, and sold to CMC, a Danish company that continues to operate at the old Icos facility in Bothell today.

But now that three years have gone by, what happened to all that intellectual capital that came to create exciting new biotech drugs for Icos? This is an important question for the future of Seattle biotech, given how companies that look to start or expand to new locations always consider the caliber of the local workforce as one of the main criteria.

From what I’ve been able to gather by talking to some very helpful former Icosians, I’ve discovered that quite a few of these bright people have stayed in the Seattle region. Some left for new opportunities elsewhere, usually after they couldn’t find suitable work in Seattle. Quite a few more than I expected have gone on to co-found or play critical technical roles in some intriguing startups—including Calistoga Pharmaceuticals, CoCrystal Discovery, Mirina, Theraclone Sciences, and Xori.

What follows here is a list of more than 270 names I’ve been able to gather from people who had made contributions to the science, medical, or business aspects of Icos. Special thanks go out to the following Icos alumni who were hugely helpful in allowing me to piece this list together: David Crowe of Mirina; Pat Gray of Accelerator; Ed Kesicki, Allen Casey, and Stephanie Florio of the Infectious Disease Research Institute; and Albert Yu of Calistoga Pharmaceuticals.

Of course, this list isn’t comprehensive. I’ve done my best to verify everybody’s connection to Icos through their LinkedIn profiles or from other sites—but I haven’t been able to confirm every name referred to me. Some people haven’t kept their profiles up to date on LinkedIn or on other sources. So if you can think of former Icos alumni who I’ve overlooked, or if you see any mistakes, please send us an e-mail at editors@xconomy.com, or to me personally at ltimmerman@xconomy.com. Or feel free to post a comment at the bottom of the story. I figure this is a starting point for what could be a valuable networking resource.

—Lee Adams, research scientist, Institute for Systems Biology

—Janet Adolphson, senior research scientist, AMRI

—Laura Afflerbaugh, research associate, Genentech

—Brian Albarran, senior scientist, Trubion Pharmaceuticals

—Lynn Allen, founder, Allen Clinical Research

—Dan Allison, senior director of therapeutic design, VLST

—Juli Ashburn, senior field force automation administrator, ZymoGenetics

—Eric Austin, senior toxicology consultant, Veritox

—Connie Ave-Teel, manager, lab support, CMC Icos

—Tim Axtelle, vice president of product development, Allozyne

—Susan Aznoff, owner, Petlane Pals

—Lauret Ballsun, owner, LBC Pharmaceutical Professionals

—Cari Barthe, recruiting project manager, NWRPros

—Ted Baughman, senior scientist, chemistry, Saltigo

—Chan Beals, senior director, Merck

—Kelly Bickley, quality control associate scientist, CMC Icos

—Julie Birashk, process development associate, CMC Icos

—Bodil Bjorner, development associate, CMC Icos

—Kyla Bjornson, senior research associate, Gilead Sciences

—Kim Black-Washington, director of marketing and strategic development, Xcelience

—Leonard Blum, senior vice president and chief commercial officer, Theravance …Next Page »

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The big new cholesterol-lowering drug from Genzyme and Isis Pharmaceuticals, which both companies are counting on as a future profit driver, passed its first major clinical trial, but investors didn’t like what they saw when full details were released this morning at a major medical meeting.

Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS) fell 16 percent to $11.17 at 1:30 pm Eastern time after details from the trial of the drug, mipomersen, were released at the American Heart Association’s scientific sessions in Orlando, FL. Cambridge, MA-based Genzyme (NASDAQ: GENZ), which isn’t nearly as dependent on the drug, saw its shares climb 2.6 percent.

Expectations have been running high for this drug for years, with many seeing it as the next big thing for cholesterol after the invention of multi-billion dollar statin drugs such as Pfizer’s atorvastatin (Lipitor). Isis’ very bullish CEO Stanley Crooke told me last month that the drug represents an historic advance. The drug is thought to have promise because it is the first of its class that’s made of specially engineered strands of RNA drugs to block a problematic protein in the body, which often can’t be hit by conventional small-molecule drugs. In this case, mipomersen is engineered to block the production of a protein called apoB that carries the so-called “bad” LDL cholesterol in the bloodstream. The drug is originally being tested among patients with a one-in-a-million genetic condition that causes them to die young from their extremely high cholesterol, although Genzyme and Isis envision this drug becoming more widely used among wider populations of people with extremely high cholesterol that can’t be controlled by existing meds.

“Mipomersen may well be a valuable addition to the therapeutic armamentarium,” said Frederick Raal, the primary investigator of the pivotal study of mipomersen, during a webcast from today’s scientific meeting. Raal is the director of the Carbohydrate and Lipid Metabolism Research Unit at the University of the Witwatersrand in South Africa.

So what was in the data that made Isis investors, at least, skittish? First off, it should be noted that the headline results were released back in May, when Isis and Genzyme said that mipomersen reached its goal of lowering “bad” LDL cholesterol by 25 percent, compared with a 3 percent reduction on placebo, in a study of 51 patients with homozygous familial hypercholesterolemia. This meant that patients had a 100 milligram per deciliter drop in their LDL scores, which significantly lowers their risk of dangerous cardiovascular events like heart disease and stroke, Raal said. Isis and Genzyme added further detail on the effect at today’s meeting, essentially showing that secondary goals, such as lowering total cholesterol and triglycerides, also were achieved among patients on the drug.

But the treatment, which was given in a once-weekly 200 milligram injection, had some side effects worth noting. Four of the 34 patients $12 percent) who were treated with mipomersen had …Next Page »

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Just when I thought venture deals, especially for software and tech companies, had headed south for the winter (or longer), the Northwest erupted with a slew of financings in the past week.

—But first, some serious biotech. Kirkland, WA-based OVP Venture Partners led a $30 million Series B round for Fate Therapeutics, a San Diego-based stem cell company with ties to the University of Washington, as Luke reported. Existing investors Arch Venture Partners, Polaris Venture Partners, and Venrock Associates also participated in the funding, as well as three strategic corporate investors—Astellas Venture Management and Genzyme Ventures were named.

—Seattle-based DocuSign, a maker of software to automate and control the process of electronic signatures, received a strategic investment from Second Century Ventures, the VC fund of the National Association of Realtors. The funding amount was undisclosed, but the money will be used to accelerate and extend DocuSign’s efforts with real estate customers.

—Beaverton, OR-based Avnera pulled in an $8 million equity round from undisclosed investors, according to a regulatory filing. The company’s previous investors include Bessemer Venture Partners, Redpoint Ventures, Jafco Ventures, Intel Capital, and DAG Ventures. Avnera was founded in 2004, and designs novel chips for wireless audio applications.

—Seattle stealth startup Doxo raised $5.25 million in equity financing, according to a regulatory filing and media reports. The investors were not disclosed, but David Feinleib of Mohr Davidow Ventures was listed on the SEC form as a director.

—Bellevue, WA-based Enroute Systems, a developer of software that helps companies manage their parcel-shipping logistics, closed a Series A funding round worth $810,000 from Keiretsu Forum, Zino Society, Puget Sound Venture Club, and angel investors. Next up, Enroute is looking …Next Page »

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[Updated: 5:55 pm Pacific, 11/16/09] Trubion Pharmaceuticals, the Seattle-based company developing new drugs for autoimmune diseases and cancer, said today that its founding CEO, Peter Thompson, has resigned and director Steve Gillis of Arch Venture Partners will step in to fill the void as executive chairman.

Trubion (NASDAQ: TRBN) said today that Thompson is leaving his positions as chairman, CEO and president of the company to “pursue other interests,” and Gillis, a member of the board, has stepped up to serve as acting president and executive chairman of the company while it plans to start a formal search for a new CEO. The company has also shuffled a few other management slots, with Michelle Burris being promoted from chief financial officer to chief operating officer, and John Bencich, the company’s senior director of finance, receiving a promotion to take Burris’s place as CFO.

The company has struggled the past two years, since it underwhelmed investors with results from a 276-patient clinical trial of its lead drug candidate, TRU-015 for rheumatoid arthritis. Back in February, the company cut one-fourth of its workforce in an effort to hold onto its remaining cash. But the company has gotten a little bit of mojo back in recent months. It announced encouraging results from a second drug candidate, TRU-016, for leukemia in June, and parlayed that into a partnership with Redwood City, CA-based Facet Biotech (NASDAQ: FACT) that generated $20 million in upfront cash, and could be worth as much as $176 million over time. The company still has a partnership intact with Pfizer to develop the rheumatoid arthritis drug, which it inherited through its acquisition of Wyeth.

Today’s statement from Trubion didn’t say why Thompson is leaving, or what he plans to do in the future, other than that he’ll be available as a consultant to the company. He was listed as 49 years old when the company issued its latest proxy statement in April. Thompson didn’t respond immediately to a request for comment, but noted in a statement that, the company has two partnerships, and three drugs in clinical trials. “With these foundational strengths, a talented leadership team, and an upcoming year replete with significant milestones from its clinical programs, Trubion is well-positioned to realize its potential,” Thompson said in the statement. “I have great confidence in the continued ability of the Trubion team to execute its strategy.”

While Trubion conducts its search for a new CEO, Burris said the company will continue to work on executing goals within its partnerships with Pfizer and Facet Biotech.

“Peter set the company up very well,” Burris says. “We’re well positioned, and we’ll continue to execute on our programs.”

Trubion went public three years ago on enthusiasm for TRU-015, a product designed by Trubion scientists to have the same targeting capability of Roche and Biogen Idec’s rituximab (Rituxan) against inflammatory cells with a marker called CD20. But because the Trubion drug is a smaller molecule than Rituxan, it should be better at penetrating deep into tissues like bone marrow and lymph nodes, where it can stop overactive immune system B-cells from causing damage. Ed Clark of the University of Washington, an immunologist and scientific adviser to the company, once called these “leaner and meaner” drugs.

Thompson, along with Jeff Ledbetter and Ken Mohler, co-founded Trubion in November 2002, when it was originally called Genecraft. Arch Venture Partners, Frazier Healthcare Ventures, Oxford Bioscience Partners, ATP Capital, and Bill Gates’ Cascade Investment all participated in a $13.6 million financing at that time. Mohler said the founders had “a shared vision of the next great immunology company in Seattle” like Immunex once was.

But Trubion has struggled to gain momentum with investors as a public company. It went public at $13 a share, and closed today at $4.13.

[Update: 5:55 pm Pacific time, 11/16/09.] Trubion disclosed Thompson’s severance package later today in a regulatory filing. He will receive one year of base pay, about $416,000, on the payroll date in January, and a lump-sum payment of about $28,000 for unused vacation time. He agreed to provide one year of consulting services, for no more than 20 hours a week, and will get paid $25,000 per month for the consulting, the company said. Thompson’s unvested stock options will immediately vest, giving him the right to buy 59,820 shares of Trubion stock, according to the document.

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