[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm …Next Page »

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

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

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

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

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

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

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

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

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

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Few doctors knew much about a rare brain infection called PML back in 2005, when two patients on a hot new multiple sclerosis drug from Biogen Idec and Elan died from the side effect. The infection, at the time, was generally considered a death sentence. But now with three years of data from more than 60,000 patients worldwide who have taken natalizumab (Tysabri) under strict monitoring by physicians, a new picture is emerging that shows PML is still very much a serious threat, but that it isn’t nearly as deadly as first feared.

While each and every confirmed case of PML, known formally as progressive multifocal leukoencephalopathy, scares investors in Cambridge, MA-based Biogen (NASDAQ: BIIB) and Ireland-based Elan (NYSE: ELN), I sought to assemble a big picture view of exactly how deadly PML really is when I interviewed Al Sandrock last week. He’s the senior vice president of neurology R&D at Biogen, and an assistant clinical professor of neurology at Harvard Medical School.

Before diving too far into the numbers about the risk of Tysabri, a little background is required. This drug, an antibody treatment designed to block certain white blood cells that cause MS when they attack nerves, has a history of also making patients vulnerable to infection. Biogen and Elan yanked it off the market in February 2005 after two cases of the brain disease were confirmed among patients taking the drug; a month later, a third case was confirmed. But legions of patients still demanded the drug, considered to be the most effective medicine on the market at reducing the disabling nerve damage from multiple sclerosis flare-ups. The FDA allowed the drug to return to the market in July 2006 after determining its benefits outweighed the risks, but it also forced doctors into a strict monitoring program to keep an eye out for the early signs of PML.

This matters not just for doctors and patients, but for Biogen’s and Elan’s financial futures. The drug, Biogen’s fastest-growing product, generated $560 million in sales in the first nine months of this year. (The importance of this drug is one reason why investors get so ticked at Biogen when it isn’t exactly forthcoming about every newly diagnosed case, but that’s a bone to pick another day.)

When the drug came back on the market, its FDA-approved prescribing information contained a prominent warning that about 1 out of every 1,000 patients on the drug were likely to get PML. But that was really just a forecast, and the actual risk-benefit balance for this drug is really a moving target that shifts over time when a new case is confirmed. So I sought to build a simple chart when I spoke to Sandrock that provides a snapshot of PML cases in February 2005, when the drug was pulled off the market because of the PML risk, versus those confirmed as of yesterday. Here’s what I gathered:

The February 2005 figures came from clinical trial data and formed the foundation for the FDA-required warning of the 1-in-1,000 chance of getting PML. The more recent figures include all the experience of patients who have gotten the drug since it was returned to the market in July 2006. The thing that jumped out at me was the fact that only five of the 27 confirmed patients with PML have died—meaning that the current survival rate stands at over 80 percent.

That curious fact has been buried under a rash of scary headlines …Next Page »

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cambridge,MA-based biotech Alkermes said this morning that its long-acting naltrexone injection (Vivitrol) was more effective in treating opioid drug dependence than placebo in a Phase III clinical trial. The 250-patient clinical trial compared urine samples of patients who took the firm’s once-per-month injection of naltrexone versus those who took placebo over the last 20 weeks of a 24-week treatment period. Alkermes (NASDAQ:ALKS) said that it plans to file an application with the FDA for approval of its drug for treating opioid dependence in the first half of 2010. The FDA approved the drug for treating alcohol dependence in 2006.

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San Diego-based Cadence Pharmaceuticals (NASDAQ: CADX) said today that the FDA has pushed back its deadline for reviewing the company’s intravenous pain reliever by three months. The FDA’s new deadline for completing its review of IV acetaminophen is now Feb. 12. The company said it remains confident it will win FDA approval, although shares fell 5 percent today on the news.

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[Update: 6:22 pm Eastern, 11/13/09] Just when you thought it couldn’t get worse for Genzyme, it did. The FDA reported today that it has found tiny bits of garbage—steel, rubber, and fiber—in vials of five of the major drugs produced by the Cambridge, MA-based biotech company.

Genzyme (NASDAQ: GENZ) shares fell $3.89, or about 7 percent, to $49.28 at the close of trading today after the FDA made its disclosure on its website.

The agency said it found the new contamination in five of Genzyme’s top-selling products—imiglucerase (marketed as Cerezyme), agalsidase beta (Fabrazyme), alglucosidase alfa (Myozyme), laronidase (Aldurazyme), and thyrotropin alfa (Thyrogen), according to a report from the Associated Press. The FDA estimates the contamination only affects about 1 percent of Genzyme’s products, and the agency says that no serious side effects have been reported related to the latest contamination, according to the AP.

This is the latest major setback for Genzyme’s manufacturing operation, which was hit by a viral contamination in June that forced it to shut down production at its Allston Landing plant over the summer. That earlier contamination caused Genzyme to slash its sales estimates for the year, and created a new opportunity for competitors like Shire and Protalix Biotherapeutics.

Christopher Raymond, an analyst with private equity firm Robert W. Baird who covers Genzyme, said in a note to clients today that the latest contamination shouldn’t affect the company’s ability to start shipping new batches of imiglucerase and agalsidase beta to patients, but noted that “continued issues at Allston, and the fact that FDA inspection of Allston remains ongoing is not encouraging.” Fellow Baird analyst Tom Russo noted that “underscores the upside potential” of Shire to gain new market for its products.

[Updated comment from Genzyme, 6:22 pm Eastern, 11/13/09]

Genzyme issued a statement later Friday about the situation. The company says a global review of its safety database “has not identified any safety concerns to suggest that patients treated with Genzyme products have been exposed to foreign particles. However, a theoretical safety risk remains should a particle enter the bloodstream.”

The company added that doctors are being reminded to visually inspect vials for foreign particles before patients are injected. It says the rate of foreign particles in vials has not increased over time, although the company “remains committed to reducing the frequency of foreign particles in all of our products.”

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Cequent Pharmaceuticals, the Cambridge, MA-based developer of RNA interference drug technology, said today it has filed an application with the FDA to begin the first clinical trial of an orally-delivered RNAi treatment. Cequent is seeking to test its drug, CEQ508, at a variety of doses in 18 patients with polyps that lead to colon cancer (familial adenomatous polyposis). Cequent hopes to get the trial underway before the end of March, at the Fred Hutchinson Cancer Research Center in Seattle.

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Seattle-based Oncothyreon (NASDAQ: ONTY) said it has decided to advance an experimental cancer drug into mid-stage clinical trials in the first half of 2010. The company plans to run two or more trials of PX-866, an oral pill made to block the PI3 Kinase pathway implicated in cancer cell growth. This shift in priorities, from cancer vaccines to cancer drugs which I profiled back in March, was applauded by analyst Simos Simeonidis at Rodman & Renshaw. “The company has not only been transformed into a well-run and very lean operation, but has literally been brought back from the brink of disaster,” Simeonidis wrote in a note to clients.

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Alnylam Pharmaceuticals, a Cambridge, MA-based developer of RNA-interference drugs, said today that it sees a new business opportunity in using its gene-silencing technology to increase the output of biomanufacturing processes. The company, which has already successfully licensed its RNAi technology for drugs, is looking to make additional money from its science by licensing it for manufacturing many types of biotech drugs.

The company (NASDAQ:ALNY) is presenting data today at its R&D day in New York that support the use of RNAi to silence certain genes in Chinese hamster ovary cells, which are used in biomanufacturing. Alnylam’s data show that the RNAi technology improved the viability of the cells by 40 to 60 percent, compared with untreated cells. The firm used RNAi to switch off certain genes that control metabolism in the cells, as well as genes involved in a cellular self-destruct mechanism.

An internal group at the company called Alnylam Biotherapeutics is advancing the application of RNAi technology in biomanufacturing. The firm, which plans to retain ownership of this use of the technology, says it could improve the production of existing biotech drugs, new biologics, and copies of biological treatments, known as “biosimilars” or “biogenerics.”

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Some San Diego life sciences companies reported a burst of new financing, while embattled Sequenom told investors it’s trying to conserve its available cash. Here’s our rundown of the latest highlights:

—San Diego’s Trius Therapeutics, a venture-backed biotech developing a new antibiotic for treating acute and life-threatening bacterial infections, disclosed plans to raise as much as $86 million in an initial public stock offering. With additional funding, the company will proceed to Phase 3 clinical trials of torezolid, which Trius describes as a second-generation successor to linezolid, the Pfizer antibiotic known as Zyvox.

—Life Technologies (NASDAQ: [[ticker: LIFE]]), the Carlsbad, CA-based provider of biotech instruments and lab supplies, agreed to acquire Woburn, MA-based BioTrove, which has developed a high throughput gene expression and genotyping analysis system.

— SpectraScience, the San Diego medical device maker, has raised more than $4.3 million through a private placement that combines preferred shares and warrants. SpectraScience (OTCBB: [[ticker: SCIE]]) CEO Jim Hitchin told Bruce the offering closes a $5 million round the company began earlier this year.

—PaxVax, a San Diego startup backed by Seattle’s Ignition Capital, has raised $2 million of a planned $6 million investment round. The biotech founded in early 2007 is developing a new type of vaccine that is administered as oral tablets and avoids much of the requirements that conventional vaccines require.

—Sequenom, San Diego’s embattled diagnostics company, said it expects to end the year with $39 million in cash—but that’s not enough to get through 2010 without raising funds or slowing spending. In April, Sequenom (NASDAQ: [[ticker: SQNM]]) disclosed that it had “mishandled data” from a prenatal Down syndrome diagnostic test, indefinitely postponing that product launch.

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[Corrected: 7:26 am Pacific, 11/12/09] San Diego-based Altair Therapeutics, a company developing inhalable drugs to block inflammatory proteins involved in asthma and other respiratory diseases, has closed on the second part of a Series A venture financing, meaning it has raised a total of $17 million this year. [An earlier version said the company has raised $17 million since inception, but that tally didn't count an undisclosed seed investment].

Domain Associates led the latest investment round, and AgeChem Venture Fund joined previous investors Thomas, McNerney & Partners, Forward Ventures, and the group that spun out Altair’s technology in the first place—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS). Altair plans to use the cash to finish a mid-stage clinical trial of 30 asthma patients who will be randomly assigned to get the company’s AIR645 drug candidate, or a placebo.

Altair actually got started two years ago by Isis and Thomas McNerney. The idea was to see if Altair could apply the things Isis knew about gene-silencing technology, known as antisense, as an inhalable drug for respiratory diseases. The concept was an offshoot that wasn’t part of Isis’ core portfolio of drugs for cardiovascular and metabolic diseases. The idea was to make this inhaled antisense drug block a couple of inflammatory proteins that are implicated in asthma attacks—IL-4 and IL-13. The company says it has found some surprisingly encouraging results in early human tests on about 80 people. If that can be confirmed in subsequent trials, it could offer a new treatment option for a disease that affects about one out of every 18 people in the U.S., according to the National Institutes of Health.

“This is a great opportunity for antisense drugs,” said CEO Joel Martin, when I visited his office a few weeks ago. On the statement announcing today’s financing, he added: “We are thrilled.”

The Altair story really began in October 2007, around the same time another company spun out of Isis, called Excaliard Pharmaceuticals. In the case of Altair, Susan Gregory was the inventor and champion of the asthma drug’s prospects inside Isis. She ended up spinning the technology outside the company with help from Pratik Shah, a partner with Thomas McNerney. The deal was structured so that Isis would own 18 percent of the new company in preferred stock, and it stands to receive development milestones and royalties if Altair is successful.

Martin, one of the early scientists at Isis, first got exposed to the technology while he was still a partner with Forward Ventures in San Diego. He left Forward in October 2008, and liked what he saw at one of its portfolio companies, Altair, that he personally joined as CEO in May.

Ivor Royston, a partner with Forward and a member of Altair’s board, told my colleague Bruce Bigelow yesterday that he considers Altair an obvious pick for the portfolio.

“Even in the worst market, with the most restricted kind of financing, this would be a good investment,” Royston says. “This company is in the sweet spot for any venture capital firm.”

Altair sees plenty of room in the market for a new asthma drug. People use inhaled …Next Page »

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Cambridge, MA-based Aileron Therapeutics has bet the company on the idea that it has discovered a whole new class of drugs that, like RNA interference, can hit targets in the body that are beyond the reach of conventional chemical compounds and biotech therapies. Today, scientists are reporting the drugs can achieve this goal and block one of the prized targets that has eluded cancer researchers for years.

Scientists at Harvard University, the Dana-Farber Cancer Institute, and the Broad Institute of Harvard and MIT say they have used a synthetic “stapled peptide” from Aileron to get inside the nucleus of cells and stop the production of a protein called Notch that’s implicated in uncontrolled growth of cancer cells, according to research being published this week in Nature. The work was repeated in multiple disease models and in animal tests, which showed blocking this target led to cancer cell death, without the side effects of previous drugs, the researchers said.

This finding is bound to stir curiosity in the cancer research world for Aileron’s stapled peptide drugs. Buzz for the new drug technique picked up in June when Aileron raised $40 million in venture capital from a syndicate that included four major drugmakers—Roche, Novartis, Eli Lilly, and GlaxoSmithKline. While a few other peptide treatments are on the market for diabetes and osteoporosis, most of these drugs don’t work because they get chewed up by enzymes in the body before they can hit their target. Aileron’s key insight is to chemically “staple” these peptides in a way that holds them together in a properly folded shape, protecting them and preserving the unique structure that gives them the ability to hit very specific protein targets inside cells, like Notch.

“There have been many valiant efforts that have gone after this target, and they’ve all failed,” says Aileron CEO Joe Yanchik. “This is the first potentially viable therapy.”

As Yanchik explained to me in a profile of Aileron a year ago, traditional small-molecule chemical drugs, like Pfizer’s atorvastatin (Lipitor), usually need “a nice deep pocket” on the targeted protein for the compound to settle into. The problem is that only about one-tenth of proteins have this kind of pocket, while many more have long, flatter pockets inside that are “like a hot dog bun, for lack of a better term,” he said. Engineered peptides, which are protein fragments, are thought to have improved properties because they are larger than traditional small molecules and able to nestle into some of those bigger pockets, but they aren’t so big they can’t get inside cells, like traditional antibody drugs that operate on the cell surface, Yanchik says. Done right, a stapled peptide ought to be efficient at penetrating cells, and bind tightly enough and long enough to its target to have the intended effect.

Researchers led by James Bradner at Dana-Farber and the Broad Institute as well as Gregory Verdine at Harvard, said they found that the Aileron drug was able to bind directly and tightly to Notch in the nucleus of cells. That target is known as a transcription factor—a protein that binds to DNA in the nucleus of cells and regulate important biological processes. By blocking Notch, the scientists found they could prevent a cancer-causing gene from assembling the necessary proteins to grow, and suppress the production of other growth proteins that cancer cells need to live.

This idea of blocking transcription factors is important because they have been traditionally inaccessible, and there are an estimated 1,500 of these proteins involved in regulating key biological processes involved in diseases such as arthritis, asthma, diabetes, infectious diseases, and cancer, Aileron says.

“These results are tantamount to a declaration of open season on transcription factors,” said Verdine, a professor of chemistry at Harvard University and co-chair of Aileron’s scientific advisory board, in a statement.

Getting inside cells to specifically target previously “undruggable” targets sounds a lot like what gets so many scientists are excited about RNA interference …Next Page »

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We spotted three New England startups today that have recently filed papers with the SEC to report new rounds of equity financing. Other than their common geographic ties to region, it’s tough to see any relationship among these firms. But here’s a brief synopsis of the deals and what each company does:

—Waltham, MA-based Affectiva reports it has raised $1.7 million of a planned $2 million round of equity financing. This spinout of the MIT Media Lab is developing a biosensor, called the “Q,” that is designed to “measure and communicate emotional arousal” of the person wearing it, according to the firm’s website. The company says that it grew out of a collaboration at MIT to find ways to help people with varying degrees of autism. Rosalind Picard, the director of the Affective Computing Research Group at MIT, is listed as a director and executive of the company. (These filings don’t list investors in the companies.)

—Meanwhile, Westford, MA-based Aylus Networks, previously backed by Matrix Partners and North Bridge Venture Partners, reported raising $5.7 million out of a planned round of about $9.3 million. The company, formed in 2005 by wireless entrepreneur Shamim Naqvi, seeks to enable rich data communications such as video telephony, video blogging, video sharing, and social networking for mobile operators.

—Have you found yourself willing to shell out gobs of cash on your pet’s drugs? I have, and I’m sure many other people have, too. Putney, a Portland, ME-based provider of specialty drugs for the veterinary market, reports that it has raised $6.6 million of a proposed $6.8 million round of equity financing. The company—which was founded in 2006 by pharmaceutical entrepreneur and CEO Jean Hoffman—says that it plans to double the size of its staff, revenues, deals, and more in 2010. (I’ve got a guess as to how the new capital will be spent.)

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