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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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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TEDMED had Martha, Goldie, and other celebrity speakers, but San Diego-based Amylin Pharmaceuticals broke this week’s big news when it signed up a big Japanese partner to develop its line of obesity drugs. It’s all part of your regular dose of San Diego biotech news, and it’s ready now:

—Amylin Pharmaceuticals, the San Diego-based diabetes drug specialist, announced that it has formed a partnership with Japan’s Takeda Pharmaceuticals, which agreed to carry most of the development costs for Amylin’s weight-loss drugs. In return, Takeda gets a worldwide exclusive license to eventually commercialize Amylin’s experimental obesity drugs, including the combination of pramlintide and metreleptin, and davalintide.

—After a five-year hiatus, TEDMED founder Richard Saul Wurman, and president, Marc Hodosh (who also is an Xconomist), brought the conference on medical technology, entertainment and design to San Diego’s Hotel del Coronado. TEDMED announced during the conference, which included presentations by Boston Scientific co-founder (and Xconomist) John Abele, Martha Stewart, and Goldie Hawn, that the conference will return to the same location next October.

—I only had time to attend a fraction of the presentations at TEDMED last week. One of my favorites talks, though, was delivered by Bill Davenhall, who leads the health and human services marketing team at ESRI, the Redlands, CA, giant in geographic information systems. Davenhall talked about the importance of including patients’ “place histories” as part of their medical records and raised an interesting question: Will the electronic health record systems being created today have the capability to add data in new categories—such as “geo-medicine”–that aren’t typically included in today’s patient records?

—New York-based Xenomics filed a lawsuit against San Diego-based Sequenom that alleges Sequenom misrepresented the progress in its development of a prenatal test for Downs syndrome. Xenomix says it would not have licensed its patents to Sequenom had it known the truth.

—Denise profiled San Diego-based Sirigen, an early stage medical diagnostic company that is developing technology that uses light-emitting polymers to detect bits of DNA. Sirigen founder Brent Gaylord developed the technology at UC Santa Barbara, extending the significance of UCSB physicist and Nobel laureate Alan Heeger’s discovery of conductive polymers.

—The FDA told San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) and its partner Eli Lilly the companies can now market exenatide (Byetta) as a frontline, standalone therapy for diabetes. The drug was previously approved for use with other drugs, or as a fallback option when other tretments failed.

—Vertex (NASDAQ: VRTX), the Cambridge, MA, biotech with operations in San Diego, said the latest trial of its telaprevir treatment for hepatitis C was able to attain the clinical definition of a cure in more than 80 percent of patients who got the drug. The finding is part of the mounting evidence Vertex is gathering on its quest to develop the first-of-its-kind protease inhibitor for the chronic liver disease.

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San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) and its partner Eli Lilly got some positive news late Friday from the FDA. The agency now says the companies have clearance to market exenatide (Byetta) as a standalone therapy for diabetes, which means doctors won’t need to combine it  with other common drugs, or hold it in reserve as a second option in case other drugs fail.

Exenatide is Amylin’s biggest selling product, generating $678.5 million in revenue last year, accounting for about 90 percent of its sales. An estimated 23.6 million people in the U.S, or almost one out of every 12 people, is estimated to have diabetes, so the expanded approval of Amylin and Lilly’s drug may allow the companies to capture a larger percentage of patients. The one downside is that exenatide currently requires twice-daily injections, so it’s hard to say how many new patients who are eligible for the drug will opt to take it instead of cheaper and more convenient oral pills.

“The expanded indication gives physicians the option to prescribe Byetta as a first-line treatment, increasing the number of patients who may benefit from the medication and providing an opportunity to treat patients with Byetta earlier in the disease,” said Orville Kolterman, Amylin’s senior vice president of research and development, in a company statement. “Type 2 diabetes is a complex disease, so it is essential that healthcare professionals and their patients have a wide array of treatments that can effectively control blood glucose levels.”

A more important milestone for Amylin and Lilly will come in March, when the FDA has a deadline to complete its review of a once-weekly injectable version of exenatide. That’s the next version of the diabetes franchise at Amylin that analysts say has blockbuster sales potential.

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“Ouch.” I’m sorry to say I didn’t write about the grand opening that drug giant Eli Lilly held in La Jolla yesterday for its new biotechnology center of excellence. I didn’t know about it.

I wrote last December about the difficulty of getting information from Lilly about the status of its plans to combine Applied Molecular Evolution and SGX, and suggested a more appropriate name for the facility might be “Lilly’s San Diego Biotechnology Center of Silence.” I was pleasantly surprised afterward when a Lilly media rep cordially reached out to provide contact information, and assured me that I’d be included when Lilly’s new eco-friendly center was opened. Oops.

It was my own fault, of course, for failing to spot the announcement that Lilly moved on the PR Newswire yesterday. What can I say? I got busy. Such is the nature of this business. The media demands a lot of hand-holding. (But then, Lilly did tell me I would be included.)

The center is officially known as the Lilly Biotechnology Center—San Diego. In its statement yesterday, Lilly says of the nearly 200 scientists based at the center, more than half are from AME, a local biotech that Lilly acquired in 2004 that specializes in biotechnology-based therapies built specifically from human proteins. Many of the rest are from SGX Pharmaceuticals, a San Diego startup that Lilly acquired in 2008 and merged into its discovery chemistry research and technology division.

I have to say I don’t have an excuse for this one either: In a speech in downtown San Diego today, Lilly’s chairman and CEO John C. Lechleiter declared that the engine of biopharmaceutical innovation is broken. In a statement released by Lilly, Lechleiter says, “At a time when the world desperately needs more new medicines—for everything from H1N1 to Alzheimer’s disease – we’re taking too long, spending too much and producing far too little.”

I’m sorry to report that I didn’t know about this in advance either.

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I’ve heard about serial entrepreneurs who start a company, build it up to a certain point, sell it to someone bigger, and then repeat the whole cycle again. But I had never heard of a true biotech sequel until I met Randall Woods a couple weeks ago.

Woods is the CEO of San Diego-based Sequel Pharmaceuticals, and a well-known entrepreneur who’s also the chairman of Biocom, the local biotech trade association. The two-year-old startup is literally the sequel to his previous company, Novacardia, a company that Woods led until it was sold for $350 million to Merck on Sept. 6, 2007.

Sequel came less than 24 hours later. The same nine employees, in the same office, with the same management team, and the same board (except for one), set their sights on a new goal. The idea was to take a drug in the early stage of development, steer it to the later stage of trials until the concept is more proven, and then sell it for a bundle to big drugmaker. Novacardia took a drug into pivotal studies for congestive heart failure, then passed the baton to Merck for the final phase of development. Sequel aspires to do the same thing with a different drug for a different heart ailment—atrial fibrillation.

“We didn’t even have a 24-hour break,” Woods says. “We just changed the sign on the door.”

This group of people clearly has skill in cardiovascular disease, so it knows something about the new problem. Atrial fibrillation is an abnormal heart rhythm that can cause acute attacks, or a chronic condition whose symptoms include shortness of breath, chest pain, or stroke.

Randall Woods

About 2.2 million people in the U.S. are estimated to be affected, and it caused 470,000 people to be hospitalized in 2003, according to the American Heart Association. The incidence is thought to be increasing as the Baby Boomers get older. There haven’t been many new developments in treatment either, except Sanofi-Aventis’ dronederone (Multaq), which first won FDA approval in July. That drug showed it could reduce hospitalizations from cardiovascular disease and deaths from all causes by 24 percent when compared to a placebo. Other than that, patients sometimes take beta-blockers to slow down their heart, or warfarin to thin their blood, Woods says. Another treatment from Vancouver, BC-based Cardiome Pharma is seeking FDA approval.

Sequel’s drug, called K201, is designed …Next Page »

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From Australia comes word that San Diego-based Amylin Pharmaceuticals’ biggest drug, exenatide (Byetta), has been caught up in a controversy over a diabetes report co-sponsored by Amylin’s marketing partner, Eli Lilly & Co.

The study, compiled by researchers at the University of Canberra’s National Centre for Social and Economic Modelling (NATSEM), warned that 1.6 million Australians would be diagnosed with diabetes by 2050, according to an account in The Australian. Over the next 40 years, according to the study, people with type 2 diabetes would have 270,000 heart bypass operations, 250,000 strokes, and 750,000 cases of kidney complications.

Although the study mentioned exenatide, the generic name for Byetta, only in a footnote, it asserted that drugs in the same class as exenatide could produce greater health improvements for diabetic patients than exercise or existing drugs. And that seems to have sparked a bit of a controversy Down Under.

The newspaper reports that some experts were concerned that the report was part of a marketing push to win public subsidies for the medication. Australia’s Public Benefits Scheme recommended the drug for inclusion last year, but the federal government has yet to respond. This means exenatide is available only on private prescription at a relatively high cost. Consequently, it is not widely used.

NATSEM defended the integrity of the research, saying the projected increase in type 2 diabetes was a legitimate concern. Lilly was one of seven organizations to support the research. “As an independent research organization, the last thing we want to do is compromise our position, and for people to regard the position we are taking as biased towards the funding body,” NATSEM research director (health) Laurie Brown told the newspaper. The account came to my attention through the Pharmalot blog.

Lilly is responsible for developing and commercializing Amylin’s diabetes drug outside the U.S. The partnership agreement calls for Lilly to pay Amylin a royalty on non-U.S. sales after a one-time cumulative gross margin threshold amount is met. Amylin told investors in June that it expected to begin receiving royalty payments in 2010. Operating profits from exenatide sales in the U.S. are shared equally by the two companies. Amylin reported exenatide sales of $503.9 million for the first nine months of 2009, compared to $515.9 million during the same period a year earlier.

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One of the scientific co-founders of San Diego-based Fate Therapeutics, along with his team at The Scripps Research Institute, is reporting a major advance that will make it faster, cheaper, and potentially practical on an industrial scale to turn adult cells into stem cells that can morph into any type of cell in the human body.

Sheng Ding and his colleagues at Scripps have found a combination of three conventional small-molecule chemical compounds that can coax adult human cells into an embryonic-like state. The new technique is about twice as fast as existing methods, and produces 200 times more cells per batch. The research in how to efficiently make these so-called “induced pluripotent stem cells” was sponsored by Fate, and is being published online today in the journal Nature Methods.

The technology, which is exclusively licensed to Fate through its sponsored research agreement with Scripps, is a big feather in the cap for the startup company as it seeks to strike deals with pharmaceutical and biotech companies that are looking get into the stem cell game. Fate has been a leader in the field since its founding two years ago by a group of top stem cell scientists from Harvard University, the University of Washington, Stanford University, and Scripps. One of those co-founders was Ding, a young scientist who got his first faculty post in 2003 at Scripps.

“This is the first example in human cells of how reprogramming speed can be accelerated. I believe that the field will quickly adopt this method, accelerating [induced pluripotent stem cell] research significantly,” Ding said in a statement from Scripps.

The latest advance builds on the discoveries of Shinya Yamanaka of Kyoto University and James Thomson of the University of Wisconsin, who showed for the first time two years ago that scientists could transform adult human cells into a pluripotent state, like that of cells in an early embryo. That was important because it was a way to circumvent the political and ethical controversy over destroying embryos in order to harvest their stem cells for research.

Pioneering as that work was, it was nowhere near ready for prime-time use in the biotech and pharmaceutical industries. Yamanaka and Thomson used viruses to insert multiple copies of four genes into adult cells. Two of the genes are known to cause cancer. Given that risk, it’s almost impossible to imagine regulators ever allowing cells with that kind of genetic modification to be injected into people who want to, say, regenerate new pancreas cells to treat their diabetes. The other big problem with the original method was that it took four weeks from start to finish, and only worked in about one out of every 10,000 cells.

Today’s announcement is the second big stem cell paper this year from the Ding lab. In May, the Ding lab reported that it had essentially gotten around …Next Page »

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[Update: 10/16/09, 3:18 pm Eastern] Flexion Therapeutics, the Woburn, MA-based company that seeks to reduce the time and expense of drug development’s risky early steps, has raised $33 million in a Series A venture round, according to a statement. Earlier in the day, we reported the deal was for $20 million, out of a potential round worth $43 million, based on a filing the company submitted to the Securities & Exchange Commission.

The financing was led by Versant Ventures, and included two founding investors, 5AM Ventures and Sofinnova Partners. The government record lists Brad Bolzon and Sam Colella, a pair of partners at Menlo Park, CA-based Versant Ventures, as directors. Rafaele Tordjman, a partner with Sofinnova, is also listed as a director. Flexion’s CEO is Mike Clayman, the former vice president of Eli Lilly’s Research Laboratories, and its chief operating officer is Neil Bodick, the founder of Lilly’s drug development incubator, called Chorus, according to the company’s website.

Flexion is built around the idea of shepherding drugs from the earliest stages of development, where they aren’t worth much, into their initial clinical trials—the first real opportunity for them to prove their worth. It usually takes three to four years and $15 million to $40 million in the pharmaceutical industry to do this, Flexion says, but the startup thinks it can cut that time frame in half, while slashing the costs to as little as $3 million to $5 million. It aims to do this through what it says are novel types of licensing deals with pharmaceutical and biotech partners, and by using “compact experimental design” and maintaining a small team with little overhead costs.

“Companies are forced to make trade-off decisions without clinical data and compounds are often shelved without compelling rationale. Among these compounds are assets of substantial but unrealized medical and commercial value,” the company says on its website. “Flexion is forming partnerships with a small number of pharmaceutical firms; in these partnerships, Flexion provides both the resource and expertise to quickly and efficiently advance delayed or de-resourced assets to clinical proof of concept.”

Flexion has apparently has persuaded a few people in Big Pharma that it is onto something. The company said in today’s statement that it expects to announce “three major partnerships” with pharmaceutical companies.

“We have been overwhelmed by the response from the pharmaceutical industry, which very much wants to partner with the proven team at Flexion,” said Andrew Schwab of 5AM Ventures, in the statement.

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The news has been breaking fast and furious here at Xconomy, just as we are putting the finishing touches on a terrific event on Monday that will explore the 20-year outlook for the Seattle region as a life sciences hub.

—Xconomy dug up an exclusive late Friday afternoon from a couple SEC filings that showed Seattle-based Dendreon has added two heavy hitters to its board of directors. They are Ian Clark, the incoming CEO of the Genentech unit within Roche, and Pedro Granadillo, the former senior vice president of manufacturing at Eli Lilly. Dendreon (NASDAQ: DNDN) announced the move officially, and the wire services picked up the report, on Monday.

—Amgen generates $15 billion a year in revenue, and plows back 20 cents on the dollar, or about $3 billion, back into research and development. But what does it really do with that money, and what ideas does it have to improve on the industry’s abysmal 1-in-10 average success rate for new drugs entering clinical trials? Senior vice president Joe Miletich offered up some fascinating insights on what Amgen is trying to do, and how Seattle and Boston teams contribute, in an exclusive interview.

—Leroy Hood, the biotech pioneer who has started more than a dozen companies, announced this week that he has raised another $30 million to launch a startup that embodies his latest vision—Integrated Diagnostics. This company will seek to develop instruments that can detect cancer and Alzheimer’s disease by looking at concentrations of proteins from a tiny droplet of blood.

—Seattle-based Omeros (NASDAQ: OMER) pulled off the first IPO of a true biotech company anywhere in the U.S. since February 2008. The company netted about $62 million, part of which will go to support pivotal trials of its treatment to help improve recovery from knee surgery. But other biotechs watching this as a bellwether have to be a little concerned after seeing Omeros price its offering at $10 a share, the low end of its forecasted range. The stock has been heading downhill ever since it started trading, to $7.44 at yesterday’s close.

—Chris Henney, the co-founder of Immunex, Icos, and Dendreon, offered up a very entertaining list of six tips for investors on how to spot a winning biotech company. He made these remarks at a luncheon event organized by the CFA Society in Seattle, in front of about 100 investing professionals.

—Medical device startups are feeling a lot of pain this year, for a lot of reasons, and it was all laid bare this week in a sobering report by Ernst & Young.

—One of the more fortunate medical device companies in Seattle, Uptake Medical, secured an additional $1.2 million in equity financing, meaning it has now raised $4.6 million out of a venture round that could be worth as much as $13.3 million. The company is developing a minimally invasive technique for treating chronic lung diseases by using hot vapor to seal off damaged parts of the lung so air doesn’t get trapped there.

—Lots of people are wondering whether Roche will retain most of the talent at Genentech in the wake of its acquisition this spring. Bothell, WA-based Seattle Genetics (NASDAQ: SGEN) pried loose at least one important player from the industry’s pioneering company, naming Bruce Seeley to the newly created position of executive vice president, commercial, with responsibility for future sales and marketing. Seattle Genetics will lean on him to spearhead what it hopes will be a successful commercial rollout of its “empowered antibody” for Hodgkin’s disease.

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Seattle-based Dendreon recruited some serious industry experience in marketing and manufacturing today to its board of directors. The company has added Ian Clark, the CEO of Roche’s Genentech unit and former head of Genentech’s commercial operations, along with Pedro Granadillo, a former senior vice president of manufacturing at Eli Lilly, according to two separate regulatory filings released late Friday.

Clark was in charge of commercial operations at Genentech when it was the largest U.S. maker of cancer drugs, marketing blockbusters like bevacizumab (Avastin), and trastuzumab (Herceptin). He is now CEO of the Genentech unit in South San Francisco that’s owned by Switzerland-based Roche. Granadillo, who also has extensive experience in human resources, also serves on the boards of Haemonetics, Nile Therapeutics, and Noven Pharmaceuticals, according to a profile page on the Forbes website.

Dendreon (NASDAQ: DNDN) is seeking to add expertise throughout its organization as it hopes to win FDA approval and start marketing its first product, sipuleucel-T (Provenge) for men with terminal prostate cancer. The company’s stock has boomed this year, and it has raised $221 million from investors, after showing that this first-of-its-kind immune-boosting treatment was able to help men live longer with minimal side effects. The company has also gone on a hiring binge this year as it seeks to make sure it has the talent to make the most of this drug, recently saying it plans to double in size to about 600 employees.

Dendreon lists seven board members on its website, and there were no associated filings that said anyone has vacated a seat. A spokeswoman for Dendreon didn’t immediately respond to a request for comment about why the company added the new directors.

Both Clark and Granadillo were awarded 4,994 shares in the company in connection with joining the board, according to SEC filings. The shares are worth about $137,000 at today’s closing stock price of $27.48.

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Cambridge, MA-based Merrimack Pharmaceuticals struck a big deal today with Paris-based pharmaceutical giant Sanofi-Aventis that will bring $60 million in upfront cash to the smaller company in exchange for rights to co-develop and co-market an experimental antibody drug for cancer.

The deal calls for Sanofi to pay all developments costs, plus another $470 million in payments if the experimental drug reaches certain milestones in development, and a double-digit percentage royalty on sales if the drug becomes a marketed product, Merrimack said today in a statement. Merrimack also retained rights to co-promote the drug, MM-121, in the U.S., the world’s biggest pharmaceutical market.

Sanofi was willing to shell out that much cash to get its hands on the Merrimack drug, a genetically engineered antibody designed to block a receptor on cells known as ErbB3. That’s thought to be an important new target for cancer drugs, because it’s a member of the epidermal growth factor receptor family of proteins, which are known to amplify cell proliferation that can give rise to out-of-control tumors. Some of the world’s best-selling targeted cancer drugs, billion-dollar molecules like Lilly’s cetuximab (Erbitux) and Roche’s trastuzumab (Herceptin), are designed to interfere with other members of this family. Merrimack says its drug, currently in the first of three phases of clinical trials needed for FDA approval, is poised to be the first drug in its class to block the new target.

“Merrimack’s expertise along with their knowledge of biologics development has allowed them to successfully identify ErbB3 as a promising target and rapidly bring MM-121 into clinical development,” said Marc Cluzel, senior vice president of research and development for Sanofi, in a statement.

Merrimack, founded in 2000, derived MM-121 from what it calls its proprietary Network Biology method. The technique, developed with help from scientific advisers at Harvard and MIT, uses computer modeling to better understand disease pathways so it can perform high-speed profiling of potential protein drugs. Peter Sorger, a systems biology expert at Harvard Medical School, and Douglas Lauffenburger, a prominent bioengineering professor at MIT, are among the company’s scientific advisers.

The company’s MM-121 treatment is currently expected to advance to a second clinical trial for lung cancer later this year in combination with OSI Pharmaceuticals and Roche’s erlotinib (Tarceva), and the Merrimack drug is scheduled to be tested on its own in a mid-stage clinical trial in early 2010, according to a statement on the company’s website.

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The first half of this year, Amylin Pharmaceuticals CEO Dan Bradbury was absorbed in the closest thing corporate America has to political warfare—a boardroom challenge from billionaire Carl Icahn and another unhappy shareholder, Eastbourne Capital. The second half has been more about doing the basics Amylin (NASDAQ: AMLN) must do if the San Diego diabetes specialist is ever going to enter the top tier of big, profitable biotech companies.

Now that the dust appears to finally have settled on the proxy fight—new director Paulo Costa was elected the chairman last month—Bradbury has been back hammering away at the company’s need to make sure it nails the potential blockbuster diabetes drug in its pipeline. Yesterday, he was happy to talk about it by phone while he visited Amylin’s new biotech drug factory in West Chester, OH.

The importance of Amylin’s new factory to its future is hard to overstate, so there’s good reason for the CEO to drop in and make sure the troops keep their collective eye on the ball. Amylin and its partner Eli Lilly have made a $500 million investment in the factory, dating back to December 2005, in order to meet market demand for what they hope will be the next big thing for diabetes, exenatide once-weekly. This plant, which now has 250 employees, is getting ready to undergo an FDA inspection in the next six months as Amylin and Lilly seek clearance to start selling the drug in the U.S. It’s the only place in the world with the expertise, and capacity, to meet the first three years of market demand for exenatide once-weekly, which will seek to grab big market share among the 25 million people in the U.S. with diabetes.

To hear Bradbury tell the story, this is the time to execute on the fundamental game plan with things like manufacturing, and not for Monday morning quarterbacking about whether the coach is calling the right plays.

Dan Bradbury

“Certainly in the first half of the year there were a lot of distractions for me. I have more time now to focus on actually running the business as opposed to board issues,” Bradbury says, during a break from meetings with Amylin’s Ohio staff. “It’s all about execution at the moment.” He adds,”We need to make sure everyone is fully on board with where we are as a company. The launch of exenatide once-weekly next year is critical to the future of the company.”

Why does getting this new drug right matter so much? Amylin generates almost 90 percent of its revenue from exenatide (Byetta), a novel peptide drug that was first approved by the FDA in April 2005 for patients who weren’t able to control their blood sugar with existing meds. The drug has gone on to become a commercial success, generating $678.5 million in sales last year, just its third full year on the market.

But the existing product has its limits, partly because it must be injected twice-daily. So Amylin and Lilly have sought to make this drug a lot more appealing to millions of patients by obtaining a license to drug delivery technology from Cambridge, MA-based Alkermes (NASDAQ: ALKS). That technology encapsulates the same peptide in a polymer microsphere that slowly dissolves in the bloodstream, so patients only need to get stuck with a needle once a week, not twice a day.

This new-and-improved drug has generated clinical trial data so far that Bradbury says are good enough to beat the biggest selling drugs in the diabetes market—Merck’s …Next Page »

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As the flu season nears, it’s still unclear how severe the H1N1 strain of swine flu will be. But several San Diego companies are nevertheless riding a wave of investor enthusiasm for the public companies that could benefit. Get that and other biotech news here.

—The financial health of San Diego’s public life sciences companies appears to be improving, according to Luke’s recent analysis of available data about the companies’ cash balances, burn rates, and financial projections. Luke concluded that 15 of the 27 public biotechs in the San Diego area are in stronger financial shape now than they were at the end of 2008.

—After presenting highlights of a clinical trial that enrolled more than 4,000 patients, San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) says its obesity drug candidate meets at least one FDA benchmark for effectiveness and is “safe and well-tolerated.” Arena CEO Jack Lief said the company has “accomplished what we set out to accomplish.”

—San Diego-based Ambrx, which has drug development partnerships with Merck, Eli Lilly, and Merck KGaA of Germany, has signed up another major partner—Wyeth. Ambryx will work with Wyeth to create new engineered antibody drugs against multiple diseases, and since New Jersey-based Wyeth (NYSE: WYE) is in the process of being acquired by Pfizer, it means Ambryx will continue to work on the antibody partnership with Pfizer—as long as the buyout goes through.

—San Diego’s Quidel (NASDAQ: QDEL) is among five San Diego biomedical companies that have benefitted from investor interest in swine flu-related products or services in recent months. But as Denise found, not all five companies will generate much additional business if the H1N1 flu season proves to be as serious and some health officials have predicted. The official start of the flu season is Oct. 4.

—Soon after Denise’s profile of San Diego “virtual” biotech Tioga Pharmaceuticals, Luke visited virtual company VentiRx, which has employees in Seattle and San Diego. VentiRx co-founder Rob Hershberg says VentiRx has enrolled 18 patients in its first clinical trial of a drug for cancer, and so far it appears safe.

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Dendreon shocked the cancer research world back in April, proving for the first time in a major clinical trial that a drug which actively stimulates the immune system can be effective against tumors. Now the Seattle-based company has to wrestle with a whole new set of challenges to make sure it fully exploits the potential of its drug, sipuleucel-T (Provenge), which most analysts say has potential to easily top $1 billion in annual sales for patients with prostate cancer.

The company (NASDAQ: DNDN) has put off answering a few important questions about how it plans to accomplish that via manufacturing, partnering, pricing, and marketing strategy until its analyst day today in New York. I will not be attending this meeting, but I thought it would be useful, for Dendreon watchers, to provide a bit of a preview on the key issues the company will have to address at this forum. Investor expectations are running high, as the company touched a 52-week high of $30.42 a share on Tuesday.

Here are some key issues the company will be prepared to discuss:

—FDA Timelines. While Dendreon clearly reached its goal of helping men live a median of four months longer than a placebo in its trial of 512 men with prostate cancer, it still needs to put together an airtight application to win FDA approval to start selling Provenge in the U.S. Dendreon has said it plans to gather all the data for its amended application, and turn the whole thing in to the FDA in the fourth quarter of this year. Since Dendreon already filed an application based on earlier data in 2007, and it really only needs to add the database from the latest big trial, this process shouldn’t drag on into 2010.

Dendreon has said it expects a six-month review of its Provenge application, so investors will set their calendars for that future date the minute Dendreon files its application. If Dendreon turns in its application in October, it could get FDA approval as soon as March.

—Manufacturing. Putting together an airtight application to the FDA has to be a top priority, but manufacturing is right up there on the list. This is especially critical for Dendreon, because …Next Page »

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Ambrx has ginned up yet another potentially lucrative Big Pharma deal. The San Diego-based biotech company has struck a worldwide partnership with Madison, NJ-based Wyeth to create new engineered antibody drugs against multiple diseases.

Financial terms aren’t being disclosed, but Ambrx says it is raking in an upfront payment, research funding, milestone payments based on progress developing drug candidates, as well as royalties on sales of work that translates into marketed products. This deal, combined with Ambrx’s partnerships with three other major drugmakers, means that Ambrx now has enough cash in the bank to operate “multiple years” without seeking additional financing, according to CEO Steve Kaldor.

“We have no lack of interest in the company,” says Kaldor, who adds that he had talks with five different prospective partners before settling on Wyeth in the latest alliance. “We’ve actually been turning down deals.”

The Ambrx story began back in 2003. That’s when Peter Schultz, director of the Genomics Institute of the Novartis Research Foundation (and the founder of eight biotech companies) had a new idea for creating new amino acid building blocks for a different class of biotech drugs. These drugs could potentially do whatever you wanted, like last longer in the body, or carry potent cell-killing agents. That work has enabled Ambrx to raise about $106 million in venture capital, build a scientific team of about 80 people, and score five different partnerships with three other major drugmakers to date—Merck, Eli Lilly, and Merck KGaA of Germany.

Ambrx’s two best-known drug candidates are designed to be longer-lasting versions of protein drugs that treat growth deficiencies and multiple sclerosis. But Wyeth, a major drug maker that’s in the process of being acquired by Pfizer (NYSE: PFE), was interested in something new that emerged at Ambrx …Next Page »

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In what I think is a first for the deals roundup, it was all venture all the time for New England’s tech and life sciences companies this past week.

—Greentech Media, the Cambridge, MA-based media, market research, and events company, collected $825,000 of a planned $1.25 extension of its Series B round, which previously totaled $2.75 million. The new financing came from EGORA Holding, the Massachusetts Green Energy Fund, and other previous investors.

—Waltham, MA-based Innocentive raised $7.3 million in a Series B-2 roubd from Spencer Trask Ventures, a New York investment network that previously put $6.5 million into a B-1 round for the startup. Spun out of Eli Lilly in 2001, Innocentive provides an online idea marketplace where people post tough problems and experts propose solutions and compete for monetary prizes.

—Zendesk, a Boston-based provider of a software-as-a-service system for customer support management, closed a Series B round of financing worth $6 million. Benchmark Capital led the deal and Charles River Ventures participated.

—Another Boston startup, “green” polymer developer Novomer, raised $14 million in a Series B round led by OVP Venture Partners. Physic Venture Partners, Flagship Venture Partners, and DSM Venturing returned to join the round as well.

—AdvanDx, a molecular diagnostics firm in Woburn, MA, and Vedbaek, Denmark, raised $8 million in a follow-on closing of its Series C venture round, which first closed in 2007. Existing investors Scandinavian Life Science Venture and LD Pensions contributed to the financing.

—New Haven, CT-based cancer drug developer Kolltan Pharmaceuticals added $5 million onto its Series A financing, bringing the total for the round to $40 million. Investors in the round include Purdue Pharma, HBM BioCapital, and the Pritzker/Vlock family.

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Three life sciences companies in the San Diego region have raised venture capital lately, according to our scan of filings from the Securities and Exchange Commission. All three are concentrating on developing new drugs. Here’s a roundup:

—Palkion, a San Diego developer of anemia drugs, has raised $2.5 million from investors, according to an SEC filing earlier this week. The company was formed in February 2008 by ProQuest Investments and CrystalGenomics, a Korean drug discovery company with operations in Emeryville, CA. Palkion is headed by Wendy Johnson, a ProQuest venture partner, and CrystalGenomics’ CEO Joong-Myung Cho is a board member.

Palkion said in June it has initiated preclinical studies of a drug to treat anemia that is based on the discovery and development of oral agents that inhibit prolyl hydroxylase enzymes. Blocking those enzymes should help to increase the production of oxygen-carrying red blood cells which are lacking in anemic patients.Plus,an oral drug promises greater convenience and dosing flexibility than current injectable drugs. This is a potentially huge market, given that anemia drugs are one of the franchises that made Thousand Oaks, CA-based Amgen (NASDAQ: AMGN) the world’s largest biotech company.

— San Diego-based Sequel Pharmaceuticals has raised $3 million of a planned $8.4 million round, according to a regulatory filing earlier this month. The company’s board includes venture partners from Domain Associates, Forward Ventures, InterWest Partners, Skyline Ventures, and Montreux Equity Partners. On its website, Sequel says it has significant capabilities in cardiovascular drug development, and is developing and commercializing novel, clinical-stage drug candidates. Sequel’s CEO, Randall Woods, is well known on the San Diego biotech scene from his past stints at Corvas International, Boehringer Mannheim, and Eli Lilly.

—Auspex Pharmaceuticals, based in Vista, CA, disclosed in a regulatory filing earlier this month that it has raised $3 million in new capital. The company, founded in 2001, says it is developing drugs based on “deuterium chemistry” in multiple therapeutic areas, and it has been working to secure a proprietary position on several hundred compounds and initiate development of multiple clinical drug candidates.

Auspex said last year it raised $13.875 million in a Series B financing led by Thomas, McNerney & Partners that was joined by CMEA Ventures and Costa Verde Capital. In January, we reported that Auspex had recruited former SGX CEO Michael Grey to head the company. Grey did not return phone calls seeking additional information about Auspex.

Deuterium modification is an emerging field in the biotech business, especially since June, when GlaxoSmithKline signed a partnership with one of the experts in the field, Lexington, MA-based Concert Pharmaceuticals. That deal could be worth more than $1 billion to the smaller company if it meets milestones over time. If Auspex can duplicate that, its latest batch of financial backers will undoubtably be quite happy.

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In a development that may cause déjà vu for anyone who read my May 2008 story about Waltham, MA-based Innocentive raising approximately $7 million as part of a Series B funding round, Innocentive has raised approximately $7 million as part of a Series B funding round. Again.

This time around, it’s $7.3 million, in a Series “B-2″ round to be exact—from the same source as last year’s $6.5 million “B-1″ round: Spencer Trask Ventures, a New York investment network funded by high-net-worth individuals.

Innocentive was launched by the drugmaker Eli Lilly in 2001 and spun out as an independent venture in 2006. It is essentially an online idea marketplace where companies and other organizations, called seekers, post problems they need solved. Experts, called solvers, submit proposed solutions and compete for monetary prizes.

Spencer Trask has now put nearly $23 million into the venture, including a $9 million Series A round in 2006. Many of the same individuals who participated in the earlier rounds have come back for this week’s round, but Spencer Trask has also brought in “lots of new investors,” says Dwayne Spradlin, Innocentive’s CEO.

“We have definitely proven that this more open style of innovation is really incredibly powerful, and we continue to see examples of that every day,” Spradlin says. In the last year, the company has successfully rolled out several new features, including a software-as-a-service version of its platform, called Innocentive@Work, that companies can use “to tap pools of creativity and inventiveness within their own companies…or just push the proverbial button and go to outside innovators,” he says. The number of solvers participating in Innocentive’s global network has increased from 140,000 to 180,000, and the percentage of challenges that are marked as “solved” by seekers has increased from the mid-30s to almost 50 percent, he adds.

Moreover, Innocentive has set sales and revenue records in recent quarters, even in the midst of recession. “For companies living with high fixed-cost R&D organizations, where they may have 100 or 1,000 people working on problems but they are really not diverse, crowdsourcing innovation seems to solve things much more effectively than anyone thought,” Spradlin says.

Given that Innocentive is on track to be profitable within a couple of quarters, a new round of funding wasn’t really needed, Spradlin says. “The irony of fundraising is that you tend to be able to raise money when you don’t need it,” he says. “But our board really came to the conclusion that we did so well late last year and in the first half of this year that it would be silly not to double down and really spend for growth.”

He says the new money will be used mainly to expand sales and marketing operations—including opening an Innocentive office in Europe—and to accelerate work on new site features such as the ability to support teams of solvers from different geographies.

The cash may also give Innocentive the opportunity to go on a bit of a buying spree. “One of the things we’re potentially interested in,” says Spradlin, “is identifying other companies with capabilities that complement ours, where there may be opportunities to roll some of those up into what is really the dominant brand in this evolving space.”

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Great biotechnology stories have three essential ingredients—science, medicine, and business. Aveo Pharmaceuticals CEO Tuan Ha-Ngoc told me last week that he thinks about these same elements in his quest to build a sustainable company. Few companies ever put together all the pieces, though, and it’s too early to say if Cambridge, MA-based Aveo is one of them.

Until a few weeks ago, Aveo was probably best known for the first piece of the puzzle, the science. It has what it calls a more accurate method for mimicking cancer in mouse experimental models, compared with the traditional “xenograft” approach.

Then, in late May, Aveo made headlines on the medical side, when researchers presented promising results for its lead experimental drug for kidney cancer. The first drug to come from Aveo’s experimental platform, tivozanib (or AV-951) is an oral pill designed to block three specific types of molecules that allow the formation of new blood vessels; tumors rely on new vessels for nourishment as they grow. The study showed the drug could slow the spread of malignancy with minimal side effects. If the data can be confirmed in a larger trial to start later this year, Aveo’s drug could be in a position to compete with Pfizer’s sunitinib (Sutent) and Bayer and Onyx Pharmaceuticals’ sorafenib (Nexavar), which combined pulled in $1.5 billion last year.

But even if things go right, Aveo won’t have its moneymaking drug on the market until 2012 at the earliest. So if you’re Ha-Ngoc, how do you keep the business moving forward for years when venture capital is hard to come by? You keep 100 percent ownership of your crown jewels in North America, find partners to commercialize them elsewhere, all structure the deals so they pay for your R&D engine. Then plow the profits back into R&D and do it again.

“To build a sustainable company, you can’t be a single-product company or a single-indication company,” Ha-Ngoc says. “We want to be a full-fledged company.”

The Aveo story began in 2002. The company spun out of the lab of Ronald DePinho and Lynda Chin at the Dana-Farber Cancer Institute in Boston. They started with the premise that since cancer has been cured many times in mice, and never in humans, maybe the existing mouse models for the disease could use some improvement. The conventional …Next Page »

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