Kineta, the Seattle-based developer of drugs for autoimmune diseases, has won about half of a $13 million federal contract awarded to the University of Washington to create new compounds which might be used to boost the effectiveness of vaccines against HIV or flu.

The five-year contract from the National Institutes of Health is worth about $6.8 million to Kineta, a company with 11 employees, with the rest going to teams led by UW scientists Michael Gale Jr. and Michael Katze. The company’s job will be to identify and analyze new chemical compounds that could become vaccine boosters, called adjuvants, and test them in animals, while Gale’s lab will study the way they work, and Katze will pitch in with computational biology support.

The federal contract is a coup for a small company like Kineta, especially in a period when seed capital for new biotech companies is scarce. Kineta is led by a pair of scientists who worked together at Seattle-based Illumigen before it was acquired by Lexington, MA-based Cubist Pharmaceuticals two years ago in a deal that could be worth as much as $340 million over time. Kineta CEO Charles Magness and chief scientist Shawn Iadonato have started their new company with a strategy of taking relatively raw molecules at the animal testing stage, steering them through the value-building steps of early human trials, and then striking partnerships with larger companies that will find them less risky and more valuable.

The decision to pursue vaccines shouldn’t come as any surprise, because Kineta’s expertise is in immunology, and Gale and Katze were both among the company’s original scientific advisers. It has been pursuing the contract for about a year, Magness says.

“This certainly helps with our financial future because it’s a long-term fixed contract,” Magness says. “We’ll look to hire some people in the short term, but what it really represents is another long-term product opportunity for the company with secure funding.”

The researchers will specifically look to activate …Next Page »

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

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

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

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

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

DxBox

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

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

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

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Pulmatrix, the Lexington, MA-based company working to stop infectious bugs from being absorbed into the lungs, has raised $30.2 million in a Series B venture round to advance its unorthodox method for treating and preventing respiratory diseases like flu, the company is announcing today.

Arch Venture Partners and Novartis Bioventures Fund co-led the new financing, and were joined by the company’s existing investors, Polaris Venture Partners and 5AM Ventures. On top of that, Pulmatrix is raking in another $2.2 million from the National Institutes of Health to advance its research with broad potential against multiple strains of seasonal and pandemic flu.

The big idea at Pulmatrix, which has its origins in the labs of MIT’s Robert Langer and Harvard University’s David Edwards, has the potential to fundamentally challenge the tradition of antiviral treatment. Instead of engineering a drug to kill a single virus, which the pathogen can resist over time, Pulmatrix is developing a method to stop any strain of invader that might embed in the lungs. Pulmatrix is trying to do this by creating aerosols that contain positively charged ion-based compounds, like calcium and magnesium. These compounds are first supposed to stimulate immune defenses to prevent infection. But beyond that, the Pulmatrix drugs are supposed to alter the viscosity of the mucus that lines the lungs, which activates proteins to form 3-D matrices that create a firewall of sorts, blocking pathogens of any kind from burrowing deep into lung tissue.

“Think of it as like a river with a light coating of ice on top, but with the river flowing smoothly underneath,” said Pulmatrix CEO Robert Connelly, in an Xconomy interview in June. “It’s more difficult to penetrate the surface top layer, and there’s still clearance below.”

Back in June, Connelly said that evidence from animal and early human studies showed the company’s method hasn’t gummed up the mucus lining of the lungs, which could make it harder to breathe, or worse, create a haven for infectious bugs to thrive.

Pulmatrix plans to use the new money to finance “multiple clinical trials” in 2010 and 2011 against a number of respiratory diseases, according to a company statement. Pulmatrix currently has a drug candidate called PUR003 that’s being tested in an early-to-mid stage clinical trial against flu, and it expects preliminary results by the end of this year. The company plans to start an asthma trial by the end of this year, and is also pursuing a treatment for chronic obstructive pulmonary disease—an umbrella term for emphysema and chronic bronchitis.

In connection with the financing, Pulmatrix has added Steve Gillis of Arch Venture Partners and Lauren Silverman of Novartis Venture Funds to its board.

“We believe that Pulmatrix’s therapies are uniquely positioned to address respiratory diseases in a fundamentally new way which could result in game changing improvements in the lives of patients with many different types of respiratory diseases,” Silverman said in a statement.

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Enigma Diagnostics, a UK-based medical diagnostics startup, plans to close its current U.S. office in San Francisco and open a new office in San Diego as its U.S. headquarters, according to chairman and CEO John McKinley.

McKinley outlined Enigma’s development of rapid molecular diagnostic technology in a presentation yesterday at the annual investor conference organized by Biocom, the San Diego life sciences industry group. The company has developed a desktop-size instrument based on advances in PCR (polymerase chain reaction) technology, which McKinley says can identify certain pathogens in less than 45 minutes. Amid concerns over the H1N1 swine flu outbreak and other infectious disease, McKinley says, “There currently is nothing in the market like our pending technology.”

Enigma expects to make an official announcement about its new San Diego office next month, McKinley says, and he estimates the company will have 30 employees here by mid-2010. He tells me he decided to establish an American beachhead for Enigma Diagnostics in San Diego because, “It’s a diagnostics center for the U.S. The pool of labor is certainly here.”

Among the factors that McKinley cited is the presence of Life Technologies (NASDAQ: LIFE), the Carlsbad, CA, company that was formed in last year’s merger of Invitrogen and Applied Biosystems, as well as Quidel (NASDAQ: QDEL), and Stratagene, a San Diego business that is now part of Santa Clara, CA-based Agilent Technologies.

Enigma ML device

McKinley says Enigma, a venture-backed company founded in 2004, first developed a rugged military version of its diagnostic machine for field detection of biological agents under funding from the UK’s Defence Science Technology Laboratory. The company’s investors include the UK’s Porton Capital Group, GlaxoSmithKline, and the UK Government Science Technology Laboratory.

The company intends to first win approval for its automated Enigma ML “mini laboratory” in Europe by next September. Following that, McKinley says Enigma intends to ask the FDA to waive requirements under CLIA, or Clinical Laboratory Improvement Amendments, which would enable the device to be operated in U.S. hospitals, clinics, and other point-of-care facilities.

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Omeros is attempting to become the first true biotech company to go public in more than a year, and the first in Washington state in two years, but it will have to overcome controversy to do it.

—Seattle-based Omeros, the biotech company with a treatment to help patients recover from knee surgery, has been listed as a contender to go public, possibly as soon as this week, according to Renaissance Capital. But the company will have to overcome an accusation by its former chief financial officer, Richard J. Klein, who has filed a lawsuit in U.S. District Court that claims he was wrongfully terminated after he blew the whistle on the company’s practice of filing false time claims on grant work performed for the National Institutes of Health. The company, in a legal response, admits it made mistakes and changed its policy after Klein’s report, but it denies many of his allegations and says the NIH accepted its self-reporting on the matter.

—Seattle Genetics has had a great run this year on the strength of its “empowered antibody” for Hodgkin’s disease, but it suffered a setback this week with another drug for lymphoma. The Bothell, WA-based company (NASDAQ: SGEN) saw its shares drop after it said a clinical trial of SGN-40, dacetuzumab, was halted early after independent data monitors said it was unlikely to succeed.

—How much do biotech workers really earn? The politicians like to throw around an average salary of about $81,000 in Washington state, but one local entrepreneur found the median salary in the Pacific Northwest was about $60,000 when he analyzed actual job openings from the past year.

—Seattle-based Theraclone Sciences struck a deal with a Japanese company that could bring in $18 million over time to generate new antibodies with broad capability to neutralize many different strains of flu virus. This is building on the Theraclone platform, which led to the creation of two new antibodies against HIV, which was featured in Science last month.

—Bothell, WA-based AVI Biopharma (NASDAQ: AVII) got some good news this week with an $11.5 million defense contract to make a novel treatment for Junin virus, in addition to its existing work against Ebola and Marburg.

—Sage Bionetworks, the Seattle-based nonprofit that aims to ignite an open source movement for biology, has secured a “major founding donation” from Quintiles, the giant contract research organization for biotech and pharmaceutical companies. Sage co-founder Stephen Friend was traveling in Europe, trying to drum up more support for the new collaborative, when the news broke.

—David Miller, the president of Seattle-based Biotech Stock Research who recently ran for the Seattle City Council, offered some great insights in a guest editorial about why biotechies need to pay attention to local issues just like they do the big national stories, like health reform and cheaper “follow-on” biotech drugs.

—Carl Weissman, the CEO of Accelerator and managing director of OVP Venture Partners, offered some advice to government officials who want to stir innovation. Instead of doing a lot of the same old stuff, they should try to recruit more superstar scientists.

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Veratect, the Kirkland, WA-based company that tracks emerging health threats like swine flu, has raised $4.2 million out of $5 million debt financing, according to an amended regulatory filing today. The filing doesn’t say who invested, but the company’s list of directors includes William Savoy, the former manager of billionaire Paul Allen’s Vulcan investment portfolio and Lee Huntsman, the executive director of the Washington Life Sciences Discovery Fund. A spokesperson for the company didn’t immediately respond to a request for comment.

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In the past week, the Northwest has seen its share of debt financings in medical devices and bio-IT, small funding deals and partnerships in Internet software, and mounting interest in an impending IPO.

—Amazon (NASDAQ: AMZN) rolled out a new mobile payments service that lets applications developers and distributors tap into the e-commerce giant’s one-click checkout system on mobile devices. As part of the rollout, Amazon has formed partnerships with mobile content distributors like Kansas City, MO-based Handmark, which sells games, apps, ringtones, and the like. Financial terms were not given.

—Seattle’s Theraclone Sciences formed a partnership with Tokyo-based Zenyaku Kogyo, worth up to $18 million over time, to discover antibodies that could protect millions of people in a flu pandemic, as Luke reported. Under the deal’s terms, Theraclone has given Zenyaku an option for exclusive rights to new flu antibodies in certain Asia-Pacific countries, while Theraclone gets an undisclosed amount of upfront cash and royalties on future product sales in Zenyaku’s territories.

—Seattle-based Omeros, the developer of anti-inflammatory treatments and other biotech therapies, is on the docket to go public this week and raise more than $80 million, as Luke reported. The company is also defending itself against accusations from its former chief financial officer that it filed false records with the National Institutes of Health and then wrongfully terminated him after he reported it to the board’s audit committee under the company’s whistleblower policy.

—Seattle-based Teranode raised $900,000 in debt financing, as Luke reported. The investors weren’t disclosed, although Bellevue, WA-based Ignition Partners has invested in the past. Teranode, a maker of software to organize life sciences labs, was founded in 2002 out of the University of Washington.

—Seattle-based Founder’s Co-op, a seed-stage investment organization, has backed two local Internet startups, Nearlyweds and BigDoor Media. Financial details of the deals were not announced, but Founder’s Co-op says it typically invests $250,000 or less in its portfolio companies.

—Redmond, WA-based Spiration raised $7 million in debt financing out of a $10 million offering, as Luke reported. The financing came from the company’s partner in Europe and Japan, Olympus Medical Systems. Spiration, which makes an implantable device to treat deadly lung diseases like emphysema and chronic bronchitis, has raised about $97 million since its founding in 1999.

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Theraclone Sciences has formed a partnership with a Japanese drug company, worth as much as $18 million over time, to discover new antibodies that could broadly protect millions of people in a flu pandemic.

Seattle-based Theraclone has formed the alliance with Tokyo-based Zenyaku Kogyo, which markets a blockbuster antibody drug for cancer and rheumatoid arthritis, called rituximab (Rituxan), in Japan. The deal calls for Theraclone to give Zenyaku an option to exclusive rights to new flu antibodies in Asia and certain Pacific Ocean countries, which can be used for treatments and vaccines. In return, Theraclone gets an undisclosed portion of the $18 million in upfront cash, and royalties on future product sales in Zenyaku’s territories. Theraclone also keeps exclusive commercial rights to the flu antibodies it discovers in the rest of the world, says CEO David Fanning.

The deal comes one month after Theraclone and its collaborators made international news when a paper in Science described how they had discovered a pair of new antibodies with ability to broadly neutralize many variations of the HIV virus that circulate around the world. Theraclone has long said that its method can be applied to the discovery of antibodies for multiple pathogens, including flu. That’s because it looks for clues from blood samples of people who are naturally protected from infection, finds the natural antibodies that seem to be protective, and then genetically engineers copies of them that can made into injectable drugs for people who lack those specific antibodies.

The global headlines couldn’t have come at a better time for Theraclone. When I interviewed Fanning for that story last month, he was in Japan negotiating the deal with Zenyaku, making a case that the HIV discovery work could also be applied to flu. It certainly didn’t hurt his position.

Theraclone CEO David Fanning

“That’s right, those were the guys I was meeting with then,” Fanning says with a smile.

Flu has been a top priority of public health officials this year, particularly since June 11, when the director-general of the World Health Organization, Margaret Chan, declared a global flu pandemic with 30,000 confirmed cases in 74 countries. Major flu vaccine makers like Paris-based Sanofi-Aventis have been taking immediate action to see if they can use lower doses of existing vaccine this flu season—to stretch out capacity in order to protect millions more people—but the pandemic has also sparked renewed interest at the lab bench among companies with newer ideas like Theraclone.

Theraclone is testing for antibodies with broad neutralizing …Next Page »

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Health care reform discussions almost always revolve around health insurance, as if care and insurance are synonymous. Understanding the difference can lead to the delivery of better care for less money, and help break the health care reform logjam in Congress.

An amendment introduced this week by U.S. Senator Maria Cantwell to America’s Healthy Future Act, currently being considered by the Senate Finance Committee, understands the difference. Senator Cantwell’s amendment would provide for coverage in a ‘direct primary care medical home’ plan, provided that plan is coupled with a quality wrap-around insurance program to cover non-primary care services.

What are direct primary care medical homes? They are primary care practices offering patients comprehensive primary care coverage outside of the traditional insurance system. They provide preventive and primary care, as well as chronic disease management and coordination of care with specialists and hospitals. Patients who elect this health care delivery model pay a flat monthly fee (ranging from $49 to $79 at my affiliated practice, Seattle-based Qliance Medical Group) for unlimited access to a primary care physician. This monthly fee covers everything from regular check-ups, women’s health exams, sprained ankles and broken arms to flu shots, and arthritis or diabetes management.

Direct primary care medical homes are already accomplishing what everyone wants health care reform to do:

• Lower costs

• Improve access

• Increase the quality of care

As a nation, we spend over $2 trillion a year on health care. We want to improve access, lower costs and expand quality coverage to the almost 50 million people who are currently uninsured – but we need to find a way to do this without breaking the bank.

There are ways to lower the overall cost of health care. An astonishing 40 percent of every dollar spent on primary care goes toward paperwork – either on the provider or insurer side – to complete the insurance reimbursement process. By eliminating the insurance payment mechanism and forming a direct relationship between a provider and patient, direct primary care medical homes have more resources available to spend on patient care.

The savings allow practices to offer more providers and longer office hours, even opening seven days per week. Smaller patient loads enable …Next Page »

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

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

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

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

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

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Scientists have been trying for years to solve the mystery of why a few rare individuals get infected with HIV, yet somehow retain immune defenses so they never get sick. Today, researchers at a small Seattle biotech company, Theraclone Sciences, and collaborators at San Diego’s Scripps Research Institute say they have found a new vulnerability in the virus that could lead the way to new treatments or possibly a vaccine.

By studying rare blood samples from HIV-resistant people in the lab, scientists have found two weak spots on the virus, and were able to genetically engineer two new antibodies that broadly neutralize many variations of the virus circulating around the world, according to research being published this week in Science. Besides Theraclone and Scripps researcher Dennis Burton, this effort included collaborators from South San Francisco-based Monogram Biosciences (NASDAQ: MGRM) and the International AIDS Vaccine Initiative (IAVI) in New York.

This effort is still in its early days, and nobody knows yet for sure if these new antibodies will even work in lab animals. But this is the first time in more than a decade that scientists have discovered antibodies with broad neutralizing capability that can stand up to multiple strains of the wily virus in the lab. Plus, they were found in blood samples from donors in developing countries, where most of the new infections occur.

While HIV is largely considered a chronic disease in wealthy countries like the U.S. where there are 32 FDA-approved antiviral drugs, the discovery of neutralizing antibodies is potentially groundbreaking. The antibodies could be critical ingredients used to develop the first HIV vaccine, which would be most useful in poor countries. More than 30 million people around the world are thought to be living with HIV, and the disease is still thought to kill 2 million people a year.

“These new antibodies, which are more potent than other antibodies described to date while maintaining great breadth, attach to a novel, and potentially more accessible site on HIV to facilitate vaccine design,” said Burton, a professor of immunology and microbial science and scientific director of the IAVI Neutralizing Antibody Center at The Scripps Research Institute in La Jolla, CA, in a statement. Burton is also a member of the newly-formed Ragon Institute, a collaboration of Massachusetts General Hospital, MIT, and Harvard.

We first wrote about this HIV work in April based on an interview with Theraclone CEO David Fanning. I caught up with Fanning again by phone to talk about the business implications of getting such big recognition in one of the world’s top two scientific journals.

Theraclone CEO David Fanning

This publication—and all the global media attention it is bound to attract—is definitely going to attract the interest of prospective partners in Big Pharma and biotech, and funding agencies like the National Institutes of Health, that Theraclone needs to help pay the bills for its research program. When Fanning called me, it was 4 a.m. in Japan, where he has been meeting with potential partners. “I’m not here for vacation, you can put it that way,” he says.

“This really validates our technology in the eyes of people that we want to see start using it,” Fanning says. “Instead of us being a small private biotech that may or may not be doing something interesting, we’ve now made a mark very rapidly in one of the biggest challenges of all infectious disease.”

Still, the work is clearly just beginning. Theraclone, through ongoing financial support …Next Page »

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AVI Biopharma, a Portland, OR-based developer of RNA-based drugs, said today it has secured a contract with the U.S. Defense Threat Reduction Agency to develop drugs for H1N1, or swine flu. Under the contract, worth as much as $5.1 million, AVI will analyze the H1N1 sequence, determine appropriate targets and identify lead and back-up candidate drugs. The company (NASDAQ: AVII) also plans to do animal tests.

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Not long ago, drug companies would break out quarterly income streams from the U.S., Europe, Japan, and something called ROW, as in rest-of-world. Investors usually didn’t care about the last numbers, because they were little more than a rounding error.

That’s not the case anymore, as these countries are often called “emerging markets.” They’ve grown enough that Chris Viehbacher, CEO of one of the world’s largest drug companies, Paris-based Sanofi-Aventis (NYSE: SNY), traveled to Seattle this week to curry favor with global health officials at the Pacific Health Summit. The head of a major drug company might have gotten a cold shoulder at a meeting like this a decade ago, but these officials welcomed Viehbacher. Sanofi made headlines at the summit, as it said it plans to donate as many as 100 million doses of flu vaccine to the World Health Organization to help poor countries cope with the swine flu pandemic.

This could all be written off as some kind of public relations exercise, but I wondered if there’s more to the story. The pharmaceutical industry is terrified by a series of patent expirations coming over the next few years, which will allow a flood of cheap generic copies to grab market share away from franchise products that generate an estimated $67 billion in annual sales. Not much has emerged in the industry’s R&D pipeline to replace all these aging blockbusters. Some analysts predict pharma companies will have to continue acquiring and partnering with innovative biotech companies to sustain themselves.

Sanofi has made a couple aggressive moves like this since Viehbacher took over Sanofi in December. Earlier this year, it acquired cancer drugmaker BiPar Sciences for $500 million (giving BiPar investor Paul Allen a big payday), and partnering with South San Francisco-based cancer drug developer Exelixis for a deal possibly worth more than $1 billion.

But Viehbacher also has his sights on making money on low profit-margin, high-volume products in parts of the world that are off the pharma industry’s beaten track. It’s part of a strategy to make Sanofi a more globally diversified company, rather than placing all its chips on the U.S. and Europe—where governments are looking for ways to trim healthcare spending.

Here are edited highlights of a wide-ranging conversation we had about industry trends, the reasons for donating flu vaccine, and how he likes to deal with biotechs.

Xconomy: Why come here to the Pacific Health Summit?

Chris Viehbacher: I laid out a strategy for the company in February, to become a global healthcare company, versus a pharmaceutical company focused on the U.S. and Europe. That means we want to be present in all countries, and therefore, you have to address all diseases in all countries. You can’t just take medicines doing well in the U.S., and try to find people rich enough in other countries to buy them. So, the company is hugely committed to these huge global health issues. We probably, I think, do more than just about anybody. We are very significant in malaria. We are the only company doing things for Sleeping Sickness. We have a new antibiotic coming for tuberculosis, which could cut the treatment time down to four months [from six months], which is huge in the area of TB. We are spending huge amounts of money developing a Dengue Fever vaccine and developing facilities for it. We have partnered with a lot of people in that room, whether it’s the Gates Foundation, GAVI[Global Alliance for Vaccines and Immunization], the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Those are all people we try to work with on a regular basis. It’s very much in line with our strategy. I take a personal interest in these global health issues, and it’s good to meet folks.

X: To what extent does the donation of flu vaccine amplify the company’s global health effort, or show that you’re serious?

CV: The pandemic flu donation is exceptional. I’d normally say donations are not the way to deal with issues of access to medicine. It’s not sustainable. If we were dealing with malaria, or tuberculosis, then I wouldn’t …Next Page »

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Center stage in Seattle life sciences moved to the waterfront this week, as 250 global movers and shakers in science, global health, and the pharmaceutical business gathered for the Pacific Health Summit.

—The Pacific Health Summit, an invitation-only event of global health stars, in its fifth year, focused this year on multidrug resistant tuberculosis, as I wrote in this preview story. Big names from global health came to brainstorm, including Margaret Chan of the World Health Organization, Anthony Fauci of the National Institutes of Health, and Chris Viehbacher, the CEO of Sanofi-Aventis, the world’s largest vaccine maker. Seattle’s Infectious Disease Research Institute is one of the players in this field, too, through work supported by Eli Lilly.

—Every good conference like the Pacific Health Summit needs power players competing for media attention. This year, we had two pieces of international news. Johnson & Johnson announced a deal to co-develop a new drug with the nonprofit TB Alliance; the deal could lead to the first new drug against tuberculosis in more than 40 years. Sanofi-Aventis also broke some news by announcing it will donate 100 million doses of flu vaccine to the WHO, to help poor countries cope with the swine flu pandemic.

—I profiled Beat Biotherapeutics, a Bellevue, WA-based company that envisions a way of generating stem cells that could perform the function of a cardiac pacemaker, or maybe someday even regenerate heart muscle that’s been damaged by heart attack. This company is built on years of research by UW stem cell scientists Chuck Murry and Michael Laflamme, and is married to bioengineering techniques from Buddy Ratner’s lab at the UW.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX) never captured much of the market for sophisticated gene chips used in modern biotech labs, which is now dominated by Santa Clara, CA-based Affymetrix and San Diego-based Illumina. But now CombiMatrix hopes to carve out an emerging niche by marketing its DNA microarray instruments as a diagnostics service to physicians, who are looking for accurate ways to diagnose the aggressiveness of an individual patient’s form of cancer, and to use genetic screening to catch malignancies earlier.

—MDRNA (NASDAQ: MRNA), the Bothell, WA-based developer of RNA interference drugs, has been working hard to clean up its balance sheet the last few months. It faced a cash crisis earlier in the year, and then raised $7.25 million from Novartis, another $10.5 million from investors, and used some of the proceeds this week to pay off its $5.5 million debt to GE Capital.

—Seattle’s Infectious Disease Research Institute said it is offering up its immune-stimulating compounds known as adjuvants to the world’s major vaccine makers. With the right partnerships in place, these adjuvants have potential to greatly amplify the world’s supply of flu vaccine, says IDRI founder Steve Reed. This may come in especially handy if the swine flu pandemic takes a severe turn for the worse.

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Sanofi-Aventis, the Paris-based drugmaker that produces 40 percent of the world’s flu vaccines, is announcing today that it will donate 100 million doses of flu vaccine to the World Health Organization to help poor countries deal with the swine flu pandemic.

The announcement is being made this morning in Seattle at the Pacific Health Summit, the invitation-only gathering of 250 world leading scientists, public health officials, and businesses focused on global health.

“Exceptional times require exceptional responses. We need to act responsibly, and we all have to play our part,” said Sanofi-Aventis CEO Chris Viehbacher, in a company statement.

The World Health Organization officially declared a global pandemic of swine flu, known as the H1N1 viral strain, on June 11, after the virus had spread to 74 countries. The pandemic designation means that the disease is spreading easily between people and countries, although the severity of the outbreak is “moderate,” with most people experiencing only mild symptoms before recovering without any medical treatment, according to comments by WHO director general Margaret Chan in the New York Times. The declaration was expected to trigger drug makers to speed up output at flu vaccine factories over the coming months, according to the Times account.

The donation from Sanofi should give the WHO the flexibility to provide vaccines to people who are most vulnerable in poor countries, the company said in a statement. While giving away a product that can be profitable may sound more like a humanitarian decision than a business decision, Sanofi made it sound like it’s both.

“Becoming a global healthcare leader, and not just a pharmaceutical company focused on the U.S. and Europe is the heart of the Sanofi-Aventis strategy,” Viehbacher said in a statement. “The future of our industry is linked to the healthcare solutions that will be found for emerging countries.”

Sanofi currently has three major factories that make flu vaccine—two in Swiftwater, PA, and another in Val de Reuil, France. A second flu vaccine factory in Swiftwater, with capacity to produce 100 million doses a year, won FDA clearance on May 6. That’s twice as big as the current facility there, which is producing vaccine for the upcoming 2009/2010 flu season, the company said. The factory in France has capacity to make 120 million doses.

I’m attending the Pacific Health Summit today, and have scheduled an interview later in the day with Viehbacher while he’s in town for the meeting. I’ll be sure to add another post soon based on what he has to say.

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The Infectious Disease Research Institute, a Seattle-based nonprofit research center, said today it it is offering a critical ingredient to manufacturers that could increase the world supplies of flu vaccine. IDRI has developed adjuvants, or immune-boosting compounds, that make it possible to give smaller doses that can still protect people against infection. The announcement came shortly after the World Health Organization officially declared a global swine flu pandemic.

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Back in September, I wrote in this space that if a global flu pandemic ever strikes, public health officials might turn to a Lexington, MA-based startup company called Pulmatrix.

The pandemic (a bit overblown, I must say) did strike. And yes, the public health officials have been calling Pulmatrix.

This company’s technology is nowhere near ready for prime time in big clinical trials, much less the marketplace, so isn’t all the fuss a bit premature? Maybe. Then again, most biotech companies work on pretty incremental advances over the standards of care, but Pulmatrix is one of those rare beasts that has a chance to transform how physicians think about treating many major respiratory diseases. The technology has attracted $18 million in initial equity financing from Polaris Venture Partners and 5AM Ventures, and a scientific advisory board that includes David Edwards of Harvard University and Robert Langer of MIT. It’s been a few months since we last wrote about this company, so I got an update from CEO Bob Connelly.

The concept at Pulmatrix challenges the status quo of antiviral treatment, in which a drug is engineered to kill a single infectious invader, which works for a while until that virus inevitably uses its evolutionary tricks to develop resistance. This is the “one drug, one bug,” method, as Pulmatrix puts it. Instead of going that route, Pulmatrix is developing a technique that’s supposed to stop any pathogen or flu strain that might find its way into the lungs. It calls this the “one drug, multiple bug” approach.

“The single drug for multiple bug approach is what’s really generating a lot of attention for us, even though we’ve been keeping a low profile,” Connelly says.

Pulmatrix is trying to do this by creating aerosols that have positively-charged ion-based compounds, like calcium and magnesium, that would be sprayed into the lungs. These compounds are supposed to do a couple of things. First, they stimulate immune defenses to prevent infection. Second, the aerosols are supposed to change the viscosity of the mucus that lines the lungs, which activates proteins in the lungs to form 3-D matrices that create a firewall of sorts that blocks pathogens of any kind from burrowing deep into lung tissue. So far, in animal and early human studies, this method hasn’t gummed up the mucus lining of the lungs, which could make it harder to breathe, or worse, create a haven for infectious bugs to thrive.

“Think of it as like a river with a light coating of ice on top, but with the river flowing smoothly underneath,” Connelly says. “It’s more difficult to penetrate the surface top layer, and there’s still clearance below.”

What’s more, Pulmatrix is supposed to change the properties of the airways, so that when people breathe in a pathogen—like swine flu—it doesn’t form into those tiny droplets that people can sneeze …Next Page »

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No single company captured the lion’s share of buzz at this year’s Invest Northwest conference with a mega-partnership or a lucrative round of venture capital. But there were signs that the Northwest’s life sciences companies have adapted to life in a recession, and are continuing to get out of bed each day with plans to develop valuable new drugs, devices, diagnostics, and vaccines for the healthcare system.

Still, it is a bit amazing how event organizers managed to break an attendance record this year with 740 people registered, in the midst of this downturn. That didn’t happen this year at bigger investor events like the JP Morgan Healthcare Conference in San Francisco. What’s more remarkable is this happened even though Seattle’s biotech stars of the past—Immunex, Icos, Corixa, Rosetta Inpharmatics, Corus Pharma—have all gotten acquired and absorbed into larger companies.

The clearest explanation I heard of what’s happening here was from Chris Rivera, the new president of the Washington Biotechnology & Biomedical Association. “Our community is coming together in a time of need,” he said in his opening remarks.

So who are some of the people in the life sciences community who are moving ahead and doing the innovative entrepreneurial life sciences work now? Here are some updates on five intriguing local companies I was able to gather at the conference:

—Alder Biopharmaceuticals, the Bothell, WA-based developer of “fast-follower” antibody drugs, drew an overflow crowd to hear its strategy. Alder has engineered its lead drug, called ALD518, to block the same IL-6 molecules that are hit by Roche’s Actemra for rheumatoid arthritis, but with a number of advantages over that drug, as CEO Randy Schatzman explained to me back in September. The Alder drug can last longer in the bloodstream, so it can be injected less frequently, possibly just three or four times a year instead of once a month, he said. Alder can also give its treatment in one-tenth the dose because it’s more potent, meaning that it’s cheaper to manufacture. And, since Alder’s drugs are made in fast-dividing yeast cells instead of the traditional mammalian cells, its production process is about four times faster at producing drugs, making much better use of all that expensive fermentation equipment, Schatzman said.

Based on this early progress in getting this drug into an ongoing Phase II clinical trial, Alder now expects to form a partnership later this year to co-develop the product with a major drugmaker, Schatzman said yesterday at the conference.

—Seattle-based Immune Design pulled in an $18 million Series A round of venture capital last June—the second-biggest initial financing of a local biotech last year (behind Seattle-based PhaseRx). As Immune Design CEO Steve Reed explained yesterday, the company has used that cash to start its first clinical trial, which combines its proprietary immune-boosting compound, called an adjuvant, to a flu vaccine made by Sanofi-Aventis. This adjuvant, according to Reed, is supposed to boost the effectiveness of flu vaccines for people over age 65, a fast-growing population who don’t get great protection from existing vaccines, Reed said. The compound …Next Page »

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A surprisingly light flu season is drawing to a close, which is good news except perhaps at San Diego-based Quidel (NASDAQ: QDEL), which makes rapid diagnostic tests. Investors hammered the stock after Quidel said it anticipates a first quarter loss due to a significant decline in sales of its diagnostic products for influenza and Strep A. Quidel shares lost $1.91, or 19.4 percent, to close at $7.92 a share. Quidel CEO Douglas Bryant said in a statement today, “the number of doctor visits for influenza-like illness is significantly lower than the prior year.”

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Bill and Melinda Gates don’t give their money away to just anybody who comes along with an impressive resume and a good cause. So why has the world’s largest charitable foundation seen fit to give $1.3 billion of its fortune to a little-known Seattle-based nonprofit called PATH?

PATH, which has raked in the second-largest amount of Gates Foundation grants of any organization behind the vaccine group GAVI, is one of the biggest success stories of the Seattle innovation community in the past decade. Since CEO and president Chris Elias joined in September 2000, PATH has grown from 240 employees to 775. Its annual budget has soared from $41million to $240 million. It has formed partnerships with 60 biotech and pharmaceutical companies, and most public health bodies in the world that count, from the World Health Organization on down.

The organization, formerly known as the Program for Appropriate Technology in Health, sometimes struggles to explain what it does in a tight little Madison Avenue slogan. But essentially it seeks out clever, affordable technologies, and partnerships with clever entrepreneurs, to help improve the health of have-nots around the world. This vision plays itself out in a dizzying number of ways. PATH finances promising vaccine candidates, whether it’s for bird flu or other infectious bugs like pneumococcal disease that kills infants. It is working with entrepreneurs to develop fortified rice to so that people get more nutrition from a staple food. It is developing practical ways to purify water. It is helping ensure doctors get trained in a cheap, simple way to fix broken bones, so that people don’t languish in traction for months. It has pioneered the use of a sticker on vaccine vials that changes color if a vaccine goes bad. It serves as clearinghouse for the Gates Foundation-funded effort to eradicate malaria from the globe.

“We’ve really kind of grown up together with the Gates Foundation,” says Elias, whom I visited in his office. “We’ve grown dramatically.”

PATH got its start in Seattle in 1977 with a grant from the Ford Foundation to try to implement new contraceptive technologies that were developed for rich countries, but weren’t getting where they were needed in poor countries, Elias says. By about 1980, PATH’s founders realized that applying its model—of brokering deals between for-profit companies with innovative ideas and public health agencies with the means to get them to people in need—was a model that might work for expanding the use of diagnostics, drugs, devices, vaccines. Almost two-thirds of its budget comes from foundations, and the next biggest percentage, about 21 percent, comes from the U.S. government.

The people at PATH spend their time thinking about something most people in the U.S. are fortunate enough to never even consider—how to meet basic human health needs that the free market is unable to fulfill.

“The markets are very efficient ways of producing innovation where they work, where there’s a predictable demand and a system for delivery and financing. As imperfect as it is here in the U.S., that exists,” Elias says. “In poor countries, the market often fails. Either the market is unpredictable, or it’s not there. People are too poor. People who live on $1 a day can’t afford to buy products that will make anybody a significant margin.”

So there you have it, one of the world’s biggest fundamental problems, creating an enormous gap between haves and have-nots. Unsolvable, right?

They don’t seem to think so at PATH. In the face …Next Page »

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