OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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Applied Proteomics hasn’t exactly been operating in stealth mode since it was founded five years ago. Co-founders David Agus, a cancer specialist at USC, and Danny Hillis, the MIT-trained computer scientist, gave TedMed talks about the startup’s technology, which provides a 40-gigabyte snapshot of all the proteins circulating in a drop of blood. By pure coincidence, I watched John Stewart’s Feb. 2 interview with Agus last night on “The Daily Show.”

“Danny and David had the foresight to build the tool before trying to use the tool,” says John Blume, a molecular biologist who joined API in 2008 as chief scientific officer. “Although the company wasn’t in stealth mode, the first several years were spent in taking the time to make it right, and then to use it and avoid some of the stumbling blocks.”

Now Applied Proteomics is raising the curtain on several steps that mark its progress beyond a seed-stage startup that was incubating at Applied Minds, an industrial think tank that Hillis founded in Glendale, CA, with a colleague from Disney Imagineering. After moving the headquarters to San Diego late last year, Applied Proteomics is today naming a new CEO—Peter Klemm, a veteran in molecular diagnostics and the former CEO of Lexington, MA-based Predictive Biosciences.

Danny Hillis

The company known as API says it also secured $22.5 million last June in Series B funding from Domain Associates (San Diego partner Jim Blair joined the board), Seattle’s Vulcan Capital, and returning angel investors. Klemm tells me the company raised $4 million from angel investors (who prefer to go unnamed) in what amounted to API’s Series A round in 2007.

David Agus

API’s goal, Klemm says, is nothing less than to “elevate molecular diagnostics to another level beyond the genome” by measuring the proteins made by genes—a long-sought technology that is expected to help doctors improve medical care for individual patients. Because proteins carry out most cellular functions, the company says a snapshot of all the proteins circulating in the body at a given moment represents “the most powerful source of information” in terms of understanding a patient’s health status.

Quantifying all the proteins in the body, Klemm says, can help doctors optimize the course of treatment for individual patients by making it easier to identify the specific drugs that would have the greatest effect on blocking specific proteins or signaling pathways, which can vary dramatically from person to person.

In a statement from the company, Hillis says, “For the first time, we can look at all the proteins in the body with remarkable specificity and sensitivity and use proteomic technology to create … Next Page »

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We’re starting to see fresh signs of life among the Internet software startups in San Diego. Check out this news.

—During a visit last week, TechStars CEO David Cohen talked with the leaders of San Diego’s grassroots Web startup community about the factors that help to create and sustain entrepreneurial communities. One crucial issue confronting San Diego is a crying need for savvy and experienced Internet entrepreneurs who are willing to “pay it forward” by mentoring a new generation of startups.

—A dozen seed-stage companies moved into the new EvoNexus incubator in downtown San Diego. EvoNexus, which was founded by the CommNexus non-profit industry group, will continue to operate its original incubator in University City, where eight startups are taking root. In both locations, EvoNexus provides office space, utilities, and other services free of charge and with no strings attached.

—Sigma Partners led a $10 million round in venture funding for San Diego-based MOGL, a Web startup that has developed a comprehensive customer loyalty program for restaurants and bars, to fuel its expansion into San Francisco and New York. San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures joined in the round.

—San Diego’s MicroPower Technologies named two new board members after raising $6.5 million in Series C funding in a deal that was led by Motorola Solutions Venture Capital and joined by an undisclosed private fund. MicroPower Technologies, which uses wireless networking technologies to create low-cost surveillance capabilities, named PacketVideo CEO Jim Brailean and former DivX CEO Kevin Hell to its board. Hell, who is now chairman of San Diego’s EvoNexus incubator, will join as MicroPower chairman.

—San Diego’s StockTwits said it has established a partnership with Toronto’s Q4 Web Systems, which provides … Next Page »

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—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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—Peter Clarke of EE Times reported that San Diego’s Qualcomm (NASDAQ: QCOM) has acquired Andover, MA-based Pixtronix, a startup founded in 2005 to develop Microelectromechanical systems (MEMS) display technology. Qualcomm, which confirmed the deal with EE Times but provided no details or press release about the deal, reportedly spent between $175 million and $200 million for Pixtronix. The Massachusetts company founded by Nesbitt Hagood raised more than $53 million in venture funding, athough the Pixtronix technology has not yet been introduced to the market. Qualcomm has spent years working to refine its own MEMS-based display technology—known as Mirasol.

—More than 200 entrepreneurs turned out to hear TechStars founder and CEO David Cohen talk about the startup accelerator program he helped to launch in Boulder, CO, in 2007. Cohen told the rapt audience during a San Diego Tech Founders meetup that the Internet software community in Boulder “is just totally on fire” compared to five years ago. This was the night after Cohen met with local tech leaders to discuss the steps that helped boost the entrepreneurial ecosystem in the Colorado college town. Xconomy San Diego arranged the dinner discussion, and I plan to have more about our conversation later this week.

—Meteorologist Stephen Bennett and investor John Plavan founded San Diego’s EarthRisk Technologies in mid-2010 with the idea of creating predictive analytics technology that could extend the range of weather long-term forecasts from two weeks to 30 or 40 days. They are now providing their Web-based technology to commodities and energy-trading firms on a subscription-basis. Bennett told me the core business at EarthRisk Technologies is focusing on extreme weather events—heat waves, frigid cold snaps, and storms because extreme events are the ones with the highest impact.

—Mark Heesen of the National Venture Capital Association gave a good-news, bad-news presentation to the San Diego Venture Group last week. Among the interesting bright spots: Corporate venture capital is growing and San Diego-based Qualcomm now ranks as the nation’s second-largest corporate venture outfit. The bad news? U.S. VC firms invested $28 billion in startups last year, but only … Next Page »

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The unsolicited $5.7 billion offer that Roche made for Illumina will no doubt dominate San Diego’s biotech news for weeks to come. We have it and more.

—Switzerland’s Roche offered $5.7 billion, or $44.50 a share, for San Diego-based Illumina (NASDAQ: ILMN in a hostile bid disclosed yesterday. Roche’s bid to stake a claim in genetic diagnostics by acquiring the market-leading maker of DNA sequencing instruments would be the Swiss pharma giant’s biggest deal since its $46.8 billion buyout of Genentech almost two years ago. Roche is the world’s biggest maker of cancer drugs, which suggests its quest for Illumina represents a significant move to base cancer treatments on each patient’s genome.

—Venture capital investors sank $4.73 billion into 446 biotechs nationwide in 2011, according to the MoneyTree report from the National Venture Capital Association, PwC, and Thomson Reuters. But as Luke pointed out in his BioBeat column, there is an alarming drop in support for early stage life sciences startups. Only 153 biotech and medical device startups got their first round of financing in 2011, the lowest amount of seed investment activity in 15 years.

—At an Xconomy dinner discussion, former Amira Pharmaceuticals CEO Bob Baltera said insufficient access to capital is the biggest driver for decision-makers on both sides of biotech-pharma partnerships. So what are some other key factors? We asked some of San Diego’s life sciences leaders to explore the question in an “on the record” dinner discussion late last year.

—San Diego’s Sequenom (NASDAQ: SQNM) completed its secondary public offering, raising roughly $62 million in gross proceeds (before underwriting costs) in the sale of 14.95 million shares, including additional allotments granted to underwriters. Sequenom said it plans to use the net proceeds for … Next Page »

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—Venture capitalists invested $269 million in 23 deals in the San Diego area during the last three months of 2011, according to the MoneyTree Report from the National Venture Capital Association, PwC, and Thomson Reuters. That was almost a 20 percent gain in dollars, but a 28 percent slide in deal count from MoneyTree data for the fourth quarter of 2010. For the full year of 2011, the MoneyTree VC survey said $829 million was invested in 104 deals in San Diego, a 5 percent decline in dollars and a 17 percent slide in deals from the $871.7 million sunk into 126 San Diego deals in 2010.

—What should students study now to be prepared for the workplace 10 years from now? We asked that question of 22 Xconomists, including San Diego Xconomists Ramesh Rao, Duane Roth, Drew Senyei, Larry Bock, and Robert Noble. We’ve compiled all 22 answers in an Xconomy special report on education, which you can find here.

—San Diego Gas & Electric hosted a grand opening of its new Energy Innovation Center, which is designed to serve as an energy innovation showcase and education facility, and to meet the U.S. Green Building Council’s requirements for a platinum LEED (Leadership in Energy & Environmental Design) certificate. The center includes a full commercial “food service demonstration kitchen” where San Diego chefs can test their recipes on energy efficient appliances and restaurant owners can learn about the advantages of new and more energy efficient equipment. Utility officials said Commercial kitchens are particularly energy intensive.

—San Diego-based Tealium raised $1.1 million in Series A financing from private investors, and plans to use the funding to expand development of the tag management technology the company created to help enterprise customers manage their online marketing. Tealium said the investors include Limelight Networks CEO Jeff Lunsford, former Visual Sciences CEO Jim MacIntyre, Collective CEO Joe Apprendi, EyeWonder CEO John Vincent, and eValue Group CEO Thomas Falk.

—After previewing their plans last year, the X Prize Foundation and San Diego-based Qualcomm Foundation officially unveiled the Qualcomm “Tricorder” X Prize, a competition offering $10 million to the team that can develop new wireless diagnostics technology. The winning entry must be able to accurately diagnose a set of 15 diseases across 30 consumers in three days, capturing real time, critical health metrics such as blood pressure, respiratory rate, and temperature, and providing information in a consumer-friendly way.

—Qualcomm’s leadership has been talking for several years about the anticipated competition between its ARM-based semiconductors and the CPUs developed for desktop computing in the expanding market for smart devices. Now some of those skirmishes are beginning. Illinois-based Motorola Mobility (NYSE: MMI)  said recently it would use Intel’s (NASDAQ: INTC) latest low-power x86 Atom processor in a number of future Motorola products, marking Intel’s opening move into the smartphone market. A Motorola spokeswoman told me by email, “We will continue to use multiple chip set vendors.” Qualcomm (NASDAQ: QCOM) already has hundreds of mobile devices using its Snapdragon processor, and has been working with manufacturers on hundreds more.

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Money pumped into San Diego’s regional economy by venture capital firms hit an eight-year low in 2011, with a total of $829 million invested in 104 startups throughout the year, according to the MoneyTree VC survey being released today. The 2011 deal count was the lowest seen in San Diego since 1997.

The 2011 numbers represent a 5 percent decline in dollars and a 17 percent decline in deals in comparison with the previous year, when VCs put a total of $871.7 million in 126 startups, according to the MoneyTree Report from PricewaterhouseCoopers, the National Venture Capital Association (NVCA) and Thomson Reuters.

The decline in San Diego’s venture activity ran counter to the nationwide trend in 2011, in which $28.5 billion was invested in 3,673 deals—and ranks as the third-highest total in the past decade. The U.S. numbers represent a 22 percent increase over the $23.6 billion in 2010 VC funding and a 4 percent rise over the previous year’s deal count, according to the MoneyTree analysis.

The overall U.S. trend depicted in the MoneyTree Report generally agrees with the rise in venture activity nationwide that CB Insights charted last week in its 2011 findings. CB Insights, the New York financial analysis firm, said the $30.6 billion VCs invested in 3,051 deals throughout 2011 was a 10-year high in terms of both dollars and deals. (The two sets of numbers don’t line up exactly because the firms use different methods to collect their venture data, and count dollars and deals in different ways.)

In the fourth quarter of 2011, the MoneyTree Report shows that venture capitalists invested $269 million in 23 deals in the San Diego area, with life sciences startups in diagnostics, drugs, and devices accounting for roughly two-thirds of the transactions. It represented a … Next Page »

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Here’s our weekly roundup of San Diego’s life sciences news.

—Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health (CDRH), briefed reporters in San Diego on his efforts to make the regulatory review of new medical devices more predictable, transparent, and efficient. Shuren is undertaking reforms at a time when eight out of 10 biomedical CEOs say they “agree or strongly agree” that the FDA regulatory approval process has slowed the growth of their organizations.

—More than 500 people turned out Monday evening for the open house that Johnson & Johnson’s (NYSE: JNJ) new Janssen Labs startup center. The first four startups to be inducted are Diomics (diagnostics, integrated DNA analysis); Neurolixis (drugs for schizophrenia, Parkinson’s and other CNS disorders); Tem Systems (comprehensive blood test for anti-coagulants); and Yolia Health (optometry device company).

—San Diego-based Auspex Pharmaceuticals, which is developing deuterium-based drugs, has raised $3 million of a $6 million round of debt and convertible promissory notes, according to a regulatory filing. Previous investors include CMEA Ventures, Costa Verde Capital, and Thomas McNerney & Partners. Auspex uses deuterium to replace metabolically sensitive hydrogen atoms in compounds to create new versions of existing drugs.

—BrainCells, a San Diego developer of neurological drugs, raised $2 million toward an $8 million round of debt, rights and securities, according to a regulatory filing. BrainCells previously raised $77 million from Alexandria Real Estate Equities, Bay City Capital, MedImmune Ventures, Mitsubishi UFJ Capital, Mizuho Capital, NeuroVentures, New Enterprise Associates, Oxford Bioscience Partners, Pappas Ventures and Technology Partners, according to VentureWire. The company says it is developing novel therapies for treating central nervous system (CNS) diseases, based on the principal of blocking select metabotropic glutamate receptors (mGluR).

—To have the skills needed in 2022, San Diego Xconomists Robert Noble and Larry Bock recommend that students should “learn how to learn.” Drew Senyei says students should study anything they are passionate about; Duane Roth would like to see a new major that encompasses engineering, biology, chemistry, physics, law, business, humanities and communications; and Ramesh Rao would emphasize studying new techniques for sensing data, as well as data analysis. They all offered their views for an Xconomy special report on education, and what students should be studying today to be prepared for 10 years from now. Their comments are available online here.

—In a talk with Sanofi CEO Chris Viehbacher, Luke explained the company’s strategy since it acquired Cambridge, MA-based Genzyme, and cut back on its internal research and development.

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Chris Rizik is one of Michigan’s most important and successful venture capitalists. He’s the CEO and fund manager of Renaissance Venture Capital, a fund of funds that is perhaps best known for its early backing of the medical device company HandyLab, a University of Michigan spinout that was later purchased by New Jersey’s Becton Dickinson & Co. for $300 million.

In addition to having a reputation as a shrewd investor and a champion of Michigan’s economic growth, Rizik has a longstanding passion for soul music. He’s the owner and operator of SoulTracks.com, a website dedicated to the music genre. (More on that later.)

Rizik, a Flint, MI, native who grew up in a musical family, says his appreciation of soul music began early. He was the youngest of six brothers who counted the Four Tops, Donny Hathaway, and the Spinners as favorites.

“The best concert I ever saw was in 1972 at the Whiting Auditorium,” Rizik says. “The Spinners opened up for the Temptations and just stole the show.”

Rizik wrote music reviews for the State News while pursuing an accounting degree at Michigan State University. He later picked up a law degree from the University of Michigan and landed his first job at Dickinson Wright, a top Detroit firm. He was there for 13 years as a pension attorney, but, he says, he always knew he wanted to do something more entrepreneurial. He started a new group within the firm to assist entrepreneurs and, a few years later, he got a call from his old buddy Rick Snyder (who was later elected Michigan’s governor in 2010).

“He had been at Gateway, but he was moving back to Michigan and wanted to start a VC fund,” Rizik says. “We picked up right where we left off and I helped him start [Avalon Investments].”

Rizik, who started out as an attorney for the firm, says that he suspects Snyder always had it in mind that he’d recruit Rizik to be his partner, but, “as is his way,” he waited patiently for about a year for Rizik to warm … Next Page »

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Alan Frazier has been on record for a long time saying that the traditional biotech venture model is broken, and in severe need of updating. He’s been working on a new strategy for the past seven years or so, but the approach is facing its biggest test ever as Frazier prepares to raise his first fund in the wake of the Lehman/Fannie/Freddie/AIG financial calamity of 2008.

Frazier is the founder and managing partner of Frazier Healthcare Ventures, a 20-year-old Seattle and Menlo Park, CA-based venture firm that has $1.8 billion under management. The firm’s last fund, Frazier Healthcare VI, assembled $600 million in November 2007 to put to work in biotech, medical device, and healthcare growth equity opportunties. Frazier hasn’t formally initiated a fundraising process with pensions, endowments and other institutions, but on average he has raised new venture funds roughly every three years. “It’s time for us to raise a new fund,” he says.

The big story this year in biotech venture capital is the sheer number of funds—most estimates are between one-fourth and one-half—that are thought to be slowly winding down as they struggle to show the returns that are needed to keep raising new funds. Frazier, during an interview at the JP Morgan Healthcare Conference last week, said he expects many peer firms—but not his—to “go into hibernation.” He’s forecasting his fund will be one of the survivors because it decided back in 2005 that it no longer made sense to build biotech companies that intend to go public, and that they needed to be tailor-made to be acquired by Big Pharma and Big Biotech companies.

“For a long time, we in the venture business created the wrong companies for [big companies] to buy,” Frazier says. “We’d build something with 150 employees and four projects, when what they want are 25 people and one project.” The payoff, he says, “has been pretty dramatic. Obviously, it takes a while for that kind of strategy to evolve.”

Like any firm that’s been around for a while, Frazier has its share of wins and losses (and it obviously prefers to talk about the wins). Seattle-based Calistoga Pharmaceuticals represented a 3.74x return on Frazier’s investment when it was acquired by Gilead Sciences last year for $375 million up front, although the return could rise to 6x Frazier’s investment if certain milestones are met. Other portfolio companies like Oakland, CA-based Cerexa, San Diego-based Calixa Therapeutics, Carmel, IN-based Marcadia Biotech, and Cambridge, MA-based Alnara Pharmaceuticals all ended up getting acquired in the last two years at multiples between 3.39x times original investment on the low end (Alnara) through 10.67x times investment on the high end (Marcadia), according to data published in a Frazier newsletter. There was even one rare IPO in the portfolio, from Boulder, CO-based Clovis Oncology (NASDAQ: CLVS).

Of course, there were less-happy events for Frazier in the past year, too. Seattle-based Calypso Medical Technologies—which raised more than $175 million in venture capital since its founding in 1999—was sold for $10 million last year, plus undisclosed milestones. And just a few months after … Next Page »

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One of the co-founders of HealthTech Capital, Don Ross, offered Brian Glaister a blunt assessment last summer when the young entrepreneur came pitching a new device to help disabled people walk.

Ross responded that his wife, Donna Jang, is a stroke survivor who struggles to walk more than a couple minutes at a time. She would be the first one to judge whether Glaister’s product was as good as advertised. Glaister didn’t blink: Within a couple weeks, he was on a plane to Silicon Valley, where Ross and his fellow investors are based.

“When Brian came to us, I told him flat out, ‘You have to get a prototype sized up so Donna can try it. If she doesn’t like it, you’re toast. If she does, maybe you’ll have a shot,’” Ross recalled. “And Donna really liked it.”

Now HealthTech Capital is leading a syndicate of medical device angel investors who are putting $750,000 in equity and convertible debt, out of a round that could be worth $1 million, into Glaister’s startup, Seattle-based Cadence Biomedical. HealthTech is being joined in the financing by Alliance of Angels, Frontier Angels, Keiretsu Forum, Sand Hill Angels, and Wings. The new financing means Cadence has raised a little more than $1.5 million in investment and government grants since its founding in August 2007. It now plans to use the cash to bring the first commercial versions of its walk-assist device to the orthotics market this spring.

The Cadence technology, licensed from the Cleveland Clinic, looks like a fancy leg brace. It is essentially is one, although it has a spring that stretches from hip to ankle that is designed to store and release energy that can help propel people as they walk forward. Cadence’s hope is that can help about 2.3 million people in the U.S. who have extreme weakness in their lower legs that impairs their ability to walk—such as stroke survivors, people with partial spinal cord injuries, brain injuries, or patients with multiple sclerosis or amyotrophic lateral sclerosis.

There are existing alternatives, of course, like canes, walkers and wheelchairs, which have their limits. There are also newer high-tech robotic options in various iterations from companies like Berkeley, CA-based Ekso Bionics, Sunnyvale, CA-based Tibion, Israel-based Argo Medical Technologies, and New Zealand-based Rex Bionics. Cadence says its technology … Next Page »

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College undergraduates today are faced with many choices of where to concentrate their studies. It is important to look down the road to determine where the major unmet needs of society will be. The healthcare industry offers many opportunities and challenges over the coming decades. As I look to the future of healthcare, there are several trends emerging which might help direct those especially interested in this field.

The most obvious trend is that the population of the United States and around the world is aging. The need to develop new drugs, technologies, devices and services to deal with this demographic shift will benefit those who have chosen careers in innovative fields to address this problem. Experience in chemistry, biology, applied mathematics, statistics, and biomedical engineering are all skills which will be in high demand. As medicine becomes more personalized—as each person gets diagnosed and treated based on their genetic make-up—new technologies will develop in conjunction with the computer science field.

The healthcare industry is also a global market. In addition to our aging population, hundreds of millions of people in developing countries will enter the middle class in the coming years. For example, more people will enter the middle class in China in the near future than the entire population of the U.S. A facility with the language and an understanding of the cultures of countries now making up the global economy will also be useful.

Healthcare will clearly play a bigger role in the global economy in the decades ahead. Innovation will be key to offer more effective, cost-effective cures and treatments for unmet needs. Hopefully, students will take advantage of their universities offerings across various disciplines to gain a broad, worldly education. And that their choice of concentration will lead toward new innovations which can lead to the betterment of the human condition.

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[Corrected 1/16/12, 1:20 p.m. See below.] When Xconomy’s biotech editor Luke Timmerman first wrote about Axonia Medical in January 2011, he wondered if the Kalamazoo, MI-based startup would be able to raise the investment funds it needs, given the cautious venture-capital climate and the unprecedented nature of Axonia’s nerve-regeneration technology. The startup produces living, functional tissue-engineered nerve grafts in the lab that can replace and repair damaged parts of the nervous system.

Harry Ledebur, Axonia’s president and CEO, recently contacted Xconomy to let us know that the company has just raised its first million in seed financing from the Southwest Michigan First Life Science Venture Fund and expects to close on another $500,000 to $1 million in the next six months, bringing Axonia within reach of its goal of $3 million.

“I took quite a few meetings,” Ledebur said, describing what the past year has been like for the company. “I got a lot of valuable feedback, which I used to structure our strategic plan.”

The initial investment allows Axonia to formally kick off operations, with Accelerator‘s president and Chief Business Officer Dave Schubert serving as chairman of the board. The company also was invited to join the Rutgers-Cleveland Clinic Consortium of the Armed Forces Institute of Regenerative Medicine (AFIRM), which may offer Axonia a small grant in the future to support support preclinical studies for peripheral nerve injury using its tissue-engineered nerve grafts. [An earlier version of this paragraph listed the wrong title for Dave Schubert. We regret the error.]

“It’s a validation of our approach,” Ledebur says of the opportunity of join AFIRM. “Our technology fits with the current medical needs of the Department of Defense’s Wounded Warriors program.”

The concept of Axonia’s technology, which is spun out of the University of Pennsylvania, hinges on the production of axons, the long thin parts of nerve cells that carry signals to distant target cells. Unlike other regenerative treatments in development, Axonia’s method doesn’t involve stem cells. Rather, Axonia uses neurons from patients or cadavers to grow long, integrated tracks of axons in the lab and then implants this tissue into the body, which then enables or accelerates the body’s natural repair system.

“Axons seem to be the key catalyst in the repair process,” Ledebur explains. “We’re the only company, to my knowledge, that knows how to grow fully differentiated nervous tissue.”

The results so far in rodent models are promising with patients who have peripheral nerve damage, spinal cord injuries, and brain injuries—injuries that the body has a very difficult time repairing on its own. He estimates that millions of U.S. patients per year with nervous system injuries could utilize Axonia’s proprietary process, which the company says represents a $1.2 billion market.

Axonia has already acheived its proof of concept in a rat model of spinal cord injury. The next step, Ledebur says, is to test it in pigs. If all goes according to plan, Axonia will begin clinical trials in roughly three years.

“We’re focusing our money now on proving the superiority of our standard of care,” Ledebur adds. “We want to repair what’s currently unrepairable.”

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Venture capital deals backed off just a tad during the last three months of 2011, but remained strong enough to carry VC activity during the year to a new high-water mark, according to data being released today by CB Insights, a financial data firm that maintains a venture capital database.

VCs invested $7.6 billion in 755 companies nationwide during the fourth quarter, bringing the total for 2011 back to pre-recession levels, with $30.6 billion invested in 3,051 deals. The New York firm says that marks a 10-year high for both dollars and number of deals.

In the regional breakdown, Massachusetts regained its No. 2 ranking, eclipsing venture activity in New York during the fourth quarter. CB Insights reports that a total of $959 million was invested in 93 Bay State deals. In New York, $568 million went into 73 deals, which ranked third in terms of both deals and dollars.

California maintained its usual poll position during the quarter, with the $3.8 billion invested statewide accounting for just over half of the nationwide total and the 300 deals representing 40 percent of the total U.S. number. There wasn’t a lot of variation in California’s deal count over the previous four quarters, but the capital invested during the quarter was 45 percent higher than the $2.6 billion that went into the Golden State during the same quarter of 2010.

In Washington State, venture activity remained well behind the big three, with $146 million invested in 24 deals during the quarter, prompting the wags at CB Insights to write, “We’ll bring back our ‘Sleeping in Seattle’ metaphor as Washington continued its … Next Page »

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San Diego’s MicroPower Technologies, founded in 2008 to develop ultra-low power wireless video surveillance products, said it has landed the first installment of a $6.5 million round of funding from Motorola Solutions Venture Capital and an undisclosed private fund.

The Series C funding represents MicroPower’s first institutional investment. Motorola Solutions Venture Capital is the investment arm of Schaumburg, IL-based Motorola Solutions, the company that retained Motorola’s mainstay radio, bar-code scanner, and RFID business in last year’s separation from Motorola’s mobile business.

MicroPower was initially funded by Southern California’s Tech Coast Angels, and was one of the first startups in San Diego to take advantage of the free EvoNexus incubator program established by CommNexus, a local nonprofit industry group.

The company says it plans to use the funding to step-up marketing of its wireless surveillance camera and related technology. The company’s flagship product, the Rugged-i wireless video camera, eliminates data and power cables and substantially cuts installation costs, such as the expense of pulling cable.

MicroPower has targeted commercial and government customers, including border protection, retail, education, and public utility markets. The company also says its wireless networking technology could be incorporated into wearable video cameras by law enforcement, paramedics, first responders, and military personnel.

Last year, MicroPower was named as a high tech award winner in the communications products and services category by the San Diego chapter of Tech America and as 2011 new product of the year by Security Products magazine.

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Biotech pilgrims are gathering today for the biggest industry frenzy of the year, the JP Morgan Healthcare Conference. This confab in San Francisco’s Union Square is the singular place each year where essentially all industry mover/shakers—and many wannabes—gather for a marathon week of investment scouting, dealmaking, publicity seeking, job-hunting, and schmoozing.

I’ve been going to this conference for at least seven or eight years (but who’s counting?) and look forward to meeting lots of interesting people and digging up all kinds of news every year. It’s the best time to meet industry players face-to-face, and hear about the latest trends at work, in an action-packed few days. Most everybody here is brimming with optimism—or least putting on their best game face—about how they’re going to make new drugs, devices, or diagnostics that will leap tall buildings with a single bound in the coming 12 months.

Some of these dreams will be fulfilled, but the odds aren’t good. Hope and hype are a couple essential ingredients in this business, and every year both are on display at this conference. Sometimes the wishful thinking can congeal into conventional wisdom. So with that, I thought I’d try to anticipate a few popular myths you can expect to hear circulated, in order to debunk them. Here goes:

1. “The biotech IPO market will pick up.” Every year this line gets repeated, and every year it’s nothing more than wishful thinking. All you need to know about IPOs is that Groupon raised more money in its initial offering last year than the entire class of 2011 biotech industry IPOs. Facebook is on the docket this year, and it will dominate the news. Many biotechs that went public last year were weak, and didn’t perform well for investors, which only serves to dampen enthusiasm. And most importantly, it’s always good to remember who will be spreading the positive word about the IPO market, and consider the sources. It’s the investment bankers, lawyers, and consultants who stand to put a lot of money in their pockets from fees every time one of these transactions occurs. Just because they want it to happen, doesn’t mean it will.

2. “Amgen will make a mondo acquisition.” The biotech industry’s biggest company was sitting on a massive stockpile of $17.6 billion in cash and investments at the end of September. Common sense says that Amgen has got to do something with the cash other than collect interest. Shareholders might like getting dividends or seeing share buybacks to lift the stock price, but this won’t excite anybody for long. The company is getting a new CEO, Robert Bradway, who might be interested in putting his own stamp on the company once he takes over in May from Kevin Sharer, who had a lackluster record in the acquisition department. And Amgen might be feeling the need to compete in the acquisition arms race, especially since Gilead Sciences (NASDAQ: GILD) scooped up Pharmasset for $11 billion.

It may sound logical, but this all feels like wishful thinking to me on the part of bankers with vested interests. Amgen will think long and hard before it attempts to do any monster acquisition, especially after seeing the organizational indigestion mega-mergers have caused in Big Pharmaland (see Pfizer/Wyeth, Merck/Schering-Plough, and Roche/Genentech). My hunch is that Amgen may buy a company in the $1 billion ballpark, but it will not pull the trigger on a really audacious mega-merger in 2012.

3. “The FDA is going to be more supportive of innovation.” I’m not sure how many people are really going to go out on a limb and take the FDA at its word that it wants to be more supportive of medical innovation. But a small group of high-powered VCs and industry advocates have pushed for this for a long time, and commissioner Margaret Hamburg has been making more noises about how the agency’s mission is to ensure the safety and efficacy of new drugs, while also helping stimulate biomedical innovation. Just like anything in politics, though, talk is cheap and the record is … Next Page »

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Seattle-based Mirador Biomedical has won FDA clearance to market its medical device for a new set of uses, which doctors have been asking about for months.

Mirador said today that its digital pressure sensor technology, which it calls its Compass platform, is now cleared by the FDA for a half dozen different medical uses. The Mirador device was first approved in October 2010 for a couple of specific uses—helping medical staff determine when they are about to make a dangerous mistake by inserting a catheter into the wrong type of blood vessel, or the wrong part of the spinal column. The new FDA approvals mean that Mirador can now pitch its product to doctors for its ability to measure additional things like “compartment pressure” which is sometimes helpful in battlefield injury settings, or elevated intra-abdominal pressure, which can make people sick.

The private company doesn’t disclose its revenues, but co-founder and CEO Karl Schmidt says that “hundreds” of hospitals have used the Mirador digital sensor in the past year, and revenues have been increasing each month. The new uses should double the potential market for its products, Schmidt says, and will free the company up to start actively marketing the technology for uses that its customers have been suggesting it pursue for months. While Mirador is legally able to sell its products for uses other than those approved by the FDA, and physicians are able to prescribe products for unapproved uses, companies can’t legally promote new drugs or devices in the U.S. for specific uses unless they are cleared by the FDA.

Justin Hulvershorn

“This is important because it allows us to push other uses physicians have found for the device,” says Justin Hulvershorn, Mirador’s co-founder and chief science officer.

The company is betting that hospitals will pay for its technology to help prevent costly medical errors, and because it provides greater convenience in everyday workflow than existing methods that rely on somewhat clumsy cables and equipment.

Mirador got its first FDA approval after less than two years of work, and little more than $1 million of investment. Last April, Mirador pulled in another $1.5 million in financing for its commercial plans. WRF Capital, Summit Capital, and various local angel investors have backed the company so far.

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Seattle-based JeNu Biosciences has raised some new cash to go after the emerging market for ultrasound-based skin care devices.

The company has pulled in $1.5 million from Seattle’s Second Avenue Partners and other angel investors, out of a round that is expected to be worth $3 million, says CEO Wayne Wager. JeNu has now raised a little more than $2 million since its founding, Wager says. The news was reported earlier today by Geekwire.

JeNu is looking to use ultrasound waves to deliver specially formulated creams into the skin, or simply, “put good things into the skin,” as Wager says. That’s a different approach than what the folks at Bellevue, WA-based Pacific Bioscience Laboratories took with the Clarisonic skin brush, which uses sonic waves to clean the skin by jostling loose dirt and oils out of pores. While ultrasound is well-recognized for its noninvasive diagnostic abilities, and sometimes for high-intensity therapeutic uses like breaking up kidney stones, the idea of using it for cosmetic applications is relatively new. Clarisonic proved it could be quite lucrative, by generating more than $100 million in sales in 2010, which led to a big acquisition by L’Oreal in November.

Wayne Wager

Wager has medical device industry experience as the former CEO of Redmond, WA-based Confirma, and is the co-chair of Wings, a local network of medical device angel investors. He’s teamed up at JeNu with Michael Lau and Alexander Lebedev, who co-founded Bothell, WA-based Mirabilis Medica—a company that uses ultrasound technology to treat uterine fibroids. The company has also recently hired Colette Courtion, the former CEO of Calidora Skin Clinics, as president.

JeNu has been testing its product candidate at skin care clinics in Seattle and New York, Wager told Geekwire. The company appears to be pursuing a razor/razor blade business model, in which it plans to sell its device plus starter skin creams for about $200, Wager says. The company will then make additional recurring revenue by selling more skin creams.

One big advantage of going into the cosmetics industry is the low barrier to entry, since it doesn’t require years of expensive and difficult clinical trials to win FDA approval, like a drug or medical device. That same ease of entry also brings lots of infomercial-type competitors making lots of often bogus, confusing claims about skin care benefits. But that’s the fray JeNu will enter. It plans to bring its device to the U.S. market in the second half of 2012, Wager says.

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Been on vacation? Get back up to speed with our end-of-the-holidays roundup of San Diego tech news.

—Almost half of the top 50 venture-backed startups had at least one founder who was an immigrant, according to a study from the National Foundation for American Policy. Such findings led author Stuart Anderson, who also is executive director of the Virginia-based foundation, to conclude, “America gains a great deal when we’re open to talent, wherever that talent was born.”

—The FCC approved Qualcomm’s sale of some spectrum rights to AT&T for nearly $1.93 billion. Qualcomm (NASDAQ: QCOM) had spent $683 million acquiring the lower 700-megahertz band and UHF Channels 55 and 56 for its FLO-TV network for transmitting television programming to mobile devices. As we recently reported, Toronto’s QuickPlay Media acquired the network operation center that Qualcomm built in San Diego for its FLO-TV operations. Qualcomm said the FCC approved the spectrum sale after AT&T abandoned its proposed $39 billion acquisition of T-Mobile. AT&T plans to use the additional spectrum to improve its network capacity as it rolls out its 4G wireless network.

—In a separate announcement, Qualcomm disclosed that founding CEO Irwin Jacobs plans to retire from the company board at its annual meeting on March 6. The 78-year-old Jacobs will officially become Qualcomm’s founding chairman and CEO emeritus.

—Razer, the Carlsbad, CA-based maker of computer and video gaming peripherals, said it is raising $50 million in a Series A venture round led by the IDG-Accel China Capital Fund, a global investment fund established by IDG and Accel Partners. The 12-year-old startup’s funding previously came from … Next Page »

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