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

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

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

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

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

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

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Waltham, MA-based diagnostics firm On-Q-ity has found $21 million in a Series A round of venture capital, according to a story this morning in peHUB. The developer of cancer tests was formed through the combination of CELLective Diagnostics and The DNA Repair Company, both portfolio companies of Mohr Davidow Ventures that had been unable to raise Series B rounds of financing individually.

Investors in the first-round financing included Mohr Davidow, Bessemer Venture Partners, Physic Ventures and Northgate Capital, peHUB reports. On-Q-ity is developing tests for breast and thoracic cancer, and the firm plans to focus later on diagnostics for prostate cancer.

The firm is developing tests that enable doctors to personalize cancer treatments for individual patients, according to its website. Its technologies include DNA repair biomarkers that can show whether a patient is likely to form resistance against certain drugs as well as microfludics chips used to capture and identify tumor cells in the bloodstream. Together the two key technologies could provide the ability to diagnose cancer, predict response to therapies, and track the progress of treatments, the company says.

Mara Aspinall, a former president of the Genzyme Genetics unit of Cambridge, MA-based biotech powerhouse Genzyme (NASDAQ:GENZ), is president and CEO of On-Q-ity.

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When somebody gets a fever in a poor country, there is no quick or easy way to tell whether it’s a symptom of flu, malaria, a bacterial invader, or some other bug.

And if you don’t what it is, then it’s hard to treat.

So it’s only natural that shrinking modern diagnostic tools into a lightweight box that’s fast, accurate, cheap, and rugged enough for the African bush is one of the big ideas the Bill & Melinda Gates Foundation has supported in the past five years. The instrument is now starting to take shape under the direction of a team at the University of Washington, through what’s called the DxBox, which looks a little like the popular video game console with a similar name. And this particular box is entering a delicate phase in which big decisions are being made about whether it is really ready for a prime time commercial push, in which it could help healthcare workers better diagnose millions of people.

The original Gates grant, worth $15.4 million over five years, went to a diverse collaboration between a pair of bioengineering labs at the University of Washington, global health experts at Seattle-based PATH, and a couple of commercial partners in Redmond, WA-based Micronics and what used to be called Bothell, WA-based Nanogen (now part of ELITech Group). Four years have now passed by since the first check arrived. As the lead scientist on the project, UW bioengineering chair Paul Yager, put it in a recent UW symposium, “it’s put up or shut up time.”

What he really meant is that enough work has been done that it’s time to size up the real-world commercial potential of the product, or maybe spend some more time back at the drawing board. “You have to take what’s in a lab here in Seattle and scrunch it down to that,” Yager said, pointing to a prototype sitting on a shelf in his office, when I followed up recently. “It’s probably about two years away.”

DxBox

So after all of the long hours from 40 UW graduate students and postdocs, another 60 professionals outside the UW, and a lot of trial and error to meet all the demanding requirements of a portable diagnostic, what can this DxBox really do?

It is made to take a pinprick of blood, which a health worker squeezes onto a cartridge that slides into an 8-pound prototype device. All the health worker needs to do is hit “run,” and the pumps and valves inside the little box perform two kinds of automatic diagnostic tests. One is an immunoassay test that uses conventional antibodies, not all that different from a pregnancy test, that are made to bind with certain microbial invaders or antibodies that people produce in response to a certain infection. The other test is a more precise nucleic acid assay, which is supposed to identify microbes at the DNA level. Both tests are made to spit out an answer on an LCD screen in whatever the worker’s native language is, within 30 minutes, to identify the patient’s illness, Yager says. And the machine can run a full day on a laptop battery in places without electricity, Yager says.

The DxBox was designed to screen for six common illnesses that are associated with high fevers—flu, malaria, typhoid, rickettsial infections, measles, and dengue. Even from the start, the machine wasn’t made to be comprehensive, since it doesn’t screen for two of the biggest killers …Next Page »

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Sequenom, the San Diego-based maker of laboratory tools and diagnostics, said today in a regulatory filing it has agreed to accept a $1 million payment from Ibis Biosciences, a unit of Abbott Laboratories, to settle a patent infringement lawsuit. As part of the deal, Sequenom (NASDAQ: SQNM) has granted Ibis a non-exclusive license to three mass spectrometry-based patents. Abbott acquired Ibis, a spinoff from Carlsbad, CA-based Isis Pharmaceuticals, for $215 million in December.

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Nuclea Biotechnologies, the Pittsfield, MA-based developer of genomic tests for cancer research, has raised $3.4 million in new equity financing, according to a regulatory filing. The company, which says on its website that it has collaborations with the Dana-Farber Cancer Institute in Boston and the Johns Hopkins School of Medicine in Baltimore, is seeking to discover genomic signatures that could lead to better diagnosis and prognosis for cancer patients. The company said in July it has closed on a $1 million private placement.

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I can’t do justice to a comprehensive review of yesterday’s FiReGlobal (West Coast) conference at the Four Seasons Hotel in Seattle. Instead, I’ll just give a few of my key takeaways. The all-day event, organized by Strategic News Service, focused on how to solve some of the most pressing problems in technology, business, and society—in areas as diverse as broadband access, entrepreneurship, education, sustainability and the environment, political discourse, human health, and mobile devices.

The sweeping conference had the tagline, “Global technology driving local solutions.” Interesting, as that’s sort of the reverse of Xconomy’s mantra, which is reporting about local stories with global impact. But I think they’re two sides of the same innovation coin.

So, in “ESPN plays of the day” style, here’s my top 10 list from the conference (if only I had the video to go with it):

10. Setting up entrepreneurial zones. A panel led by Ty Carlson of Microsoft proposed denoting special “R&D zones” from Oregon to British Columbia geared toward supporting startups in fields like renewable energy, sustainable farming, and biotech. The idea would be to offer tax credits and other incentives to create a more entrepreneurial culture in the Northwest, especially in rural areas.

9. What government should and shouldn’t do. Investor and entrepreneur Martin Tobias of Seattle-based Kashless said, “Startups and investors can’t make a 10-year bet when you have a two-year tax credit.” Those conditions freeze out small companies, especially in costly ventures like energy. So government should create open markets and set minimum market sizes for new technologies, Tobias said. But it shouldn’t pick the technology winners themselves.

8. Northwest tech startups do the Olympics. Tom Guthrie, CEO of Seattle-based Twisted Pair Solutions, said his company has helped numerous agencies on the Olympic Peninsula inter-operate their radios—a key problem in disaster response and other scenarios. Twisted Pair, which is backed by Ignition Partners and other investors, is also working on a laser system to deliver broadband signals. Meanwhile, Paul Manson, CEO of Vancouver, BC-based Sea Breeze, talked about his company’s project to build a high-voltage, direct-current undersea cable between Victoria, BC, and Port Angeles, WA. This would be a fast, controllable power transmission component of a smart grid; it should be under construction by mid-2010, he said.

7. The world according to Dell. In a chat with Mark Anderson of Strategic News Service, Michael Dell said he is excited about China and the rest of Asia as fast-growing economies. He anticipates a U.S. recovery from the recession, but says, “I don’t think you’ll see an immediate snap-back.” And he likes South America as an emerging market (Dell does sales of more than $1 billion in Brazil alone). But Europe, not so much—he sees a lot of uncertainty in the workforce there.

6. Get ready for Dell smartphones. “Mobility is absolutely the theme,” Dell said. He was talking about the relative importance of desktop computers, laptops, netbooks, and mobile devices to …Next Page »

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A quiet epilogue to last spring’s heated Amylin proxy battle was the lead story in an otherwise slow week for San Diego life sciences news.

—Eastbourne Capital, which won a partial victory in a proxy fight against Amylin Pharmaceuticals earlier this year, sold its entire stake in the San Diego diabetes company. The San Rafael, CA-investment firm owned 12.5 percent of Amylin (NASDAQ: [[ticker: AMLN]]) during the proxy contest. One of its three nominees, Kathleen Behrens, was elected to the Amylin board.

—San Diego ranked second last year to Cambridge, MA, in total venture capital investment in medical technology firms, according to a report from Ernst & Young. San Diego saw $151 million invested in 15 deals, compared to $169 million in nine deals for Cambridge. E&Y said 2008 was tough for medical device companies, in part because of the economy and concerns about health care reform. Southern California, which E&Y defines as San Diego and Orange County, has 82 venture-backed and 41 public medical technology companies, one of the highest concentrations in the country.

—Illumina (NASDAQ: ILMN) acquired worldwide rights to commercially develop Orchid Cellmark’s (NASDAQ: [[ticker: ORCH]]) single base nucleotide extension technology for forensics and diagnostics. Under the deal, Illumina paid Princeton, N.J.-based Orchid $850,000 up front and agreed to pay $150,000 in milestone payments.

—Avanir (NASDAQ: AVNR), which is located just across the San Diego border in Orange County, said its experimental drug for treating unprovoked emotional outbursts reached secondary endpoints in a clinical trial of people who had either multiple sclerosis or amyotrophic lateral sclerosis. Data presented at the annual meeting of the American Neurological Association in Baltimore showed that patients diagnosed with pseudobulbar affect experienced a statistically significant improvement in their mental states. Avanir previously announced that the drug dextromethorphan/quinidine, or DMQ, met the primary endpoint of reducing PBA symptoms—episodes of uncontrollable laughter or crying—by a clinically meaningful 30 percent. The drug could receive FDA approval during the second half of 2010.

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Lee Hood, the legendary researcher and entrepreneur who invented machines that made the Human Genome Project possible, has secured $30 million in venture capital for a startup that aims to detect cancer and neurodegenerative diseases like Alzheimer’s in their earliest and most treatable stages.

The new company is called Integrated Diagnostics, or InDi for short (not Integrative Diagnostics, as previously reported in government filings). The company has secured the first of three tranches of financing in a $30 million commitment from Menlo Park, CA-based InterWest Partners, the U.K.-based Wellcome Trust, and Germany-based dievini Hopp Biotech holding, which is part of a collaboration with the government of Luxembourg, according to a statement.

Integrated Diagnostics, which we first reported on more than a year ago—and again last month when the first public financing document appeared—is working to create a new generation of precise diagnostics. These tests are being designed to take a pinprick of blood and spot signature proteins that are associated with tumors, or Alzheimer’s disease. If successful, this work has the potential to shake up the healthcare system in three big ways, Hood says. It will make it possible for doctors to diagnose diseases much earlier; it will open the door to more individually tailored therapies that will have much greater odds of success; and it will allow doctors to follow up with patients to see if treatments they prescribe are really working at the molecular level, Hood says.

The dream for this company is as bold as anything Hood has done before at more than a dozen companies he has co-founded.

Leroy Hood

“This is going to transform medicine,” Hood says. “My view is that P4 medicine—predictive, preventive, personalized, and participatory—will emerge over the next five to 20 years, and this is the first step. This is going to be the platform in the initial days.”

The science behind this vision—which Hood and others call systems biology—seeks to go beyond the traditional study of one gene or one protein in isolation. Instead, Hood and his colleagues use high-powered computers to look at full networks of genes and proteins, and how they interact.

“We are optimistic that systems biology will become a critical tool in the development of personalized medicine and believe that Integrated Diagnostics is at the leading edge in this field,” said Julie Eskay-Eagle, head of The Wellcome Trust Health Care Investments, in a statement.

The founding intellectual property for Integrated Diagnostics comes from two main places—Hood’s lab at the Institute for Systems Biology in Seattle and Jim Heath’s lab at Caltech …Next Page »

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Sequenom (NASDAQ: SQNM), the San Diego medical diagnostics company that disclosed earlier this year it had “mishandled data” from a clinical trial, has met with investigators from the FBI and U.S. Attorney’s office looking into the matter, according to a regulatory filing today.

The company previously acknowledged the Securities and Exchange Commission was investigating, so it was not immediately clear if the Justice Department’s involvement reflects a more serious turn in the case. San Diego FBI spokesman Darrell Foxworth and Deb Hartman, a spokeswoman for the U.S. Attorney in San Diego, had no immediate comment on the company’s disclosure.

San Diego-based Sequenom said it was contacted by the U.S. Attorney’s office and NASDAQ officials after it announced on Sept. 28 that it ousted five employees, including CEO Harry Stylli and R&D chief Elizabeth Dragon, and two others resigned, following an internal investigation into mishandling of data to support the company’s non-invasive prenatal test for Down Syndrome. Company officials have met with representatives from the FBI and U.S. Attorney’s office, and added “we intend to cooperate fully” with their investigations, according to the regulatory filing.

Each of the officers who were dismissed has denied wrongdoing. A special committee of the board that investigated the matter since April said in a statement last week their work “has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved.”

The company’s new leader Harry Hixson, told investors last week that he will cooperate with an investigation by the Securities and Exchange Commission. Members of the Sequenom special committee and independent counsel have met with staff from the SEC’s Enforcement unit, the company said today in a regulatory filing.

Shares of Sequenom have plummeted 46 percent to $3.08 a share since the company announced the results of its internal investigation, and the dismissal of executives.

The company hasn’t said in detail what really happened, but it has repeated that the public and investors should no longer rely on the company’s previous claims to have developed a noninvasive prenatal blood test that was 100 percent accurate at detecting Down Syndrome when compared with the standard, more invasive tests known as CVS and amniocentesis. The company essentially said that its data handling protocols weren’t good enough, and that certain employees failed to provide adequate supervision of the process, leading to errors and inconsistencies in the data released to the public.

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Nexus Dx, a stealthy San Diego biotechnology company that appears to be an emerging diagnostics maker, has raised $9 million in new equity funding and $6 million in debt and options, according to a pair of regulatory filings.

The documents don’t say who is providing the money, but they list Risa Stack, a partner with Kleiner Perkins Caufield & Byers, as a director, along with William Gerber and Lionel Carnot, a pair of partners with Bay City Capital, a San Francisco venture firm. Nexus Dx lists James D. Merselis as president and CEO in the documents.

Merselis, as well as representatives for Kleiner Perkins and Bay City, didn’t immediately respond to requests for comment about the company. But if Merselis’ track record is any clue about what he might be doing in San Diego at Nexus Dx, the safe bet would be portable medical diagnostics. Merselis most recently made news in July 2008 when he was hired as CEO of San Jose, CA-based Alverix, a company that developed low-cost, handheld diagnostics with the accuracy of lab instruments, according to its website.

Before the stint at Alverix, Merselis was CEO of HemoSense, a company that developed diagnostics to help doctors manage the risks with blood-thinning drugs like warfarin that patients get after suffering a stroke. He also has 22 years of experience at Boehringer Mannheim Diagnostics, which is now part of Roche Diagnostics, according to a statement from Alverix when he took that job.

Gerber, one of the two Bay City partners on the Nexus Dx board, also has a long record in diagnostics. He was the CEO of Bothell, WA-based Epoch Biosciences before that company was acquired by San Diego-based Nanogen in 2004.

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Sequenom shares plummeted 44 percent today in after-hours trading after the San Diego-based company said it has ousted CEO Harry Stylli and its head of R&D in the wake of an investigation into mishandling of data for its prenatal genetic test for Down Syndrome.

Chairman Harry Hixson, 71, the former president of Amgen, has assumed the role of interim CEO of Sequenom (NASDAQ: SQNM), along with the responsibility for explaining the situation to investors on a conference call this afternoon. He couldn’t say much beyond his prepared remarks about what really went wrong with data handling procedures, because the company is facing class-action shareholder lawsuits, and is “fully cooperating” with an ongoing investigation by the Securities and Exchange Commission.

Whatever really happened, the company repeated that the public and investors should no longer rely on the company’s previous claims to have developed a noninvasive prenatal blood test that was 100 percent accurate at detecting Down Syndrome, when compared with the standard, more invasive tests known as CVS and amniocentesis. The company essentially said that its data handling protocols weren’t good enough, and that certain employees failed to provide adequate supervision of the process, leading to errors and inconsistencies in the data released to the public.

When asked by one analyst on the conference call today whether the company will seek to bring criminal charges against people responsible for the mishandling, Hixson would only say “we are fully cooperating with the SEC, and that’s all I should say.”

Sequenom shares fell $2.50, or 44 percent, to $3.20 in after-hours trading after the conference call. That’s a painful free fall for investors who bought last year on the enthusiastic news about Sequenom’s test, which drove shares up to $27.76 the day after the original announcement on Sept. 23, 2008.

Hixson, who said he plans to stay in the CEO job as long as he’s needed, acknowledged that he and Ronald Lindsay, the new senior vice president of R&D, have their work cut out. “This has been a significant setback and the company will face significant challenges ahead,” Hixson said on the conference call. He added, “It’s fair to say that Ron and I will have to work very hard to regain the confidence of investors.”

Even though the data can’t be relied upon anymore, Hixson said the company still …Next Page »

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[Update: 1:58 pm Pacific, 9/28/09] San Diego-based Sequenom has ousted president and CEO Harry Stylli after an investigation by independent members of the company’s board raised “serious concerns” about the mishandling of data to support the company’s non-invasive prenatal test for Down Syndrome, the company said today in a statement.

Besides terminating Stylli, the board ousted Elizabeth Dragon, the company’s senior vice president of research and development, and received resignations from Paul Hawran, the chief financial officer, and one other officer who wasn’t identified, the company said in a statement. Three other employees were also terminated.

While each of the officers has denied wrongdoing, the special committee’s investigation “has raised serious concerns, resulting in a loss of confidence by the independent members of the company’s board of directors in the personnel involved,” according to the statement. Members of the Sequenom special committee, and its counsel, plan to present the findings of the investigation to staff of the Securities and Exchange Commission.

Sequenom (NASDAQ: SQNM) has been through a nightmare of a year ever since it disclosed in April that it had opened the investigation into “mishandling” of clinical trial data to support the market introduction of SEQureDx, a first-of-its-kind noninvasive blood test for prenatal screening of Down Syndrome. Last October, Stylli went so far as to claim that Sequenom would become “the Google of molecular diagnostics” based on a study of 400 pregnant women which found its test was 100 percent accurate at predicting whether a developing fetus has Down. That finding excited investors, because such a test could supplant much more invasive and risky tests known as CVS and amniocentesis.

Sequenom had planned to roll out the commercial version of this test by mid-2009, but that was before the data mishandling came to light in April. Now, the company “is no longer relying on, and the public should no longer rely on, any of the previously announced test data and results for the company’s noninvasive prenatal test.” The company said it can no longer provide guidance for when it will complete R&D of the test, or start commercializing it, but stated that it still “continues to believe in the science underlying the test.”

Based on the findings of the investigators, who interviewed 40 witnesses and reviewed over 300,000 documents and e-mails, the company said it has imposed a number of new procedures to prevent something like this from happening again. These steps include new disclosure controls, changes in organizational reporting structure, enhanced ethics training, new procedures for storing samples, and a new science committee on the board of directors to oversee R&D strategy and activities.

Sequenom named chairman Harry Hixson, 71, as interim CEO, according to a regulatory filing. Fellow director Ronald Lindsay was named interim senior vice president of research and development. Controller Justin File has been designated as the principal financial and accounting officer.

[Update: 1:58 pm Pacific, 09/28/09]. Stylli didn’t immediately respond to a request for comment sent to his work e-mail.

The company is planning on holding a conference call at 5 pm Eastern/2 pm Pacific to discuss the findings of the investigation in greater detail. We’ll update this space or follow up with separate stories if we hear anything more of note.

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

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

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

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

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

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

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

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

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

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[Update: 09/21/09, 6:27 pm. See below.] Leroy Hood’s new idea for a company that detects cancer at its earliest, most treatable stages in the bloodstream has gotten some venture capital after a year of effort. Seattle-based Integrative Diagnostics has secured $7.5 million out of a $30 million equity round, according to a filing with the Securities and Exchange Commission.

The filing doesn’t say who invested in the company, and when I reached Hood by phone late this afternoon, he said the company was preparing a press release and not yet ready to make that disclosure.

Xconomy first described Integrative Diagnostics almost exactly a year ago, when Hood declared in an interview that “this company is going to transform medicine, I guarantee you.” Hood, the inventor of high-speed gene sequencing machines and founder of 13 biotech companies, said he was enthused by the potential for Integrative Diagnostics to usher in the era of what he calls P4 medicine—shorthand for predictive, preventive, personalized, and participatory medicine.

The idea is to create a new generation of more precise diagnostics that can look at a pinprick of blood and spot cancer cells at their earliest, most treatable, stages of development before people even have symptoms. The company is co-founded by Hood, his fellow faculty member David Galas at the Institute for Systems Biology, and Jim Heath, a chemist at Caltech who is the inventor of two technologies that improve measurement of blood proteins. One is a microfluidic chip that “will do for proteins what DNA chips did for messenger RNA or DNA fragments,” said Hood. The other is a set of simple chemicals Heath has developed to replace antibodies in diagnostic tests, which are hard to make and too unreliable, Hood said.

An earlier version of this technology was incubated starting in 2005 at the Accelerator, the Seattle-based venture-backed startup machine that’s affiliated with Hood’s Institute for Systems Biology. The company, called Homestead Clinical, was one of the companies that didn’t “graduate” from the Accelerator with venture rounds, like VLST, Allozyne, and Theraclone Sciences did.

Hood said at the time, about a year ago, that he thought it would take a couple months to get funding for Integrative Diagnostics, but that obviously stretched to a full year during the recession. He was bullish enough during that earlier interview to say he expected Integrative Diagnostics to give birth to at least five or six companies in the future. I expect to hear more details from the biotech pioneer tomorrow, and will be quick with updates when I know more.

[Additional comment from Carl Weissman, CEO of Accelerator, 09/21/09, 6:27 pm.]

“Integrative Diagnostics, or InDi, is partially based upon technology that was developed at Homestead Clinical Corp. while within Accelerator, or was the subject of an option agreement between Homestead and Caltech. So this is our fourth graduate,” Weissman says. “We always believed in the conceptual basis of the company at Accelerator, but we needed discovery technology to advance to a level that would enable the concept. InDi also disproves a long-held belief that no company could graduate from Accelerator without the financial support of Accelerator investors. We at Accelerator are very gratified with this outcome and fully support the company.”

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Optherion, a New Haven, CT-based developer of diagnostics an drugs for eye and kidney diseases, has raised $5 million in a planned $9.5 million convertible notes and warrants offering, according to an SEC filing. The company writes in the filing that the notes and warrants can be converted into capital stock under certain conditions. Colin Foster, president and CEO of Optherion, was not immediately available for comment this morning. Optherion turned heads when it announced a $37 million Series A round of financing in October 2007 to develop a treatment for age-related macular degeneration.

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Westport, CT-based diagnostics startup 3PrimiR has raised $2.1 million of a proposed $4 million round of equity financing, according to an SEC filing. Yale scientists launched the startup based on their research that involves how mutations in micro RNA molecules can be used in cancer diagnostics, according to the Yale University Office of Cooperative Research website. The scientists listed as founders of the company on the Web were not immediately available for comment this morning. The SEC filing did not name the investors in the round.

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Quidel’s woes from earlier this year look like ancient history now, thanks to surging worldwide demand for its quick diagnostic flu tests. The San Diego-based company said today that it expects to eclipse its quarterly sales and profit records as health officials stock up in anticipation of a worsening global flu pandemic.

Quidel (NASDAQ: QDEL) says it has been manufacturing diagnostic flu tests seven days a week since April. The company didn’t disclose any hard numbers from its financial forecasts for the quarter ending Sept. 30, although its best quarter ever came in the first quarter of 2008, when it reported $40.9 million in sales, and operating income of $13.6 million.

The company has benefitted from the public health scare of the year, which really kicked off in June. That’s when Margaret Chan, the chief of the World Health Organization, declared a new strain of “swine flu” virus was causing the world’s first official flu pandemic in 41 years. Even though the flu season hasn’t officially started yet, other public health agencies have also urged officials to be prepared. Quidel specifically attributed its demand to increasing flu incidence rates from the U.S. Centers for Disease Control and Prevention, and a report last week from the American College Health Association said that more than half of the 189 colleges and universities it tracks have reported cases of students with flu. Washington State University, in Pullman, WA, has reported 2,500 flu cases before classes even start.

“Quidel has experienced an unprecedented volume of orders by hospital and physician office labs for the QuickVue tests in the third quarter of 2009, coinciding with the start of school. Previously we had anticipated that third quarter flu sales would be solely a factor of physicians initially stocking shelves in preparation for the traditional October through May flu season, but we are already receiving reorders for influenza products, which is activity that we usually see in the fourth and first quarters of the year,” said Douglas Bryant, president and chief executive officer of Quidel, in a statement today. “Despite having delivered a record level of flu tests to customers, we continue to manufacture at high levels given notable increases in non-seasonal demand.”

This surge represents quite a turnaround for Quidel, which had some rough moments earlier in the year. Back in March, Quidel lost 20 percent of its stock value one day when it warned investors that an unusually light flu season had hurt sales of its diagnostic tests for flu and Strep A. Quidel laid off 10 percent of its workforce a couple weeks later.

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Waltham, MA-based Thermo Fisher Scientific (NYSE: TMO), one of the world’s leading makers of diagnostic devices and lab equipment, said today that it has purchased Hennigsdorf, Germany-based B.R.A.H.M.S. for €330 million (US $470 million). B.R.A.H.M.S. is known for making a line of in vitro diagnostic tests based on patented biomarkers, including a test for sepsis widely used in Europe. A Thermo Fisher spokesperson said the acquisition would complement the company’s existing line of immunoassay testing products and give it “a significant reagent manufacturing footprint in Europe.”

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Somebody forgot to tell the Northwest biotech community this is the height of vacation season. Our pages this week were packed with stories on financings, clinical trials, exclusive interviews and more.

—Rick Klausner, the former leader of the National Cancer Institute and the global health wing of the Bill & Melinda Gates Foundation, provided some intriguing insights on cutting-edge biology that he’s been following in his new job as a venture capitalist. Deep into this story, Klausner explains why he thinks Seattle-based Dendreon (NASDAQ: DNDN) is just scratching the surface of what immune-stimulating therapies will be able to do in the future.

—Targeted Growth gets its share of publicity for its camelina seeds that are used to make jet fuel, but further in the future, Targeted Growth envisions making a bigger impact with genetically modified algae that can be made to compete on price with petroleum. We got the story from a conversation with Targeted Growth’s Margaret McCormick.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) raised about $40 million last month, and lo and behold, this week it found yet another lone institutional investor willing to wager another $30 million that this company has brighter days ahead. Cell Therapeutics has asked the FDA to approve its experimental pixantrone therapy for patients with non-Hodgkin’s lymphoma.

—PATH, the Seattle-based nonprofit that works to improve health in poor countries, won the closest thing the humanitarian field has to the Nobel—the Conrad N. Hilton Humanitarian Prize. PATH president Chris Elias envisions using the $1.5 million cash award as seed capital for a five-year, $25 million plan to support innovative new global health technologies, and to support geographic expansion in Africa.

—Amgen scientists in Seattle had something to celebrate a week ago, but just one week later the picture has gotten a little muddier. Earlier, we reported that the first big prospective clinical trial confirmed the company’s hypothesis that panitumumab (Vectibix) can slow the spread of tumors for colorectal cancer patients with normal forms of the KRAS gene (and that the drug doesn’t help those with mutated forms). This week a second clinical trial in a sicker patient population found the same pattern with respect to slowing the spread of tumors, although the treatment didn’t actually help normal KRAS patients live any longer.

—Seattle Genetics put the finishing touches on its big stock offering, which ended up generating a grand total of $136 million. The Bothell, WA-based developer of cancer drugs (NASDAQ: SGEN) said its underwriters exercised all their options to buy an extra 1.65 million shares. JP Morgan and Goldman Sachs were joint book-running managers of the offering. (Apparently Seattle Genetics saw fit to use at least a little money to spiff up its website, too.)

—Seattle-based biotech consultant Stewart Lyman submitted another intriguing editorial for the Xconomist Forum on why Big Pharma companies have many reasons to make biologic drugs. Some of this is about science, but there’s politics and business to consider, too.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX), the maker of genetic analysis tools, is looking to hire an investment bank to consider whether the time is right to sell the company. Back in June, after it got crushed by bigger competitors selling DNA microarray tools, I profiled the company’s attempt to reinvent itself around cancer diagnostics.

— Light Sciences Oncology isn’t just about oncology anymore. The Bellevue, WA-based company said it has started enrolling patients in a clinical trial to see if it can treat benign prostatic hyperplasia, otherwise known as an enlarged prostate. The company’s technology uses light-emitting diodes, threaded into localized tissue, to activate a drug within a certain wavelength.

—Seattle-based Sound Pharmaceuticals, the developer of treatments for hearing loss, said this week it nailed down a $2.1 million contract from the U.S. Navy to continue developing its lead therapy. It’s the third grant the company has gotten from the Navy since 2005, and will enable it to beef up its pipeline of experimental treatments, says CEO Jonathan Kil.

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PATH, the Seattle-based nonprofit that works to improve health in poor countries, said today it has won the closest thing the humanitarian field has to the Nobel Prize—the $1.5 million cash award known as the Conrad N. Hilton Humanitarian Prize.

The news was delivered at an exuberant press conference this morning with PATH president Christopher Elias, Bill Gates Sr. of the Bill & Melinda Gates Foundation, and officials of the Hilton Foundation. The prize, given annually since 1996, has gone to other big-name health nonprofits in the past like Partners in Health and Doctors Without Borders. The story first appeared on The Seattle Times.

PATH, as I explained in this profile back in February, has such a broad portfolio of projects that it sometimes struggles to explain what it does in a sound bite. But essentially it seeks out clever, affordable technologies, and partnerships with clever entrepreneurs and government agencies, to help improve the health of have-nots around the world. It has developed or played a role in co-developing 85 different technologies being used to improve global health, such as needles designed to curb the spread of infectious diseases, simple diagnostic tests for common diseases, and stickers on vaccine vials that can tell whether the immunization has gone bad. We’ve written a lot about PATH in the past year, including its work to improve the nutritional value of rice, fix broken bones, purify water, and develop new vaccines that can withstand hot and cold temperatures.

“We were absolutely thrilled when we heard,” Elias said during a brief conversation after the press conference. “We’ve been nominated in prior years, but haven’t won.”

The award may not sound like a lot of cash for an organization with 800 employees and a $240 million annual budget, but Elias made it sound like he plans to get major bang for the buck. PATH plans to use the money to expand its field operations in Africa, to scale up big production of existing global health technologies, and to provide seed funding for new technologies.

He gave an example of what he means when he talks about leveraging resources. Five years ago, PATH wanted to compete for grants to improve health in South Africa, but couldn’t be a serious …Next Page »

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