George Scangos spends much of his time these days in an office about 10 miles from the working class Greek neighborhood in Lynn, MA, where he grew up. You could say he’s come a long way in those 10 miles. The kid who didn’t speak English until he went to elementary school, and who didn’t get serious about biology until his mid-20s, is now leading a comeback at New England’s largest independent biotech company, Biogen Idec (NASDAQ: BIIB).

“I’ve spent a lot of time here. It feels like home, in a lot of ways,” says Scangos, 63, during an interview at his office in Kendall Square in Cambridge, MA. He did add, though, that after spending the previous 17 years at biotech executive posts in the San Francisco Bay Area, he is still re-adjusting to the seasonal changes of New England.

Scangos (pronounced SKANG-goce, with a hard “G” as in “go”), is settling in for at least a few more seasons in New England, as Biogen has mounted a turnaround during his first year as CEO. This was no small feat, given that Scangos was hired to be a change agent at a company that hadn’t introduced any new marketable drugs since 2004. Some decisions were tough to swallow—like cutting 650 jobs, dropping whole lines of R&D, and closing its San Diego research center (originally the home of the Idec part of the company)—but the more focused end result has gotten positive reviews from shareholders. Billionaire investor Carl Icahn, who battled for several years with previous management, has sold his stake in the company to make some big profits. And the company’s stock, after years of lagging biotech peers, has broken out to become one of the S&P 500′s best performers this year.

Biogen Idec certainly experienced some good luck during Scangos’ watch, and he’s quick to admit it, like when clinical trials that had begun long before his tenure showed positive results for a new oral multiple sclerosis drug. But those who work with him closely say his leadership style has also played a role in bringing renewed focus to Biogen.

“George’s leadership style is open, welcoming of input and fair-minded in his decision-making. He has the ability to be your peer and your manager in a simultaneous and seamless fashion,” says Fran Heller, who previously worked for Scangos as head of business development at South San Francisco-based Exelixis (NASDAQ: EXEL). “He is often referred to as the most lovable CEO in our industry, and deservedly so.”

Scangos’s path to the top job of one of Massachusetts’ leading companies began in a lower-middle-class section of Lynn, where his paternal grandparents had immigrated from Greece and had settled down with what became a family of 10 kids. His father was an accountant at what later became Exxon, while his mother stayed at home to care for George and one younger daughter. The family spoke Greek in the home, and young George never learned English until it was time to go off to school. There were about 30 cousins nearby, some of whom still live in Massachusetts, Scangos says.

Scangos moved with his parents to Connecticut when he was in elementary school, and attended public schools there until it was time for college. He was smack in the baby boom generation, among the group that came of age during the social upheaval of the ’60s. He says he didn’t work very hard at academics, other than French class.

“You know how at the back of your high school yearbook where it lists people who were the best at various things?” Scangos says. “I had two of those. One was in typing, which has turned out to probably be the most useful skill I learned in high school. The other was in French. I won the award for the best French student in the state.”

He went on to win scholarships to attend Cornell University. He thought about majoring in French, and only took science classes to fulfill graduation requirements. Even then, he was initially planning to take physics, until a classmate urged him to try biology, because it was easier. “I hated bio in high school, didn’t have a good teacher,” Scangos says. “I had to be talked into it.”

Freshman biology at Cornell, as taught by the professor and textbook author William Keeton, was “unbelievably good,” Scangos says. It was interesting enough for … Next Page »

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Given what investment bankers did to the financial system just a couple years ago, it surprises me how many people still accept what they have to say at face value. But quite a few people in biotech are still lapping up all sorts of short-sighted, destructive advice from the financial powers that be.

The latest bit of wisdom passed down from Wall Street came in a Reuters story this past week. It speculated about 11 publicly traded biotech companies that various investment pros consider to be takeover candidates. These companies have the kind of novel drugs that Big Pharma needs to replenish its empty pipelines. If you’re a shareholder in one of these little companies, this sounds exciting. Just hold onto your shares a little while longer, or buy some now while you can, and wait a couple quarters for a suitor to pay a 30, 40, or 50 percent premium. Instant returns! That will make everybody happy, right?

What stories like this usually fail to mention is who really stands to gain, and who loses, in these deals. Investment bankers, C-level executives, lawyers, accountants, certain consultants—they all pocket big money. Bench scientists, lower-level management, and entire regional economies can get whacked as hundreds or thousands of people lose their jobs.

The so-called winners in these deals often end up with a pyrrhic victory. While the quarterly and annual financial reports of the acquiring company might look good for a while, they often are left with an organization that is too bloated to really do the innovative work of developing new drugs. What happens a year later? These same fee-seeking investment bankers start whispering in the ears of executives, and reporters, about the next crop of biotechs that need to be harvested to fill up Big Pharma’s empty hopper.

Don’t get me wrong, some acquisitions can work out well for everybody involved. This tends to be true with small, private, venture-backed biotech companies that are essentially built to create a single drug, or maybe two, with a small team that can be easily integrated. Recent examples that made sense were Daiichi Sankyo’s purchase of Berkeley, CA-based Plexxikon; Gilead Sciences’s buy of Seattle-based Calistoga Pharmaceuticals; and Amgen’s takeover of Woburn, MA-based Biovex. These were cases of little companies that needed the resources of a bigger enterprise to make the most of their drug candidates. They also were able to provide healthy returns to their venture backers. And because the little company didn’t have many employees, the acquirer had fewer integration headaches and didn’t need to make mass layoffs.

What’s more problematic is when the bankers aren’t satisfied with the puny fees they get from those $500 million to $1 billion acquisitions. So they start beating the drum for multi-billion dollar mega-mergers. These are the kind of deals that can generate monster fees, like the potential takeovers listed in the Reuters report. The target list includes Biogen Idec (NASDAQ: BIIB), Vertex Pharmaceuticals (NASDAQ: VRTX), Dendreon (NASDAQ: DNDN), Seattle Genetics (NASDAQ: SGEN), Exelixis (NASDAQ: EXEL), and Intermune (NASDAQ: ITMN), along with some smaller players.

Most in the financial crowd sees these companies as nothing more than any other liquid security, like a pork belly or a securitized mortgage. They don’t care … Next Page »

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Seattle-based Dendreon (NASDAQ: DNDN) has a passionate base of fans and detractors all over the web, but now it has a new and potentially volatile issue on its hands—an Internet-driven shareholder uprising that aims to shake up the company’s board of directors.

Battles for control of corporate boardrooms that hit the press are usually waged by powerful interests like billionaire Carl Icahn, or prominent activist Ralph Whitworth. But in this case, Brad Loncar, 32, has agitated for change with a Tweet and a posting today on a popular message board, InvestorVillage. Loncar, an individual Dendreon shareholder in Lenexa, KS, went public today with a 65-page, footnoted critique in which he details Dendreon’s managerial “missteps” of the past few years. After reaching out privately to Dendreon chairman Richard Brewer in February, and coming away unsatisfied with the company’s response to his concerns, Loncar went public with his call to add one or two new, independent directors to provide greater oversight on the existing eight-member board.

Within a few hours, hundreds of people had viewed the proposal, and dozens had written directly to the company to say they support it.

While Loncar said the company appears to be following of some of the suggestions, he wrote in a cover letter posted online today that, “it appears that management has otherwise chosen to ignore the proposal rather than work together constructively. That is why I have decided to reach out to other shareholders like you at this time. I am seeking your support in seeing that change is seriously pursued. Dendreon’s board might be able to ignore one shareholder, but hopefully they will more clearly see the importance of these issues if more of us stand together. Therefore, I respectfully ask that you contact Dendreon and let them know you support this proposal to add outside shareholders to the board.” [Editor's Note: The bold emphasis is Loncar's].

Dendreon, for those new to the story, faced intense skepticism throughout much of its history as it sought to develop the world’s first active immunotherapy against cancer, which works by stimulating the immune system to fight cancer cells as if they were viruses. The drug proved in a study of 512 men reported in April 2009 it could help prolong the lives of men with prostate cancer, with minimal side effects. The drug won FDA approval a year later.

Brad Loncar

While scientists and doctors (and more recently, Medicare) debated the merits of clinical trial data to support Dendreon, shareholder debates have raged for years about a number of controversial moves. In his critique, Loncar points to a number of reasons why he thinks greater board oversight of management is necessary:

—Dendreon paid a $16.5 million settlement to resolve a shareholder lawsuit, in which the company was accused of failing to properly disclose material information about its interactions with the FDA when it was seeking clearance of its drug, sipuleucel-T (Provenge), in 2007.

—The company has a history, Loncar asserts, of making forecasts to the investment community that have “often conflicted with reality or changed significantly over time.”

—Many company actions have been unfriendly to shareholders, Loncar says, citing the board’s authorization of dilutive rounds of financing, insider stock sales, and “generous gifts of stock and options to executives.”

—Dendreon management, Loncar says, “seems unprepared to effectively recognize and answer the public relations challenges facing the company that are outside the scientific realm.”

A Dendreon spokeswoman didn’t respond to my request for comment about Loncar’s complaints on Friday afternoon.

After reading Loncar’s cover letter and proposal, I followed up with him by phone to hear directly what he had to say, and find out more about him, and what motivated him to lead such a shareholder uprising.

Loncar isn’t a lawyer trained in the nuances of corporate governance, or someone skilled in waging the legal contests that big guys like Icahn know … Next Page »

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Biogen Idec, after a long search, has found a new scientist to spearhead its R&D group—Doug Williams, the former CEO of Seattle-based ZymoGenetics.

The Weston, MA-based biotech company (NASDAQ: BIIB), the world’s largest maker of multiple sclerosis drugs, also added another heavy hitter from the Boston biotech scene to its management team—Steve Holtzman, the former CEO of Cambridge, MA-based Infinity Pharmaceuticals (NASDAQ: INFI). Williams takes the title of executive vice president of R&D, while Holtzman will be the executive vice president of corporate development. Both will report to Biogen’s relatively new CEO, George Scangos.

Scoring two seasoned executives in key departments represents the latest step in the new direction Biogen has taken since Scangos took the reins last summer. Biogen has been operating without an executive head of R&D since the departure of Cecil Pickett in2009, at a time when billionaire investor Carl Icahn was complaining mightily about the company’s failure to innovate in recent years. Scangos hammered home the point immediately when he took over in July, saying that R&D has to improve. Biogen Idec, a company with $4 billion in annual revenue, hasn’t introduced a new FDA approved product of its own since 2004.

Williams, 52, has a long history as a scientist and biotech industry R&D leader. He was the chief technology officer at Seattle-based Immunex when it developed etanercept (Enbrel), a treatment for rheumatoid arthritis that’s expected to generate $8 billion in worldwide sales by 2014. He went on to senior R&D posts at Seattle Genetics and ZymoGenetics before advancing to the CEO’s role in January 2009. He hit the free agent market last fall after ZymoGenetics agreed to be taken over by Bristol-Myers Squibb for $885 million.

Doug Williams

Holtzman, 56, has an equally long record on the business side of biotech. He was the chief business officer of Cambridge, MA-based Millennium Pharmaceuticals during its go-go genomics days, before he left to be founder and CEO of Infinity Pharmaceuticals, a cancer drug developer. Holtzman handed over day-to-day operating responsibility of Infinity a year ago to new CEO Adelene Perkins.

Essentially, Williams, Holtzman, and Scangos have all grown up together in the biotech industry over the years, even though they never worked together at the same company.

“I am delighted to welcome Doug Williams and Steve Holtzman to Biogen Idec,” Scangos said in a statement. “I have known Doug and Steve for a long time and have great respect for their capabilities, accomplishments and character. Doug has repeatedly demonstrated the ability to build and lead high quality research groups and, importantly, to aggressively focus the science and transform promising research into products. Steve is one of the most thoughtful and creative business people I know and has demonstrated over the years the ability to build great organizations and create innovative collaborative structures that meet the needs of both partners. Steve and Doug represent the completion of what I believe is now an excellent management team.”

Michael Lytton, who had been in charge of Biogen’s business development efforts, will be leaving the company.

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Biogen Idec is returning to its biotech roots, in a way. The Weston, MA-based company (NASDAQ:BIIB) made headlines yesterday for its plans to cut 650 full-time jobs and narrow its research and development focus to emphasize its core expertise in neurology. And a big part of the restructuring plan, the firm’s CEO, George Scangos, says, is to make the biotech company, well, more biotech-like.

Xconomy was early on Biogen’s big news yesterday and also provided details about where the job cuts are being made in Massachusetts and San Diego, where the company plans to completely close its R&D center.

Scangos, who took over as Biogen’s chief executive on July 15, inherited a company that has not brought a new product to market sine 2004 and has been criticized by billionaire investor Carl Icahn and others on Wall Street for an overall lack of research and development productivity. (Those critiques sound an awful lot like the knocks on lumbering big pharmaceutical companies.) So Scangos is taking action, not just to address concerns among investors, but also to remove some of the productivity-hampering bureaucracy from the firm, he says.

“What’s best about small companies is they are fast, they are efficient, and there’s not a lot of bureaucracy,” Scangos said in an interview. “As the company gets larger, it gets harder and harder to do that. We want to make Biogen more like a biotech and less like a pharmaceutical firm.” The CEO has reduced the number of R&D committees, for instance, and he has designated project leaders who report directly to him.

Biogen, founded in 1978 during the biotech industry’s earliest days, has grown into a profitable industry leader, best known as the world’s largest maker of multiple sclerosis drugs. However, the company’s $1.2 billion in revenue for the third quarter of 2010 rose a modest 5 percent from a year ago, in part because of decreased revenue from one of is three major products, the anti-cancer and rheumatoid arthritis drug rituximab (Rituxan). Also, the company’s MS franchise faces competition from, among other products, the Swiss drug giant Novartis’s recently approved oral MS treatment, fingolimod (Gilenya).

Scangos inspected the company’s R&D pipeline and other operations over the summer, and concluded that the company was stretched too thin in terms of the number of therapeutic areas it was researching. A major part of the restructuring plan is to divest the company’s cancer and cardiovascular drug pipelines. The company has designated 11 programs that it plans to remove from its pipeline, including its molecule galiximab for lymphoma, the anti-tumor drug volocixiumab, and the cardiovascular therapy lixivaptan.

Scangos wants Biogen to build on its leadership in neurology. This means increasing revenue from its blockbuster MS drugs interferon beta (Avonex) and natalizumab (Tysabri), developing its existing pipeline of drugs for neurological disorders, and researching biomarkers and other avenues to help personalize treatments for people with illnesses such as multiple sclerosis, he said during a conference call with investors yesterday. The company highlighted its late-stage pipeline, which features five new neurological disease treatments that could reach the market by 2015. The firm also has two hemophilia drugs in late-stage development.

Still, there are lingering worries about the increasing number of cases of a potentially deadly brain … Next Page »

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It almost goes without saying that the Boston biotech scene is rapidly evolving—perhaps as fast as any industry we write about here at Xconomy. So the editors and I thought it would be useful to highlight five of the most important storylines that we have been and will continue to follow in New England.

1. Big Pharma Influence

French drug giant Sanofi-Aventis’s (NYSE: SNY) hostile bid to acquire Cambridge, MA-based biotech powerhouse Genzyme (NASDAQ: GENZ) is the big news on this front. Yet other large drug companies—including Eli Lilly (NYSE: LLY) and Pfizer (NYSE: PFE)—have also been buying up Boston biotech properties. These deals are evidence of all the great science under development here, but they will also inevitably change the face of the biotech community. We’ll be following up on what this means for entrepreneurs, venture investors, and scientists in the Hub.

2. Biotech Getting Personal

No, this is not about corporate raider Carl Icahn’s beefs with some Boston-area biotech CEOs in recent years. Rather, this is about the ongoing excitement surrounding the field of personalized medicine—in Boston and beyond. Genetic sequencing has become cheaper, faster, and more accurate. Foundation Medicine and Good Start Genetics are just two of the recent local startups to take advantage of next-generation sequencing tools to help guide the treatment of patients based on their genetics. There has also been intense interest in advances in the sequencing tools themselves, as we saw with the $375 million sale of Guilford, CT-based Ion Torrent Systems to Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) in August.

3. Future of Gene-Silencing Drugs

Over much of the last decade, investors swooned over the promise of RNA interference drugs to silence disease-causing genes and become valuable new class of medicines for touch-to-treat illness such as cancers and neurological disorders. But the trouble has been figuring out how to deliver the gene-silencing drugs to cells deep in the body—and I mean deeper than the liver. Swiss drug giant Novartis is wrapping up its five-year collaboration with Cambridge-based … Next Page »

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Most companies might consider reining in their loftiest ambitions after an IPO plan falls far short of expectations.. Then again, most companies aren’t run by Ryan Wuerch.

Wuerch is the founder and chief executive of Bellevue, WA-based mobile software company Motricity (NASDAQ: MOTR). The company, founded in 2001, filed for its IPO in January. At the time Motricity, which had generated more than $100 million in revenue in 2008, though it was not yet profitable, was expecting to raise as much as $250 million from investors in its initial public offering.

Instead, the company, met by a tough economic climate, was forced to lower its expectations. First, it sought to raise $85 million, then $62 million, before finally settling on a much lower $50 million to seal the deal. But a less than ideal IPO, Wuerch says, isn’t enough to speak to the well-being of the company, and won’t be enough to curtail its ambitions.

“Stock price doesn’t indicate the strength of a company,” Wuerch says, adding, “We were waiting for that window.” Timing certainly didn’t help Motricity. On the last day of the company’s road show in May, just when Motricity was trying to whip up enthusiasm among dozens of investors, the Dow Jones Industrial Average fell 1,000 points in a very scary 16-minute period. The window Motricity had been waiting for was suddenly gone, but Wuerch and the company decided to move forward with its plans regardless.

“It’s a very difficult market and we feel very fortunate that we did get out,” he says. “We didn’t have to go public.”

The reasoning for moving ahead with the public offering was three-fold. First, Wuerch was eager to have transparency with the customers that comes with the territory of being public. Second, there was an obvious opportunity for the company’s some 355 employees, as of March 31, to benefit from the transaction by enabling them to potentially cash out their stock options. Third, the company had some rigorous international expansion plans in the works that required extra capital.

Ryan Wuerch

Motricity had a number of prominent stockholders going into the IPO, including Advanced Equities (28.6 percent), billionaire investor Carl Icahn (13.8 percent), Technology Crossover Ventures (10 percent), and New Enterprise Associates (9.8 percent).

Although the public offering was no doubt humbling, Wuerch says the company has already bounced back. Motricity posted revenue of $113 million in 2009. And although they haven’t yet become profitable, the company’s revenues are climbing and losses are narrowing. In 2008, the company reported a loss of $78 million. In 2009 its loss was down to $16 million.

The company is ready to move forward—and aggressively so—with plans to ramp up its local presence, and expand to Asia and India. Citing the famous children’s fable, Wuerch says actions speak louder than words. His motto around the office is “maniacal execution against the plan.”

“My largest investors actually bought in the IPO, so if there’s any indication to the strength of the company, that’s it,” he says. “It has nothing to do with how much money you’re raising.”

And so far things are looking up. The company’s second quarter results—some $30.4 million in total revenues—exceeded expectations, Wuerch says. As the domestic market has improved for Motricity, Wuerch says it has enabled him to think more about international expansion.

Motricity relocated from North Carolina to Bellevue in December 2007, coinciding with the company’s $134 million acquisition of the mobile division of Infospace. But Wuerch had other reasons … Next Page »

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Henri Termeer has invested most of his professional life building Cambridge, MA-based Genzyme (NASDAQ:GENZ) into a global biotech powerhouse, and it could all come to an unceremonious end if French drug giant Sanofi-Aventis (NYSE:SNY) succeeds in its efforts to acquire the company. Yet people close to the Genzyme CEO tell Xconomy that Termeer has plenty of unfinished business, and isn’t nearly ready to leave.

Termeer, who joined Genzyme in 1983 as president and became chief executive in 1985, is credited with leading the company’s evolution from a Boston startup into a multibillion-dollar global enterprise with about 12,000 employees. But over the past year and a half, his sterling record at the company has been tarnished by the viral contamination found at its Allston Landing plant last June and the resulting shortages of its therapies for genetic diseases. A growing chorus of critics, including the powerful activist investor Carl Icahn, has called Termeer’s leadership into question.

Nevertheless, Termeer, 64, has shown few signs that he’s ready to call it quits. Termeer, who is the firm’s chairman, and the rest of Genzyme’s board last month rejected Sanofi’s unsolicited offer to acquire the company for $18.5 billion. This month, Genzyme announced that it is selling its genetic testing unit and cutting 1,000 workers to improve the company’s bottom line and future prospects.

Though Termeer has told the media that he’s open to selling the company, some observers have their doubts. ”Henri does not want to sell the company. Henri never would want to sell the company. He’ll fight it tooth and nail to the extent that he can,” said a former Genzyme executive who asked not to be named. “He has to officially act in the shareholders’ best interest. The trouble is that his view of the shareholders’ best interest is probably not the same as what some of the shareholders think are their best interest.”

Genzyme declined a request to interview Termeer for this story.

He certainly isn’t the first CEO willing to put up a fight to keep his company independent. But Termeer is somewhat unique among biotech chief executives, many of whom build their companies to be sold or dream of the day when a large drug maker will come along with a multibillion-dollar buyout bid.

“I’ve known Henri for many years, and he never … Next Page »

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Cambridge, MA-based biotech powerhouse Genzyme (NASDAQ: GENZ) has struck a deal to sell its laboratory testing unit to Laboratory Corporation of America for $925 million in cash, the company reported this morning. The move is part of a plan to win over shareholders and comes after the French drug maker Sanofi-Aventis made an unsolicited offer to acquire the company.

Genzyme Genetics, the business unit under agreement to be sold to Burlington, NC-based LabCorp (NYSE:LH), took in $371 million of Genzyme’s $4.5 billion in 2009 revenue. LabCorp “is committed” to offering jobs to the Genzyme unit’s roughly 1,900 employees and senior managers, according to Genzyme. This sale pact comes on the heals of an internal memo that Genzyme CEO Henri Termeer sent to employees last week to announce that the company would let go about 1,000 of the company’s 12,000 total workers over the next 15 months.

Both the sale of Genzyme Genetics and the job cuts revealed last week are part of Termeer’s plan announced in May to boost shareholder value. The plan also calls for the sale of Genzyme’s diagnostics and pharmaceutical intermediates units. The proceeds from these sales might be used to finance the second half of the $2 billion stock buyback plan that was also announced in May, the company said today.

Genzyme, the world’s largest maker of drugs for rare diseases, has come under intense pressure from shareholders because of manufacturing snafus such as viral contamination found in its Allston Landing plant on June 16, 2009, which caused shortages of its drugs. Activist investors Carl Icahn and Ralph Whitworth criticized management’s handling of the manufacturing problems and caused a leadership shakeup on Genzyme’s board and executive ranks.

Termeer, 64, has built Genzyme to be a diversified business during his 26 years as chief executive. But now the company, founded in 1981, is streamlining its operations to focus on its therapeutics business, which brings higher profit margins than the Genzyme Genetics unit and the other divisions it has on the block.

“LabCorp is the right strategic partner for Genzyme Genetics,” Termeer said in a statement. “LabCorp intends to invest in growing its operations. The business will have the opportunity to continue to grow, serve its customers and fulfill its potential to bring continued innovation to important areas of the diagnostics field.”

Genzyme said the deal is subject to customary closing conditions and is expected to close by the end of the year.

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Politics play a significant role in Massachusetts’s 10-year plan to invest $1 billion into its life sciences sector. Gov. Deval Patrick championed the effort, which aims to grow the life sciences sector in the state and create new jobs. And every year the Massachusetts Life Sciences Center, the quasi-public agency in charge of the initiative, seeks support from politicians on Beacon Hill to approve part of its annual budget.

In the second part of my interview with Susan Windham-Bannister, the chief executive of the Life Sciences Center, we focused on the role of politics in the state’s $1 billion plan. (Here’s the first part of the interview that focused on topics related to Genzyme, Biogen Idec, Carl Icahn, and a two-year status update on the initiative itself). There have been major political changes in the Bay State since the $1 billion plan was signed into law in June 2008.

To name a couple of those changes, Gov. Patrick is now in a close race in his bid for reelection with Republican candidate Charlie Baker, the former chief of the Boston-based health insurer Harvard Pilgrim Health Care (read on in the Q&A below for Windham-Bannister’s comments on Baker’s healthcare background). Also, Scott Brown, who won the late Ted Kennedy’s former seat in the U.S. Senate in January, voted against the bill that created the $1 billion initiative back in June 2008 when he was still a state senator.

What do these political changes mean for the state’s $1 billion life sciences plan? Windham-Bannister recently tackled my questions on this topic in addition to others related to politics. For example, I’ve been wondering how, with the majority of industry and academic activity clustered within and east of the Route 128 corridor, the Life Sciences Center has managed to distribute its funding elsewhere in the state. Also, I got her take on what the life sciences community lost with the death of Sen. Kennedy, who was the industry’s go-to man on Capitol Hill to help bring federal research funding to the state.

It’s also worth mentioning that Windham-Bannister herself has close ties to the Patrick administration. While she says she won’t endorse any of the gubernatorial candidates in her official role as head of the Life Sciences Center, she acknowledges that as a private citizen she’s giving her time and financial support to … Next Page »

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It’s been more than two years since Massachusetts Gov. Deval Patrick signed the bill for the state’s plan to invest $1 billion in its life sciences sector over a 10-year period. Susan Windham-Bannister, who started work as chief executive of the quasi-public Massachusetts Life Sciences Center around the time the bill was signed, has since been in charge of the massive initiative.

To get a read on how things are going at the Life Sciences Center, and to hear Windham-Bannister’s take on major developments at Cambridge, MA-based Genzyme (NASDAQ:GENZ) and other nooks of the state’s life sciences sector, I wandered around the Waltham, MA office park where she and center are based until two maintenance guys pointed me in the right direction. (It was a good thing, as I almost dropped in on my friends at the venture firm Advanced Technology Ventures in the same building to ask for directions. If you wonder why “Dr. Sue” set up shop here, read this piece from our Xconomy archives.)

So far, the $1 billion plan appears to be moving along nicely despite some cuts to its annual budget for its investment fund on Beacon Hill. In the program’s first two years, a total of $191 million dollars has been awarded through several programs to support the life sciences sector in the state. Those dollars have been invested alongside $710 million from companies, the National Institutes of Health, private investors, and other sources of external funding. Noting the impact of those dollars and her center’s, Windham-Bannister likes to say that her organization has already come close to reaching its magic number of $1 billion in investments in life sciences.

In pure state funding, the center has distributed the majority of its dollars to capital projects in the life sciences sector. For example, the town of Framingham got a $12.9 million grant from the center to for work on a wastewater facility, which is needed to support Genzyme’s $300 million project to build a new biotech drug plant there. The company also got $6 million in tax incentives last year to create 200 jobs in Framingham during 2010.

The center is also courting global life sciences companies to match its investments in startups. To date, the French drug giant Sanofi-Aventis (NYSE:SNY) and New Jersey-based health products powerhouse Johnson & Johnson (NYSE:JNJ) have each agreed to contribute at least … Next Page »

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We asked our readers to chime in this week on the value of the venerable biotech Genzyme (NASDAQ:GENZ), which has reportedly become an acquisition target of the French drug giant Sanofi-Aventis (NYSE:SNY). Well, the results are in, but the question remains how our readers’ predicted price will match up with what Sanofi offers, and whether that offer will be enough to persuade the powers that be at Genzyme—especially company chief Henri Termeer—to sell.

Our readers sent in the Genzyme stock price that they felt best reflected the company’s value in a buyout, and the average price from our first 100 respondents was $76.29 per share. (See our graph below for a distribution of prices that people submitted.) Thus, our readers think that Genzyme, the world’s biggest maker of drugs for rare diseases, is worth about $20.4 billion. That’s a good deal more than the $70.24 price of Genzyme stock as of 10:31 am Eastern time today, and it might be more than Sanofi wants to part with to own the biotech company.

Sanofi’s board has authorized the company’s executives, led by CEO Chris Viehbacher, to formally offer up to $70 per share or $18.7 billion for Genzyme, Thomson Reuters reported this morning. If it were up to our readers, Genzyme’s Termeer will say “no thanks” to Sanofi’s offer. And according to a Bloomberg News report, Termeer already passed on an informal offer from Sanofi last week, and sources tell the news service that Genzyme is worth up to $22 billion or $80 per share in a takeover.

Genzyme, which had 2009 revenue of $4.5 billion, makes several high-margin drugs for rare illnesses like Gaucher’s and Fabry diseases that would make nice additions to almost any Big Pharma company’s menu of products. (Reports say that other potential Genzyme bidders include British drug behemoth GlaxoSmithKline (NYSE:GSK) and New Jersey-based Johnson & Johnson (NYSE:JNJ). On the other hand, Genzyme’s manufacturing woes in recent years, especially at its Allston Landing factory in Boston, present any prospective buyer with some unwanted baggage to inherit in a takeover. Genzyme already paid $175 million in fines to the FDA this year for messy drug-vial-filling operations in Allston, and the agency is threatening the firm with further expensive penalties if it doesn’t clean up its act.

After major shareholders complained about the company’s handling of the manufacturing problems, Genzyme cut deals with activist investors Ralph Whitworth and Carl Icahn this year. Whitworth and two Icahn associates have taken seats on Genzyme’s 13-member board of directors.

Very quickly, we will learn what the Genzyme board’s appetite is for selling the company. In most such cases, it all comes down to how much.

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Genzyme stock boomed today on speculation that the company could get acquired by Paris-based drug giant Sanofi-Aventis. The news was reported earlier today by the Wall Street Journal and Bloomberg News.

No deal was actually announced, and a Genzyme spokesman stated the obvious—that the company, with headquarters in Cambridge, MA, and significant operations in San Diego, doesn’t comment on speculation about transactions. But investors went into a frenzy, driving shares of Genzyme (NASDAQ: GENZ) up 15 percent to close today at $62.52 a share, on more than five-fold higher than normal trading volume. Sanofi-Aventis (NYSE: SNY) fell 4 percent, although that may have been partly because of news that its second-biggest selling drug will now face competition from a generic competitor.

Genzyme, founded in 1981, has grown into one of biotech’s powerhouse companies and the world’s largest maker of drugs for rare genetic diseases. It had about 12,000 employees worldwide at the beginning of this year, $4.5 billion in revenue a year ago, and a stock market valuation of $16.6 billion at today’s close. But the company ran into some nightmarish manufacturing problems when it said on June 16, 2009 that it had discovered a viral contamination at its Allston, MA biotech drug factory.

The ensuing decontamination process led to shortages of Genzyme’s two best-selling drugs. The shortages created an opening for competitors seeking to fill the void, and depressed the stock enough to attract activist investors such as Carl Icahn and Ralph Whitworth to press for new leadership on the Genzyme board of directors.

Sanofi-Aventis certainly has the financial muscle to pull off such a takeover of Genzyme. Sanofi is the world’s sixth-biggest pharmaceutical company, with $40.8 billion in 2009 revenue and market capitalization of $76.9 billion as of today’s closing stock price. Sanofi CEO Chris Viehbacher has proven to be an aggressive dealmaker since he took the helm in December 2008. But while he’s done partnerships with or acquisitions of small biotech companies, he hasn’t overseen a mega-merger like Pfizer’s takeover of Wyeth, Merck’s purchase of Schering-Plough, or Roche’s takeover of Genentech. Viehbacher, in an interview with Xconomy in June 2009, said he looks to small biotech companies as the source for innovative new products to help Sanofi grow.

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George Scangos, the newly appointed chief executive of Biogen Idec (NASDAQ:BIIB), is calling for the biotech powerhouse to improve its research and development productivity. Which could mean that some projects get cut, Scangos said in a call with analysts yesterday. The news broke on Wednesday that Biogen selected Scangos for the big job.

Scangos, 62, knows how to run a tight R&D ship. He comes to Weston, MA-based Biogen after 14 years as CEO of the South San Francisco-based cancer drug developer Exelixis (NASDAQ:EXEL), an organization with fewer than 400 employees and an impressive 14 compounds in development. Some credit for that efficiency also goes to Michael Morrissey, who is taking the helm as CEO of Exelixis after serving as the firm’s president of R&D. (Biogen recently moved its headquarters from Cambridge, MA, to Weston, and it also has a base of operations in San Diego.)

A big knock on the R&D engine at Biogen, one of the world’s leading makers of multiple sclerosis drugs, is that the company hasn’t brought a product to market since the 2004 launch of its MS therapy natalizumab (Tysabri). Scangos, who starts work at Biogen on July 15, indicated that he would like to recreate some aspects of the Exelixis culture at his new company.

“At Exelixis, we were able to create a culture with a sense of urgency, a lack of bureaucracy, and great productivity—but with much more limited financial resources,” Scangos said. “One of the compelling characteristics of Biogen Idec is its size; it’s large enough and has great cash flow, and it’s small enough so that we can instill a greater sense of urgency and move quickly and decisively.”

Scangos reminded analysts and journalists at least twice yesterday that he doesn’t officially start work at Biogen for another couple weeks, and he declined to discuss specific changes he would make. But a focus of his early days will be on reviewing Biogen’s pipeline, which includes five products in late-stage development that have the potential to be launched on the market over a three-year period, he said.

“Another priority for me is to take a hard look at R&D. We spend a lot of money on R&D and we have to make … Next Page »

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Biogen Idec won’t be the biggest biotech without a CEO for long. Bloomberg News reported late this morning that the Cambridge, MA-based company (NASDAQ: BIIB) is expected to announce its appointment of George Scangos as its new chief executive as soon as today.

Scangos, a microbiologist by training, has been CEO of the South San Francisco-based cancer drug developer Exelixis (NASDAQ: EXEL) since 1996. He got his doctorate in microbiology at the University of Massachusetts, so he’d be in familiar surroundings as head of one of the two largest biotech companies in the Bay State. (Genzyme is the other of the two.)

A Biogen spokeswoman wasn’t immediately available to confirm the Bloomberg report this afternoon.

Biogen (NASDAQ:BIIB), which also has significant operations in San Diego, has been without a CEO since June 8 when long-time chief executive James Mullen finished his tenure at the firm. Mullen had been CEO of the company since 2000, and announced his retirement in January. He’d been a big target of billionaire investor Carl Icahn’s complaints about the company’s poor stock performance, and Mullen decided to retire at age 51 after multiple proxy fights with Icahn.

Scangos brings extensive scientific expertise to the CEO’s office at Biogen, which is the world’s largest maker of multiple sclerosis drugs. Biogen chairman Bill Young, who oversaw the search for a new Biogen CEO, told Xconomy back in February that the company was looking for a scientist, or at least someone with a deep understanding of the role of science in a biotech company, to replace Mullen, who has a business background. Scangos, who is also the chairman of San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS), has an appointment as an adjunct professor of biology at Johns Hopkins University.

Exelixis has built its reputation with a broad pipeline of drug candidates against some of the hot targets in cancer biology, but it is still no Biogen in terms of commercial might. Exelixis, which does not yet have a product on the market, brought in $151.8 million in revenue in 2009 primarily through payments from collaborations with Bristol-Myers Squibb, GlaxoSmithKline, and Roche/Genentech, to name a few. Last week, Exelixis lost Bristol-Myers as its partner to commercialize its lead cancer drug candidate, XL-184. Back in March, Exelixis cut 40 percent of its work force, eliminating about 270 jobs.

Biogen, on the other hand, raked in $4.4 billion in revenue last year. Its products include the multiple sclerosis drugs natalizumab (Tysabri), its fastest-growing franchise, and interferon-beta (Avonex), its biggest seller. The company also develops drugs for cancer and inflammatory diseases.

We’ll update this story later as needed.

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Motricity found a limited appetite from Wall Street for its IPO, but it decided to seal the deal anyway. The Bellevue, WA-based maker of wireless technologies completed its IPO, by selling 5 million shares at $10 apiece.

That offering is a long shot from what Motricity (NASDAQ: MOTR) originally hoped it would fetch when it embarked on its IPO quest in January. Back then, the company hoped to raise as much as $250 million. It scaled back its ambition to about $85 million heading into this week, and ultimately settled for $50 million.

Before the IPO, Motricity kept a low profile in the local tech community. It moved to Bellevue in late December 2007 when it acquired the mobile division of Infospace for $135 million. But ever since, the company has quietly been making an increasing impact in the wireless business. The company’s mCore platform is now being used by four of the world’s 10 biggest global wireless carriers, and provides customized access to the Web for 35 million people a month using wireless devices, as I pointed out in Monday’s IPO preview story. Motricity generated $113 million in revenue a year ago, and posted a loss of about $16 million.

The Motricity deal will create some new liquid assets for some prominent people. Advanced Equities was the company’s biggest shareholder with a 28.6 percent stake heading into the deal, followed by billionaire investor Carl Icahn (13.8 percent), Technology Crossover Ventures (10 percent), and New Enterprise Associates (9.8 percent). Ryan Wuerch, 42, the company’s chairman, CEO and founder, personally has 1.5 million shares, about a 4.8 percent stake, according to the prospectus. Motricity had 355 employees as of March 31.

As always, the true story of an IPO’s success can’t completely be written until some time passes. We’ll have to watch whether it trades up or down today on the NASDAQ, and how it does next month, next year, and the next five years. But just watching how Motricity went through the wringer has got to make a lot of investment bankers and entrepreneurs pause for a while to see if they really want to go through with what can be a humbling ordeal.

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This week we saw news from Genzyme’s much-awaited annual meeting, in addition to funding news and profiles of startups with Boston roots and West Coast backing.

—Nonprofit organization Women Entrepreneurs in Science and Technology held its third annual Leadership Awards celebration. Three of the four award winners were from life sciences companies: On-Q-ity CEO Mara Aspinall, Avila Therapeutics CEO Katrine Bosley, and Elemè Medical CEO Nancy Briefs.

—Cambridge, MA-based BioScale, a maker of tools for protein analysis, said it grabbed $25 million in a funding round led by China-based Morningside Venture. The money, some of which also comes from individual investors, New Science Ventures, WFD Ventures, and F2 Ventures, will go to sales and manufacturing of BioScale’s research products.

—Newton, MA-based Clinical Data (NASDAQ: CLDA) reported netting about $30 million in a sale of 2.24 million shares of its common stock. The FDA recently agreed to consider the company’s application for approval of its first drug, depression treatment vilazodone.

—Genzyme (NASDAQ: GENZ) re-elected its entire board of directors at its annual meeting. Ryan observed that it was a relatively calm session, considering the Cambridge-based biotech giant’s tumultuous year of proxy battles with activist investor Carl Icahn and fallout from manufacturing problems at its Allston, MA, site. The company will add two of Icahn’s associates to the board, as well as an Amgen veteran, bringing the total number of seats from 10 to 13. Earlier in the week, Genzyme announced its plans to sell $1 billion in corporate debt to help finance a $2 billion stock buyback designed to boost its share price.

—FoldRx Pharmaceuticals, a Cambridge-based developer of drugs targeting diseases caused by misfolded proteins, announced it had raised $29 million in a round of bridge financing from a mix of new and existing investors. In the second half of this year, the company plans to apply for FDA approval of its drug for TTR amyloid polyneuropathy, a rare neurological disease that affects 5,000 to 10,000 people and causes patients to lose control of movement in their arms and legs.

—Lexington, MA-based Predictive Biosciences pulled in $25 million in Series C money, leaving the biotech startup with enough cash to start selling its test for bladder cancer and to continue researching and developing its diagnostic products. The company is a … Next Page »

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Cambridge, MA-based Genzyme’s annual meeting was over in about an hour, and although the company took some hard questions from a shareholder about an internal investigation into insider trading and other matters, it appears that chairman and CEO Henri Termeer and the rest of the company’s directors were easily re-elected to serve on the board of directors.

Genzyme’s (NASDAQ:GENZ) annual meeting at a conference center in Somerville, MA, was remarkably mundane given what has happened in the past 12 months. Almost exactly a year ago, a viral contamination struck its drug manufacturing plant in the Allston section of Boston, which led to a shortage of two drugs that are important to patients and the company’s bottom line. The costly mistake gave some serious ammunition to Genzyme’s critics including billionaire investor Carl Icahn. Yet Termeer, who built Genzyme into a biotech powerhouse over the past 25 years as CEO, was able to hold onto his job and reach a settlement with Icahn one week before the annual meeting.

Just as a reminder, Icahn was initially seeking four seats on the board of directors, and specifically wanted Termeer and three other directors to be ousted. Last week Icahn agreed to end his proxy fight and back Genzyme’s nominees to the board, in return for getting two of his associates added to the board of directors. Today, Termeer took questions about the proxy battle, the manufacturing woes, and why he decided to make the agreement with Icahn.

One of Icahn’s charges against Termeer’s leadership was that Genzyme’s manufacturing system was “broken.” Today, no one from the Icahn slate voiced any objections at the meeting.

“We now move on,” Termeer said, standing at the podium during the annual meeting. “This proxy fight focused us in many areas… where we need to pay attention because it can never happen again.”

As a result of the proxy battle, Genzyme’s board will add Icahn associates Eric Ende and Steven Burakoff to the company’s board of directors. And with the addition of Genzyme’s appointee Dennis Fenton, a former Amgen executive, the board will grow from 10 members to 13 members.

Though the proxy challenge was quashed well ahead of the annual meeting, Genzyme officials were criticized for their handling of an internal review of alleged insider trading among top management and some directors. Thomas DesRosier, the company’s chief legal officer, said that three independent directors of Genzyme’s board are investigating the issue and that investigation is ongoing.

Ray Rogers, who was representing shares owned by the International Brotherhood of Electrical Workers Pension Fund, questioned the independence of the Genzyme directors who are investigating the matter, given that they are serving on the same board as the directors under investigation. “That’s not independent,” Rogers said. “That’s a farce.”

When the internal investigation is through, Genzyme’s DesRosier said, the investigator’s final report is expected be turned in to the court.

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New England-area deal-making news came back with a roar in the last week. We saw headlines of stock sales, myriad stages of venture funding, acquisitions, and a top venture capital firm’s moves to raise money for a new fund.

—Etouches, a Ridgefield, CT-based meeting planning company turned software-as-a-service business, said it raised $2.5 million in its first round of venture capital funding, led by Greycroft Partners. Cava Capital and Connecticut Innovations also participated in the financing for etouches, which makes software for managing events.

—Healthrageous, a maker of software designed to give personalized medical advice on issues like weight loss and diabetes, raised $6 million in Series A funding. North Bridge Venture Partners led the investment, and is also housing the startup in its Waltham, MA, offices until it finds Boston-area office space. Egan-Managed Capital and Long River Ventures also kicked in cash, which will go to hiring more engineers and other staff, and development of a platform for smartphones.

—New Haven, CT-based antibiotics developer Rib-X Pharmaceuticals pulled in $5.5 million of a round of debt and options that could reach $15 million, an SEC filing showed. The company took in a new CEO in March and has raised more than $158 million before the newest funding, since its founding in 2000.

—Exogenesis, a Billerica, MA-based developer of technology for improving implantable medical devices’ interaction with the body, raised $3.7 million of a planned $4.1 million round of equity funding. The company lists members of Inflection Point Ventures and Venture Capital Fund of New England as members of the board, according to a regulatory filing.

—Sonicbids, whose website enables bands to discover and book gigs, said it acquired San Francisco-based ArtistData. No financial terms were disclosed for the deal, but Boston-based Sonicbids says that ArtistData, which serves as a platform for publishing gig information, will be … Next Page »

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Genzyme is raising cash to buy shares of its own stock, in a move that will mean taking on debt to gain more control of its shares.

The Cambridge, MA-based biotech powerhouse (NASDAQ:GENZ) reports today that it will sell $1 billion in corporate debt to complete the first part of a $2 billion share buyback plan. The firm is selling $500 million in senior notes at an interest rate of 3.625 percent due in 2015 and another $500 million in notes at 5 percent due in 2020. Genzyme expects to close on the sale of the notes to institutional buyers on June 17.

Genzyme’s stated motivation for the share buyback plan is to increase shareholder value, and it’s a common practice for companies to repurchase shares for that reason. Yet the buyback plan was announced last month amid the company’s proxy fight with the activist investor Carl Icahn, who reached an agreement with Genzyme last week to end the proxy contest in exchange for two of his associates being appointed to the company’s board. While Genzyme hasn’t related the stock buyback to Icahn’s bid to gain control of the company, the firm will increase its control of company stock by taking a significant number of shares out of play.

Last month, the company said it would repurchase $1 billion of its shares in the near term and spend the second $1 billion to buy shares over the next 12 months.

Genzyme, which is the world’s largest maker of drugs for rare genetic diseases, holds its annual meeting tomorrow. All 10 seats on the board of directors are up for re-election. Plus, the board is expected to appoint three more directors—including Icahn associates Steven Burakoff and Eric Ende—bringing the total number of seats on the board 13. People aren’t expecting there to be much drama at the annual meeting, given last week’s agreement between Genzyme and Icahn.

But we’re planning on being at the annual meeting anyway—because you never know what might happen.

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