This week’s deal news covered a breadth of sectors: biotech, medical devices, mobile applications, software, and robotics. Not to mention a major venture capital fund raise.

—Waltham, MA-based drugmaker Avila Therapeutics was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million, with as much as another $575 million available in milestones. Avila is a maker of “covalent” drugs that are designed to shut down the activity of disease-causing proteins for a prolonged period of time.

—Verastem, a young Cambridge, MA-based biotech working on drugs targeting cancer stem cells, completed its initial public offering, led by UBS and Leerink Swann. The IPO (5.5 million shares sold at $10 apiece) represented a strong showing among investors, as Verastem originally indicated it planned to sell 4.5 million shares priced between $9 and $11 each. The underwriters have a 30-day option to buy another 825,000 shares.

—Burlington, MA-based ConforMIS, a maker of knee implant systems, raised $89 million in a Series E funding from private equity investors and government investment funds abroad. The company said it will put the money toward sales, manufacturing, and expansion of its technology.

—Co3 Systems, a maker of data loss management software, received new funding from Fairhaven Capital. The Cambridge, MA-based startup said it will put the money (whose sum was undisclosed) toward sales, marketing, and engineering.

—Malborough, MA-based medical device startup Navilyst Medical will be acquired by Albany, NY-based AngioDynamics (NASDAQ: ANGO) in a transaction valued at $372 million, based on the company’s $14.20 per share closing stock price Monday. Navilyst, which focuses on … Next Page »

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Kirkland, WA-based Cardiac Dimensions, after 10 years of developing a new device to tighten up leaky heart valves in heart failure patients, is now ready to roll with its first product approved for sale in Europe.

Cardiac Dimensions said today it has been granted permission by European Union regulators to start selling its Carillon Mitral Contour System as a way of treating a common type of congestive heart failure. The company plans to start marketing the product on its own, with its own sales force, in 2012, says CEO Rick Stewart. Insurance reimbursement work is underway with payers in those countries, and Cardiac Dimensions initially has its sights on selling the product in Germany, France, the Netherlands and Belgium, he says.

The company’s device is made to treat a form of congestive heart failure, known as mitral valve regurgitation, in which the heart is no longer able to vigorously pump blood throughout the body. The reason is that the mitral valve loosens up, meaning that when the heart pumps blood out, some of the blood backflows into the heart. Cardiac Dimensions aims to tighten up the valve, and prevent the backflow, by using a catheter to insert a super-flexible alloy wire around the valve to cinch it up tight again. An estimated 3.2 million people in the U.S. have loose mitral valves contributing to their heart failure, although Stewart didn’t provide numbers on the incidence in the EU.

Cardiac Dimensions won EU approval on the basis of trials that involved about 100 patients, Stewart says.

“These things [regulatory approvals] are harder and harder to get these days. The bar for [European clearance] has gone up quite a bit from the standpoint of the amount of patient experience you need to have,” Stewart says.

The EU approval offers a glimmer of hope for returns for Cardiac Dimensions’ investors, who have had to wait a long time. Stewart declined to say how much has been invested in the company, but I reported here two years ago that since 2001, Cardiac Dimensions had raised more than $60 million from a venture syndicate that includes MPM Capital, Polaris Venture Partners, Frazier Healthcare Ventures, and Johnson & Johnson Development Corporation. Cardiac Dimensions pulled in another $6.4 million last November out of a round potentially worth as much as $15 million, according to a filing with the Securities & Exchange Commission.

The company originally won EU approval for an earlier iteration of its device in 2009, but hasn’t commercialized that version because it wanted to develop an improved version to make it easier and more convenient for doctors to use, Stewart says. The company hasn’t yet set the price for its new device, but it plans to compete with a product from Abbott Laboratories, originally developed by Evalve, that now sells for 20,000 Euros, Stewart says.

Because of the large size of the market, with so many … Next Page »

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We saw an interesting mix of financings, collaborations, and research news from New England’s drug and medical device developers this week.

—HealthCare Ventures put $15 million in Series A funding into Cambridge, MA-based Tensha Therapeutics, a startup developing small-molecule drugs designed to treat cancer and other diseases by regulating the expression of disease-associated genes.

—Boston’s Brigham and Women’s Hospital said it will use technology from Cambridge-based GNS Healthcare (part of Via Science) to help manage the cost of treating congestive heart failure patients. GNS Healthcare will apply its computer simulation models to predict the likelihood that the hospital patients will experience adverse drug events or readmission.

—Henri Termeer, who was CEO of Cambridge-based Genzyme before its acquisition by Sanofi-Aventis, donated $10 million to Massachusetts General Hospital to establish the new Henri and Belinda Termeer Center for Targeted Therapies. It will focus on developing more personalized cancer drugs, initially for certain genetic forms of breast cancer, lung cancer, and leukemias.

—Natick, MA-based Boston Scientific (NASDAQ: BSX) revealed that it will be bringing in Michael Mahoney as president starting next month and as CEO in November 2012. Current CEO Ray Elliott announced in May that he’d be stepping down; soon-to-be interim CEO Hank Kucheman will have the job until Mahoney, formerly worldwide chairman of Johnson & Johnson’s medical device and diagnostics group, takes the chief executive role.

—GI Dynamics, a Lexington, MA-based medical device developer, went public on the Australian stock exchange to raise the $80 million it needed to get through the next three years, wrote Xconomy New York editor Arlene Weintraub. The company is looking to get regulatory approval for its device to be used as a treatment for obesity and type 2 diabetes.

—NABsys, a Providence, RI-based maker of gene-sequencing tools, took in a $10 million Series C investment from Stata Venture Partners. The Needham, MA-based firm, founded by semiconductor pioneer Ray Stata, also led NABsys’ $7 million Series B funding round. The startup said it will use the new financing for development and commercialization of its solid-state electronic systems for single-molecule DNA sequencing and analysis.  The company is similar to Ion Torrent, a new unit of Carlsbad, CA-based Life Sciences that’s using semiconductor technology in its gene-sequencing machine.

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Plenty of New England startups across IT and biotech sectors inked investments from area venture capitalists this week.

—Interactions, a speech and customer service technology developer of Franklin, MA, nabbed $12 million in a deal led by Sigma Partners. Interactions said it will use the money—which also comes from North Hill Ventures, Cross Atlantic Capital Partners, and Updata Partners—to support its customer base, expand its market presence, and invest in new technology.

—Natick, MA-based medical device developer Boston Scientific (NASDAQ:BSX) revealed its plans to repurchase about $1 billion in common stock. The announcement came alongside other details from its Q2 earnings report.

—Stealthy Nashua, NH-based networking startup Plexxi pulled in $20 million in a Series B round, led by Lightspeed Venture Partners. Existing backers Matrix Partners and North Bridge Venture Partners also put money into the round, which brings Plexxi’s funding total to $28 million.

—Boston-based online data backup firm Carbonite indicated in an SEC filing that it plans to raise as much as $122.2 million in an initial public offering, up from the $100 million it first estimated in May. The company expects to sell 6.25 million shares, plus 937,500 additional shares for underwriters (as an option), at $15 to $17 per share.

—Pathogenetix, a Woburn, MA-based firm developing biodefense and diagnostic technologies, snapped up $4 million of a potential $9.5 million equity round, according to an SEC filing.

—Beacon Endoscopic of Newton, MA, inked a $5 million Series B financing from Boston- and London-based MVM Life Science Partners. The medical device startup also said it took in new money from existing angel investors.

—Newton-based Ambient, which makes technology for utilities to run smart grid applications, is expected to start trading on the Nasdaq today under the symbol “AMBT.” It previously traded on the OTC Bulletin Board.

—Knome, a Cambridge, MA-based personal genomics company, pinned down $5 million of a targeted $20 million equity offering.

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We saw several headlines surrounding clinical development by New England-area drugmakers this week.

—Weston, MA-based Biogen Idec (NASDAQ: BIIB) said that it nabbed a conditional approval from the European Commission to market a long-acting version of fampridine (Fampyra) to adult patients with multiple sclerosis who have walking disability. The agency has also asked Biogen to commission a study exploring the benefits, beyond improved walking speed, of the therapy—which Biogen said it had planned to do post-marketing.

—Xconomy East Coast biotechnology editor Arlene Weintraub wrote about how Watertown, MA-based EnVivo Pharmaceuticals is charging ahead with development of its Alzheimers drug—despite negative data reported by Eli Lilly in a drug trial of its own similar compound. EnVivo began Phase 1 testing on June 1 of its compound, EVP-0962, which reduced brain inflammation caused by Alzheimer’s, reversed behavioral defects, and appeared to have a better safety profile than gamma secretase inhibitors (which the Lilly drug is), during animal trials.

—Also perserverent, Cerulean Pharmaceuticals of Cambridge, MA, is pushing ahead with its nanotechnology for drug delivery. The company began a trial this month of its cancer nanoparticle drug and is also continuing development of its technology for the field of RNA interference—which has struggled to realize its potential in the form of successful drugs.

—Natick, MA-based Boston Scientific (NASDAQ: BSX) announced second-quarter sales of nearly $2 billion and earnings of $.17 per share—beating Wall Street predictions by about a dime. The medical devices firm also announced plans to repurchase $1 billion of its common shares and (the day before its earnings announcement) revealed that it will be investing $150 million over five years in a manufacturing facility in China and will be upping its employee head count in the country.

—San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) and Waltham, MA-based Alkermes (NASDAQ: ALKS) resubmitted their application for the FDA’s approval to market their drug exenatide once-weekly (Bydureon) as a new treatment for diabetes in the U.S. The FDA, which had previously asked the two biotechs to submit data indicating the drug doesn’t have an effect on abnormal heart rhythms known as the QT interval, will have about six months to review the application.

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Today Natick, MA-based Boston Scientific (NYSE: BSX) announced second-quarter sales of $1.975 billion and earnings excluding special items of $0.17 a share, which beat analyst expectations by nearly a dime. Sales of its neuromodulation devices were up 16 percent, and the company reported sales increases in many of its product lines. It also said the recent introduction of its new drug-eluting stent, Ion, has gone well. To cap it all off, Boston Scientific announced its intention to repurchase $1 billion of its common shares—a classic sign of optimism, and a common tactic companies use to boost their stock price.

But much of the focus on the earnings call with analysts was on news the company announced yesterday: It’s greatly expanding its presence in China. Boston Scientific said it would invest $150 million in China over the next five years, and it expects to expand its employee base there from 200 to 1,200 as it builds out a fully staffed manufacturing presence. The company also intends to invest in R&D, with the goal of developing innovative devices designed for the China healthcare system.

Boston Scientific’s outgoing CEO Ray Elliott said during the call that the China expansion would help bring the company’s products into a market that’s still largely untapped when it comes to less-invasive cardiac devices such as stents. What’s more, Elliott said, “Longer term, the products we develop in China may ultimately reach other markets.”

During the question-and-answer session with analysts, Morgan Stanley analyst David Lewis asked what the return on investment might be with the China program, and how the initiative differed from previous emerging-market strategies the company had initiated. “It’s additive,” responded Boston Scientific chief financial officer Jeffrey Capello. “We enjoy over 20 percent growth in India and China, and we see it as a situation in which we’re just getting started.” He noted that the buildout would take four to five years, but that investors could start seeing an upside from the initiative as early as next year.

In the shorter term, Boston Scientific expects to capitalize on a surprise announcement from stent rival Johnson & Johnson. On June 16, J&J (NYSE: JNJ) announced it would exit the stent business that it’s credited for creating, and it will stop marketing its flagship drug-coated Cypher stent by the end of the year in the face of declining sales. “It’s a rare opportunity, and frankly a rare gift,” Elliott said during today’s analyst call. Some analysts predict Boston Scientific will grab … Next Page »

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Natick, MA-based medical device firm Boston Scientific (NASDAQ: BSX) announced today that it will invest $150 million over five years to establish a manufacturing facility in China. Boston Scientific said that it will use the site as a medical device training facility, and that it will also invest in R&D activites in China and increase its employee base in the country from 200 to 1,200. The company said it expects these moves to push its revenues in China to more than $500 million at the end of 2016.

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When the Institute of Medicine (IOM) released its report on chronic pain late last month, medical device makers cheered.

“A landmark report,” a Boston Scientific press release gushed.

“Chronic pain is a major public health issue, and we applaud Congress [and] the IOM…for their thoughtful recommendations,” Medtronic senior vice president Tom Tefft said in a statement.

Mandated by President Obama’s healthcare reform law, the IOM report laid out ways for the country to improve research and treatment of chronic pain, a condition that affects 116 million Americans.

So why such a big deal to medical device companies?

First, let’s start with the obvious. Pain management, through neuromodulation devices that shoot electricity into the nervous system, has become big business for medical device industry, especially its Big Three: Boston Scientific, Medtronic, and St. Jude Medical. Any high profile report that highlights a potential market of 100 million-plus patients is a good thing for those companies, especially as sales in core devices like pacemakers and implantable cardioverter defibrillators (ICDs) slows considerably.

Take Boston Scientific, based in Natick, MA. Neuromodulation was one of the few bright spots for the company in an otherwise dismal fiscal 2010. Sales of neuromodulation devices, including Precision Plus spinal cord stimulation (SCS) therapy, rose seven percent to $304 million from 2009 while cardiac rhythm management sales (pacemakers and ICDs) dropped 10 percent to $2.1 billion.

Medtronic, headquartered in Fridley, MN, has high hopes for its RestoreSensor SCS device, set to launch in the United States the first quarter of fiscal 2012. The company estimates a potential worldwide market of $1 billion for the device, which can adjust the amount of electricity it shoots into the spine depending on the patient’s position (walking, standing, lying down).

And earlier this week, St. Jude Medical, based in Little Canada, MN, said the Food and Drug Administration approved a limited release of its Epiducer lead (wire) system for SCS therapy. The system allows doctors to insert multiple leads into patient through one entry point.

But the IOM report is noteworthy for two other reasons.

First, the report declares chronic pain to be a “significant public health problem.” While this may seem fairly … Next Page »

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Our roundup of San Diego’s biotech news is short, but we had some important developments over the past week. Your update begins now.

— Westport, CT-based Advanced BioHealing, which makes Dermagraft bio-engineered skin patches in San Diego, agreed to a $750 million buyout offer from Shire (NASDAQ: SHPGY), the Irish pharmaceutical drug maker. The deal was announced the day before Advanced BioHealing was scheduled to go public through an initial public offering.

—San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN) filed suit in federal court in San Diego against Eli Lilly (NYSE: LLY), claiming that Lilly violated the companies’ 2002 agreement covering the marketing of the diabetes drug exenatide (Byetta). Amylin filed the suit a few months after Lilly formed a new partnership with Boehringer Ingelheim to market a rival diabetes drug. Lilly says it remains committed to its Amylin partnership and will vigorously defend itself against the lawsuit.

—Xconomy New York editor Arlene Weintraub talked with Pacira Pharmaceuticals (NASDAQ: PCRX) CEO Dave Stack about the turnaround at the company, which is based in Parsippany, NJ, with manufacturing and R&D operations in San Diego. Stack, an MPM Capital partner, hopes to emulate the success he had at The Medicines Company at Pacira with a long-acting version of the painkiller bupivacaine (Exparel), although he says this has been his most-difficult job, ever. Pacira is the latest reincarnation of DepoTech, a San Diego company that developed a controlled-release drug-delivery technology called DepoFoam.

—Xconomy national med tech editor Tom Lee reported on the changing global market for implantable cardio-defibrillators (ICDs). He found the pacemakers have matured into a commodity market, where price/volume players like Germany’s Biotronik and Italy’s Sorin Group, are challenging traditional players like Medtronic, Boston Scientific, and St. Jude Medical.

—Carlsbad, CA-based AutoGenomics withdrew its nearly three-year-old IPO filing. The company says it might now raise capital through a private stock placement.

—Luke’s BioBeat column featured a talk with Stelios Papadopoulos, the longtime life sciences investment banker, who explained that investor expectations for life sciences deals have been tempered through years of experience. “We have a pretty good idea of what can happen, in terms of how much money it takes, how long it takes, what the FDA process is about,” Papadopoulos says. “It’s a pretty difficult proposition. There was a time in the early ’90s, people believed every year there would be one or two new Genentechs. They were looking for it. Now we realize the next Genentech occurs maybe once every 10 years, not once a year. People have come to accept that.”

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It’s pretty tough to be a CEO at a major medical device company these days. Just ask Bill Hawkins, who was reportedly pushed out at Medtronic and Ray Elliott, who abruptly left Boston Scientific.

I’m not sure if the two men ever knew each other but their departures have a weird type of symmetry. Both served relatively brief stints as CEO—less than five years for Hawkins, who was recently replaced by former General Electric Healthcare head Omar Ishkar; less than three years for Elliott, who will step down at the end of the year.

Both men presided over tremendous change at their companies—reorganizing business units, cutting employees, spending millions of dollars on acquisitions. Yet judging from Medtronic and Boston Scientific’s stock prices during their tenure, neither man received much credit for his efforts.

Why? The medical device industry—long dominated by cardiac rhythm management devices that regulate the heart’s electric impulses— has changed dramatically since the days Medtronic founder Earl Bakken developed a battery-powered pacemaker in its garage more than fifty years ago.

Gone are the days when the latest implantable cardioverter defibrillator (ICD) or surgical catheter would significantly boost sales figures and stock prices. Over the past several years, medical device makers have failed to introduce technologies that have significantly moved the needle, analysts say. Today, the maturing global ICD market is driven less by innovation or even incremental technological change than by price and customer relationships, according to recent research reports from Morgan Stanley and Citigroup.

In other words, pacemakers and ICDs have become commodity businesses, where price/volume players like Biotronik, based in Germany, and Sorin Group, based in Italy, are challenging the dominance of the traditional leaders ICDs—Medtronic, based in Fridely, MN; Boston Scientific, headquartered in Natick, MA; and St. Jude Medical, based in Little Canada, MN.

Matthew Dodd, an analyst with Citigroup suggests that better cardiovascular care is making such devices increasingly irrelevant—at least until Baby Boomers get a bit older.

“With heart attacks falling, it makes sense that ICDs—both secondary and primary prevention—are now being impacted,” Dodd wrote. “While both markets are likely to be experiencing a temporary ‘reset’ as demographics will eventually overpower the reduction via better care, the near term prospects for the ICD market don’t look very good.”

That doesn’t bode too well for either Medtronic or Boston Scientific, where cardiac rhythm management products … Next Page »

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Boston Scientific picked Ray Elliott as the change agent less than two years ago to help turn things around for the medical device giant, and now Elliott is on his way out.

The Natick, MA-based company (NYSE: BSX) said today that Elliott, 61, informed the board of directors on May 4 that he plans to resign from his post at the end of December. The board has formed a search committee to look for a new CEO, and Elliott will be part of the search for his replacement, the company said.

Investors balked at the sudden turn of events, sending Boston Scientific shares down almost 10 percent, to $7 a share, at 2:51 pm Eastern, following the mid-day announcement. Elliott, who made a lot of investors money in this previous job at Warsaw, IN-based Zimmer Holdings (NYSE: ZMH), acknowledged in today’s statement that he’s saying goodbye before the turnaround job is complete.

While Boston Scientific pointed to a number of accomplishments in its press release today—things like improving the R&D pipeline, streamlining operations, paying down debt, and cultivating future management talent—investors will surely frown on the Elliott era. Sales declined almost 5 percent last year, compared with 2009. The stock was 30 percent higher—at $10 a share on June 25, 2009—on the day Elliott was named the new CEO.

“We believe we have accomplished a lot during my time here: a strengthened senior leadership team, a clear and executable strategic plan we call ‘POWER,’ a basis for success in Emerging Markets, a solidified balance sheet due to debt paydown and refinancing and much more,” Elliott said in a statement. “And while the company continues to evolve, we expect that much of the turnaround work will be complete by the end of the year. We believe we are well positioned for future growth. Therefore, I believe the time is right for someone new to take the reins, complete execution of that plan and take Boston Scientific to the next level and new heights.”

Elliott went on in his statement to offer a little more than the usual corporate boilerplate. Just reading between the lines—I’ve never interviewed Elliott personally, so this is pure conjecture—the tone sounds to my ear a little bit like burnout from someone who’s too young to really “retire” from business.

“It has been, and continues to be, an honor to lead Boston Scientific, but after nearly 40 years in healthcare, the last 33 of those in general management and as a company president, it’s time for me to permanently pass the baton to a long-term CEO,” Elliott said in the statement. “Finding the right time to leave is difficult. Leaving too soon or staying too long can both be problematic. However, this decision is mine and mine alone. I am grateful to have received tremendous Board and employee support as CEO, often during challenging times.”

Bloomberg captured some of the negative reaction on Wall Street in one of its first reports. “Ray Elliott, the tough guy of the industry, after a lot of bluster and bravado, seems to be throwing in the towel,” Phillip Nalbone, an analyst at Wedbush Securities in San Francisco, told the business news service. “It’s a big blow to people who have been pinning hopes for a turnaround at Boston Scientific on Elliott and his team.” Over at Forbes, Matt Herper’s post is headlined: “Boston Scientific Turnaround Expert Quits Before the Turnaround.” This story is clearly to be continued.

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We saw news of personnel shifts, litigation, clinical progress, financing, and acquisitions from health IT firms, device makers, and drug companies in New England this week.

—Waltham, MA-based Forerun, a developer of patient-charting software for emergency room doctors, raised $2 million in a Series C funding led by the Massachusetts Technology Development Corporation.

—GlaxoSmithKline (NSYE: GSK) announced Boston-based biotech entrepreneur and investor Christoph Westphal will leave his position at SR One, Glaxo’s venture arm. Westphal will focus on other businesses, including Longwood Founders Fund, the relatively new VC fund he founded with Rich Aldrich and Michelle Dipp, who will also leave her position at Glaxo. Both Dipp and Westphal came to Glaxo through the drug firm’s $720 million acquisition of Sirtris Pharmaceuticals in 2008, and both have agreed to stay in their positions until successors are lined up.

—Natick, MA-medical devices maker Boston Scientific (NASDAQ: BSX) paid $5.13 million upfront for acquiring Israel-based S.I. Therapies in November, the Israeli business news website Globes reported. Boston Scientific could pay a total of $24.3 million if S.I., a maker of catheter devices for treating artery blockages, hits certain milestones.

—Cubist Pharmaceuticals (NASDAQ: CBST) of Lexington, MA, announced it had settled patent litigation with Teva Pharmaceutical, surrounding the antibiotic daptomycin (Cubicin), Cubist’s only marketed drug. Teva will drop its claims that two patents on the drug were unenforceable, and in exchange, will get to market a generic version of Cubicin as early as December 24, 2017 under a licensing deal with Cubist, who will also be Teva’s supplier of the product for the U.S. market.

—Cambridge, MA-based RNA interference drug developer Alnylam Pharmaceuticals (NASDAQ: ALNY) said it filed a legal response and counterclaim against Canadian firm Tekmira Pharmaceuticals, which last month accused Alnylam of misappropriating trade secrets.

—My colleague Ryan wrote about the progress that a trio of Boston-area firms are making in developing their products. T2 Biosystems of Lexington said its magnetic biosensor diagnostic approach was able to identify five species of Candida infections from whole blood samples in less than two hours, much faster than the two days taken in existing approaches. Waltham-based On-Qi-ity said its developmental chip for diagnosing cancer was about twice as efficient as a clinically available chip in capturing tumor cells. Cambridge-based gene sequencing startup GnuBIO said it supplied the Montreal Heart Institute and the Broad Institute of MIT and Harvard with its first sequencing data and that it had raised an $8 million Series A round from angel investors in November.

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Natick, MA-based medical devices firm Boston Scientific (NASDAQ: BSX) paid $5.13 million in cash last November to acquire Israel-based S.I. Therapies, according to a report in the Israel business publication Globes. The Natick firm could pay a total of $24.3 million for S.I., a developer of a re-entry cardiac catheter, if certain milestones are reached. The deal was first announced by Boston Scientific in February, alongside its announcement of the acquisition of Sunnyvale, CA-based ReVascular Therapeutics, which is also developing a device to treat artery blockages.

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San Diego’s life sciences community took two steps forward last week, as two new startups stepped into the light with new medical device technologies, and then one step back with the closure of another company founded in 2000. We have all the latest moves for you, plus a lot more.

—San Diego’s Topera Medical, which has maintained a low profile since it was launched three years ago, established a Lexington, MA-headquarters to commercialize technology developed by UC San Diego cardiologist Sanjiv Narayan. Topera, which hired former Boston Scientific executive Edward Kerslake as CEO, has technology designed to map the heart’s abnormal electrical currents, which occur with irregular heartbeats like atrial fibrillation.

—San Diego-based OncoSec, which was created March 1 through a reverse merger with a dormant public company, says it has licensed drug delivery technology from Innovio Pharmaceuticals to improve the efficacy of certain anti-cancer drugs. Inovio’s electroporation technology uses brief pulses of electricity to temporarily increase the permeability of cell walls, making it easier for OncoSec’s conventional chemotherapy drugs to penetrate cancerous tumors.

—San Diego’s Novalar Pharmaceuticals sold its only product, an FDA-approved drug for reversing the numbing effects of dental anesthesia, and will shut down in coming weeks. The French dental medication company Septodont acquired … Next Page »

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Here’s an interesting development involving figures in the medical devices scenes of Boston and San Diego. Topera Medical, a secretive startup launched in 2008 in San Diego, has established a new headquarters in the Boston area to develop a catheter system for rapidly identifying the source of irregular heart rhythms in each patient. The Lexington, MA-based firm, which was founded to commercialize the inventions of physician Sanjiv Narayan at the University of California, San Diego, has also hired former Boston Scientific executive Edward Kerslake to be its CEO.

Kerslake, who used to evaluate emerging technologies as a corporate vice president at Natick, MA-based Boston Scientific (NYSE:BSX), says that he joined Topera as its chief executive in December 2010. The company has raised a small, undisclosed amount of Series A financing recently from a group of individual investors that includes veteran medical technology executives. Plans are to expand the round later this year with additional investments.

Topera has been operating with a low profile for most of its existence and only recently put up a website. Work on the firm’s technology has until now been conducted at UCSD, where chief scientific officer Narayan is an associate professor of medicine, and at the VA San Diego, where he is director of the electrophysiology. (Narayan, whose diverse training includes a master’s degree in software engineering, was a clinical fellow at Harvard Medical School and a faculty tutor for the Harvard-MIT Health Sciences Technology program.) Ruchir Sehra, a medtech consultant who serves as the chief medical officer of the Carlsbad, CA-based medical devices firm PhotoThera, is also a co-founder of Topera.

Topera’s executives are keeping many of the details about the firm’s technology under wraps until the large Heart Rhythm Society annual meeting in San Francisco in May, when the firm plans to release details about the clinical use of its system for identifying patient-specific sources of irregular heart rhythms. Yet people with knowledge of the technology provided me with some general information about it.

Using catheters inserted in the heart, Topera detects electrical signals from the heart. Its software analyzes the signals to provide physicians with a two-dimensional electrophysiological map of the heart. The aim is to show how electricity is flowing in the heart, providing a way to view the abnormal electrical flows that can sustain arrhythmias such as atrial flutter and atrial fibrillation.

Atrial fibrillation, the most common of the arrhythmias, affects about 2.7 million Americans and is a cause of stroke and heart failure. Treatments for the complex disease include drugs to thin the blood and control heart rhythms as well as surgery for cases in which the drugs aren’t effective. But many such procedures, which involve using catheter-based tools to ablate the heart tissue involved in the disease, end in failure. Part of the challenge is knowing which tissues to target.

Existing systems have been able to give physicians three-dimensional maps of the heart to aid in the treatment of irregular heart rhythms. The large providers of such technologies include St. Jude Medical (NYSE:STJ) and Biosense Webster, a Johnson & Johnson (NYSE:JNJ) company. And Burlington, MA-based startup Rhythmia Medical has been working to improve the speed and resolution of 3D heart-mapping tools.

Hopefully, Topera will have some interesting data come May that will shed more light on its technology and its ability to aid in the treatment of arrhythmias.

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Boston Scientific (NYSE:BSX) has been talking the talk of late. But its walk the past few years can be best described as a limp.

There’s no mistaking the company’s new-found bravado as CEO Ray Elliott, who succeeded Jim Tobin in 2009, attempts to infuse the company with some of the energy that made his previous tenure at Zimmer Holdings so effective.

During Boston Scientific’s investor meeting in November, its first in years, the Natick, MA-based company played Van Halen’s “Right Now” and Jesus Jones’ “Right Here, Right Now” over the loudspeakers.

At JP Morgan’s annual healthcare conference in January, Boston Scientific titled its presentation “Our Pipeline is no BS(X).”

Boston Scientific has made aggressive predictions about future profit growth and acquired several companies over the past few months, including Sadra Medical, Atritech, and Asthmatx.

But judging from the company’s fiscal 2010 earnings, released late Monday afternoon, Boston Scientific has a long way to go before it proves to anyone it’s a rock star. Annual sales fell five percent to $7.8 billion from $8.2 billion in 2009. The company’s core cardiac rhythm management and cardiovascular businesses dropped 10 and eight percent respectively.

The good news is that Boston Scientific posted top line growth in endoscopy, women’s health, and neuromodulation. But those businesses combined account for not quite a quarter of the company’s annual revenue.

But that’s the past. In Boston Scientific’s eyes, the future is extraordinarily bright. At the investor meeting, the company told analysts it can generate 11 to 12 percent compound annual earnings growth over the next four years, through a combination of … Next Page »

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We saw some meaty stories on FDA drug approval processes, new collaborations, acquisitions, and hires for Boston’s life sciences firms.

—Pfizer’s former chief of licensing Ed Harrigan started a new gig as CEO of stealthy Boston biotech Karuna Pharmaceuticals, a PureTech Ventures-incubated startup that is quietly working on schizophrenia drugs.

—Vertex Pharmaceuticals (NASDAQ: VRTX) of Cambridge, MA, announced that the FDA granted its request for a speedier review of its drug telaprevir as a new treatment for hepatitis C. The agency, which will take six months to review the drug instead of the usual 10, often grants such requests when a potentially groundbreaking or lifesaving drug is involved.

—Last week an advisory panel to the FDA suggested the agency not approve liprotamase, a pancreatic enzyme replacement therapy that Eli Lilly (NYSE: LLY) took on when it acquired Cambridge-based Alnara Pharmaceuticals last summer. This week Ryan took a look at the potential impact of that decision, with perspective from a Needham, MA-based mother of two children with cystic fibrosis, a genetic disease that typically requires patients to take enzyme replacement therapies like liprotamase. The drug is intended to produce pancreatic enzymes that patients with cystic fibrosis and other diseases lack.

—Boston Scientific, a Natick, MA-based medical devices firm, announced it had bought Atritech, which makes a device alternative to treating patients with atrial fibrillation who are at risk of stroke. Boston Scientific (NYSE: BSX) will shell out $100 million upfront for the Plymouth, MN-based firm, and as much as another $275 million in regulatory and commercial milestone fees through 2015.

—I took a look at Boston-based Sproxil, which won IBM’s SmartCamp competition last summer for its mobile product authentication technology for detecting counterfeit medicine abroad. The startup has nabbed awards at other business plan competitions and has enlisted some big-name pharmaceutical companies as customers for its service in Nigeria. Consumers can use the service to verify whether a medication they’re about to buy is the real thing.

—Cambridge-based Ironwood Pharmaceuticals (NASDAQ: IRWD) announced a new drug discovery collaboration with Redwood City, CA-based Protagonist Therapeutics. The California company will use its proprietary technology for developing peptide drugs against biological targets picked by Ironwood.

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The United States has been the undisputed leader in medical device innovation for the past 50 years. But there are some out there who insist that title is in jeopardy.

It would certainly take a breathtaking free fall, if you look at the standings today. The U.S. is where most of the R&D gets done, and the most money gets made, on workhorse tools of modern medicine like diagnostic ultrasound, stents that prop open clogged coronary arteries, or clever new insulin pumps for diabetes. A whopping 32 of the 46 medical technology companies with $1 billion or more in annual sales are based here in the U.S., according to a new report this week from PwC. Many new medical devices are regional economic drivers in the geographies we cover—Boston, San Francisco, Seattle, San Diego, and Michigan.

Yet if you talk to medical device entrepreneurs in the U.S. today, they are frustrated. They tell horror stories about dealing with an FDA that’s constantly moving the goalposts around before granting product approvals, and about insurers driving ever-tougher bargains. They seethe in private—and sometimes in public—about a new 10-year tax increase on medical device companies (originally proposed at $40 billion, later reduced to $20 billion) that was incorporated into the new healthcare reform law. Venture capitalists are doing the math and wondering whether to steer clear.

Josh Makower, a prominent med device entrepreneur with ExploraMed and a consulting professor at Stanford University School of Medicine (and Xconomist), said in the PwC report that there are so many costs and regulatory hassles that he now looks outside the U.S. first to do clinical trials, because high quality clinical trials can be done overseas cheaper and faster.

While the U.S. is still the undisputed leader, the foundation for much of its med-tech strength is weakening, according to PwC. The firm’s report, written by a team led by former med device entrepreneur Chris Wasden, sought to put together a five-point list of essential ingredients for med-tech innovation, and then grade the U.S. on it against other countries over the past five years. The idea was that med device entrepreneurs and investors needed to stop passing along anecdotal stories, and start coming up with some convincing data to support their arguments, if they want to really persuade lawmakers, insurers, and citizens to provide more support for med-tech innovation.

Chris Wasden

“When we’d talk to regulators, policy people, they’d hear our anecdotes, but many of them were not impressed,” Wasden says.

The PwC formula factors in how much insurers in the country are willing to pay for med-tech innovation; the underlying strength of academic research; the regulatory approval process for new products; demand from patients for the best possible healthcare; and the base of support from venture capital. When PwC crunched the numbers and created a scorecard ranking countries from 1 to 9, with 9 being the best, the U.S. was head and shoulders above everyone else. The U.S. had a 7.4 score in 2005, which dipped to 7.1 over the next five years. Germany was second, seeing its score drop from 5.6 in 2005 to 5.4 last year—a decline that was similarly seen with other major European countries.

China, Brazil, and India all saw gains in that same five-year period, but they still aren’t even within hailing distance of the top—which you can see in the PwC bar charts if you click here on the Innovation Scorecard report go to page 5.

Still, there are reasons to worry that the U.S. leadership will continue to erode … Next Page »

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Natick, MA-based medical devices maker Boston Scientific has expanded its cardiovascular products business with the purchase of Atritech, a Plymouth, MN, developer of a device alternative to treating patients with atrial fibrillation who are at risk of stroke, the company says today. Boston Scientific (NYSE:BSX) is paying $100 million upfront for Atritech as up to $275 million in regulatory and commercial milestone fees through 2015, according to Boston Scientific. Atritech’s device is cleared for sale in Europe and but is still in development for the U.S. market.

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Dealmaking activity in New England’s tech and life sciences sectors continued at a blizzardy pace this week. Hold on to your hat…

—Marlborough, MA-based biofuels developer Qteros raised $22 million from new and existing investors in the first tranche of a Series C financing.

—IT services provider MindShift Technologies of Waltham, MA, acquired Alpheon, a Morrisville, NC-based IT firm focusing on healthcare clients.

—Somerville, MA-based XL Hybrids, which converts commercial vehicles into hybrids, took in $2 million from undisclosed investors and forged an alliance with U.K.-based retrofit kin maker Ashwoods Automotive.

—Boston Scientific (NYSE:BSX), the Natick, MA-based medical devices giant, acquired Boston-based Intelect Medical, a developer of deep brain stimulation technology, for about $60 million in cash.

—Waltham-based On-Q-ity inked a deal with Laboratory Corporation of America (NYSE:LH) to commercialize On-Q-ity’s technology for detecting tumor cells circulating in the blood.

—Civitas, a Chelsea, MA-based spinout of Alkermes (NASDAQ:ALKS) focusing on inhaled drug-delivery technology, raised $20 million in a Series A round led by Longitude Capital and Canaan Partners.

—Cambridge-based Epizyme, a developer of drugs based on the emerging science of epigenetics, partnered with pharmaceutical giant GlaxoSmithKline in a deal worth $20 million upfront and up to $630 million more in milestones fees.

—Barre, VT-based Wind Power Holdings, the parent company of wind turbine developer Northern Power Systems, raised $12.7 million in equity-based funding from 33 investors, according to an SEC filing.

—Boston-based educational software maker Jenzabar acquired the assets of Allurent, the e-commerce firm reported to be defunct last month, and will invest a “seven-figure sum” in Allurent over the next 12 months, according to Jenzabar CEO Robert Maginn.

—Antibiotic developer Rib-X Pharmaceuticals of New Haven, CT, raised $20 million in a financing round led by Warburg Pincus.

—A number of other startups scored venture dollars as well: Concord, MA-based KnowledgeVision Systems ($2 million from GrandBanks Capital and others); Cambridge, MA-based Labtiva ($2 million); Newton, MA-based Life Image ($12M from Cardinal Partners and Galen Partners); Waltham, MA-based EyeGate Pharmaceuticals ($5.9 million); Acton, MA-based Neuroptix ($4.6 million); Waltham-based DynaTrace Software ($4 million); Southbury, CT-based Doctors Research Group ($7.7 million); and Cambridge-based Dekkun ($9.9 million).

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