After Carlsbad, CA-based Verdezyne disclosed last month that it plans to raise more than $15 million in venture funding, I arranged to sit down with Damien Perriman, the company’s vice president of business development.

As it turns out, the startup that was founded in 2005 as CODA Genomics has essentially re-engineered itself over the past 18 months. The company overhauled its core business strategy, recruited a new CEO, E. William Radany, along with a new management team, changed its name, and moved its headquarters from Orange County to Carlsbad, CA, about 28 miles north of San Diego. In changing its name to Verdezyne, the company created an identity that is better aligned with its revised focus on the “green design” of biofuels and industrial chemicals.

The company initially was focused on technology spun out from UC Irvine that used specialized computer algorithms to design synthetic DNA. The company offered its services in Computationally Optimized DNA Assembly, or CODA, to help drug discovery teams at pharmaceutical customers like Eli Lilly and Genentech design synthetic genes that could be used to maximize the production of certain proteins for their biotech drug manufacturing processes.

Perriman, who joined Verdezyne in February, tells me, “Our investors made a decision in 2008 that we could make a lot more money by doing the production ourselves.”

With its extensive experience in computational biology and bioinformatics, Verdezyne saw the value in creating high-diversity libraries of genes, so that various genes could be inserted into fast-dividing yeast cells (and other micro-organisms), essentially programming the microbes to produce enzymes it would not otherwise produce. Verdezyne landed a federal grant last month to help build out its genomic library.

“We prefer to work with yeast,” Perriman says, “but we can work with any fungi or bacterial organism.”

The company, which now has 26 employees, has identified three primary markets for its technology.

The first and most obvious target is an …Next Page »

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The Institute for Systems Biology, a Seattle-based nonprofit research center, said today it has secured an $8 million grant from the National Institutes of Health as part of The Cancer Genome Atlas, an effort to identify new targets for cancer drugs based on deeper genomic understanding. ISB professor Ilya Shmulevich is the co-primary investigator on the grant along with Wei Zhang of M.D. Anderson Cancer Center in Houston. Other centers receiving federal grants for the cancer genome include the Broad Institute of Harvard and MIT; Lawrence Berkeley National Laboratory; and Memorial Sloan-Kettering Cancer Center.

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Life Technologies (NASDAQ: LIFE), the Carlsbad, CA-based provider of biotech instruments and lab supplies, says it has agreed to acquire Woburn, MA-based BioTrove, which has developed a high throughput gene expression and genotyping analysis system. BioTrove, which withdrew plans to raise $75 million in an IPO last year, says the flexible array format of its OpenArray technology enables researchers to perform more than 3,000 PCR or qPCR gene expression assays at a time. Financial terms were not disclosed.

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Helicos Biosciences (NASDAQ: HLCS) said today that it has decided to call off discussions that could lead to a sale of the company, because of its “improving standalone prospects and its current market valuation.” The Cambridge, MA-based company hired Thomas Weisel Partners consider strategic alternatives earlier this year, and will continue to work with the investment bank on long term financial strategy. Helicos said it had $11.5 million in cash and investments on hand at the end of September, down from $19.7 million at the start of the year, according to its quarterly financial report. The company’s market value was about $132 million at today’s close.

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Ion Torrent Systems, a company advised by Harvard University genomics pioneer George Church, has raised $23 million in new capital to develop what it calls on its website “groundbreaking and highly disruptive technology” and to hire people who “want to do what it takes to put a dent in the universe.”

The company, which has a location near Yale University in Guilford, CT, and one in San Francisco, has raised $23 million in equity out of a financing round that could be worth as much as $26 million, according to a regulatory filing released today.

The document doesn’t say who invested, and Ion Torrent didn’t immediately respond to a request for comment. But the new company is associated with some big names, including Church and Stanford University’s Ron Davis, who serve on the company’s scientific advisory board, and CEO Jonathan Rothberg, who was the founding CEO of 454 Life Sciences before that company was sold to Roche two years ago for $140 million in cash.

Ion Torrent Systems website is pretty vague about what it is really up to, although its job postings offer some clues. It says it is looking to hire molecular biologists and biochemists to do the aforementioned universe denting, and that it offers that it offers the opportunity to work with top scientists “and have a profound impact.” It is also looking to hire software developers and “evangelists” who want to “create the biotech software platform of the future and share it with the world. Build powerful tools and create a tight-knit community that will use and develop them for years to come.”

GenomeWeb speculated back in March, based on a patent application filed by Ion Torrent Systems, that it is working on new DNA sequencing technologies, although the company wouldn’t confirm that. Major players in the field—such as Carlsbad, CA-based Life Technologies, San Diego-based Illumina, and Roche—have been in a competitive frenzy to lower the cost of sequencing full human genomes. One Mountain View, CA-based startup, Complete Genomics, raised $45 million in venture capital earlier this year to support its new model for sequencing entire genomes for as little as $5,000 apiece or less.

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The local life sciences scene was pretty quiet this week, although we heard more than usual from medical device companies.

—Paul Yager, the University of Washington’s chair of bioengineering, offered a detailed status update on a tool called the DxBox his lab has been developing the past four years in collaboration with Redmond, WA-based Micronics, Seattle-based PATH, and Bothell, WA-based ELITech Group, all with the support of the Bill & Melinda Gates Foundation. They are seeking to develop a portable, fast, accurate, and rugged diagnostic tool to help doctors in the developing world, and while there’s been a lot of progress, it’s entered the “put up or shut up” phase, Yager says.

—Seattle-based Dendreon turned in its complete application to the FDA for clearance to start marketing its first drug, sipuleucel-T, (Provenge) in the U.S. This filing came a bit earlier than Dendreon had forecasted, but it’s also a lot later than the company originally hoped when it first asked the FDA for approval, which you can read more about in this Dendreon history piece I did back in April.

—The Institute for Systems Biology said it has commissioned Mountain View, CA-based Complete Genomics to sequence the full genomes of 100 individuals as part of a Huntington’s disease experiment. This experiment is said to be the largest ever to use full human genome sequences.

—We’ve seen a few medical technology companies that are seeking to repair damaged tissues without leaving behind any implantable devices, and Bothell, WA-based QuantumCor is the latest. CEO Vern Dahl described his company’s plan to do this for a form of heart failure known as mitral valve regurgitation.

—Seattle-based Calypso Medical Technologies, the maker of a device to pinpoint radiation therapy for prostate cancer to minimize side effects, formed a collaboration with Siemens Healthcare. The companies will seek to develop the technology for pancreas and lung tumors.

—We also had an insightful guest editorial from Anthony Rodriguez, a Ph.D. bioengineering student at the University of Washington and an aspiring entrepreneur. He contends that it takes a village to raise an entrepreneur, and that while a few organizations have made some effort to cultivate young entrepreneurs at the UW, the business community could be doing much more.

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The Seattle-based Institute for Systems Biology and Mountain View, CA-based Complete Genomics said today they are planning to gather full human genome sequences from 100 individuals to study Huntington’s disease. The experiment, the largest complete human genome disease association study ever conducted, will examine samples from patients with Huntington’s, family members, and matched controls to look for genomic differences linked to how the disease presents itself and progresses. Complete Genomics, which we profiled in August, is best known for its effort to sequence entire human genomes for $5,000 apiece, far cheaper than is currently possible with other technologies.

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[Updated: 10/05/09, 7:05 pm Pacific] Sage Bionetworks, the Seattle-based nonprofit seeking to spark an open source movement for biology, has secured a “major founding donation” from Durham, NC-based Quintiles, the giant contract research organization for pharmaceutical and biotech companies.

Sage didn’t disclose how much the donation is worth in its statement announcing the news. But Friend, the founder of Rosetta Inpharmatics and former senior vice president of cancer research at Merck, said he had received $5 million of commitments from anonymous donors when he first publicly unveiled the Sage effort back in March.

Friend provided more detail on the fledgling nonprofit during an August interview, saying that Merck had donated $150 million worth of intellectual property, and that Sage had set up offices at the Fred Hutchinson Cancer Research Center with 15 employees. At that time, Friend said that the Cure Huntington’s Disease Initiative was one of the original anonymous donors.

[Updated with new comment from Friend] When reached by phone a couple hours after the Quintiles donation was announced, Friend said he was in the U.K. meeting with people from Nature, Cancer Research U.K., the Wellcome Trust, and the National Cancer Research Initiative to see what role researchers there might be able to play in helping shape Sage. From there, he said he plans to head to Germany.

Sage is worth watching because it aspires to do no less than shake up the culture of biology. It wants biologists to cast away traditional attitudes toward keeping raw experimental data close to the vest, and instead pool data in a common, shared database for researchers around the world. This kind of collaborative is needed, Friend contends, because biologists are starting to see how vast networks of genes get perturbed in complex diseases like cancer, diabetes, and multiple sclerosis. All of this data is too complex for any individual, or team of scientists—even at a place as wealthy as Merck—to fully grasp. Yet researchers scattered around the world are capturing huge volumes of genomic data on their computers, hoping it will someday be fodder for discovery. If Sage can convince scientists to contribute to the database, and get them collaborating through social networking mediums like Twitter and Facebook have done, then Sage hopes biologists might be able to speed up the pace of discovery of more effective drugs, just like open-source computing can create better software.

Stephen Friend

“There is a critical need to provide this access because genomic data has the potential to move the discovery side of the pharmaceutical industry away from the traditional competitive model toward consortium-style, pre-competitive collaborations,” Friend said in today’s statement.

Quintiles said it is supporting Sage not just as a charity, but partly as a way to keep its edge sharp in business. “While this is a donation on our part, we also see it as an investment in the future of biopharmaceutical development, as Quintiles seeks to work with customers as an ally during a period of intense change for the industry,” the company said.

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The University of Washington has been awarded a two-year, $25 million grant from the federal stimulus program to establish a new genome sequencing center to explore underlying causes of heart, lung, and blood diseases. The new UW center, to be led by scientist Deborah Nickerson, is one of two such sequencing centers being set up through the stimulus, along with one at the Broad Institute of MIT and Harvard. Six total grants worth a combined $64 million will go academic collaborators on the research, according to a statement from the National Institutes of Health. UW scientist Michael Bamshad is receiving a $5.2 million grant as part of the collaboration.

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[Update: 09/16/09, 11:15 am] Helicos Biosciences has gotten a lifeline, at least temporarily. The Cambridge, MA-based maker of genetic analysis instruments which hired an investment banker two weeks ago to seek “strategic alternatives” as it ran low on cash, has raised $10 million from new and existing investors and CEO Ron Lowy. [The deal includes new and existing investors, not just existing investors.]

Helicos (NASDAQ: HLCS) got the money from investors that include Atlas Ventures, Flagship Ventures, Highland Capital Partners, Versant Ventures, and Lowy. The cash infusion comes about a month after Helicos disclosed in its quarterly report, on August 14, that it was down to its last $5 million of cash. That meant it needed to raise money in the next four months, given the company burned $11.3 million of its cash to operate the first six months of this year.

The company is hopeful that its gene sequencing machines—which compete with those from industry heavyweights like Life Technologies, Illumina, and Roche—will gain acceptance in the market in a hurry after they were first introduced last year. Demand is encouraging so far, Helicos says. The company’s tools are used at the Broad Institute of MIT and Harvard, Mass General Hospital Cancer Center, and Dana-Farber Cancer Institute. Last week, Helicos sold four of its systems to a research institute in Japan.

But Helicos makes it sound like it’s not out of the woods, even after raising $10 million. The company hired Thomas Weisel Partners earlier this month to help consider “strategic alternatives,” like more financing, or partnerships, to make sure the company doesn’t run out of money.

“We believe that raising this level of funds is appropriate given the recent demand for the Helicos Single Molecule Sequencing System while we consider our strategic alternatives,” Lowy said today in a statement.

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[Updated, 3:15 pm Sept. 11 with added "burst" from Immune Design.]

Seattle biotech has taken its share of lumps lately, but beyond the next quarter or next year, what kind of life sciences potential really exists here in the Northwest? Over the next 20 years, will this area have grown as a world leader in university and corporate research, venture financing, and entrepreneurial activity in the life sciences—and, if so, in what fields? Those are the questions Xconomy is seeking to answer at our next event here in Seattle on Oct. 19.

I’m excited to announce today that we have assembled a panel of some of the most accomplished life sciences entrepreneurs and visionaries in the world, all of whom happen to live here in Seattle. They are: Leroy Hood, president of the Institute for Systems Biology; Steve Gillis of Arch Venture Partners; Ben Shapiro, former executive vice president at Merck and now a partner with Boston-based PureTech Ventures; and Stephen Friend, co-founder and CEO of Sage Bionetworks and formerly of both Merck and Rosetta Inpharmatics.

It’s hard to imagine a group more qualified to speak on the region’s future. Hood is a legendary entrepreneur who has co-founded 13 companies, including Amgen, and is best known for inventing high-speed gene sequencing machines that made the Human Genome Project possible. Gillis co-founded Seattle-based Immunex, where he led the team that created a breakthrough for autoimmune disease that now generates more than $7 billion a year in worldwide sales. Shapiro, a former chairman of the University of Washington’s biochemistry department, was executive vice president of basic research at Merck during its 1990s heyday when it did the early development of Gardasil, the vaccine to prevent cervical cancer. And Friend was co-founder and CEO of Rosetta Inpharmatics before that company was sold to Merck for $620 million, and he stayed with Merck for eight years to integrate its personalized medicine approach through the company’s global operations.

Chris Rivera, the president of the Washington Biotechnology & Biomedical Association, will lead off with introductory remarks about the WBBA’s effort to secure more support for the local biotech cluster. The star-studded panel will be moderated by Carl Weissman, CEO of Accelerator and a managing director of OVP Venture Partners.

After that discussion, Bob Nelsen, co-founder of Arch Venture Partners, will introduce startups from the Seattle area with the potential to transform their respective fields of biotech—Calistoga Pharmaceuticals, VLST, and Immune Design. Executives from those companies will deliver “bursts,” or brief introductions of their work, before the networking portion of the evening.

The event will be held from 5:30 pm to 8 pm on Oct. 19 at the Seattle Biomedical Research Institute in the heart of Seattle’s South Lake Union neighborhood. You can get more information on how to register here. We expect this to be a highly interactive conversation with the audience, with yours truly running around with a microphone—so be ready with your questions. We look forward to seeing you there on Oct. 19.

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Biotech companies run into walls all the time, and either reinvent themselves or die. If they’re fortunate, they get one shot at a turnaround. San Diego-based Ambit Biosciences is getting a third chance, and this time it has some hard data, not just a flashy concept, to offer.

Ambit got started in May 2000, just when the bubble was starting to pop on the Internet and genomics stock bubbles. Ambit’s original plan was to take some technology out of Yale University to build a database of all the proteins in the body and sell the information to drug companies.

When that business model fell out of favor just seven months later, Ambit re-started around the idea of screening ideal drug candidates against certain protein targets. Two multi-billion dollar drugs for diabetes and neurological conditions, metformin and gabapentin, were losing patent protection, and Ambit thought it could develop more effective second-generation treatments if it could discover how they really interacted with protein targets. It raised $20 million on that effort in 2001 and 2002, before it flamed out the next year.

“At the end of the second incarnation, we had nothing. It didn’t work,” says Scott Salka, Ambit’s CEO. “We had two strikes against us, we were standing at the plate, and had hardly any money. We could fold up our tent and go home, or salvage something.”

Ambit’s next chance came with an emerging class of drugs known as kinase inhibitors. They have been a hot area for prospective cancer drugs over the past decade, and block certain enzymes called kinases. Novartis’ imatinib (Gleevec) achieved breakthrough status (and multi-billion-dollar sales) as an inhibitor of a very specific kinase involved in chronic myeloid leukemia. Other pioneering kinase inhibitors, like Pfizer’s sunitinib (Sutent) appeared to work well against kidney cancer even though it blocked several variations in the family of kinases. That stirred debate about whether it was better to be more selective to certain targets, or less, in developing new compounds. That created demand among drug companies to do in-depth selectivity studies, Salka says. As a result, drug companies lined up for services from Ambit, which could screen large numbers of kinases for the best possible drug to block them.

That core skill of Ambit’s was good enough to win support from Roche, Bristol-Myers Squibb, GlaxoSmithKline, Pfizer, Johnson & Johnson, and Cephalon, and has provided some cash to keep the doors open of a fledgling biotech company for nine years. It’s also enabled Ambit to raise a total of $105 million from a list of investors that now stretches 14 deep.

But just like genomics was the hot new thing that faded in 2000, it’s hard to get investors excited about a biotech business that collects fees for services from Big Pharma. The big potential, as always, is in developing new drugs for deadly diseases.

While Ambit was screening kinases for Big Pharma customers, it was also building up a portfolio of kinase drug candidates of its own. The company’s lead asset of the moment is AC220 for acute myeloid leukemia. It’s a malignancy that strikes 13,000 people each year in the U.S., mostly elderly, who have a short life expectancy and no realistic treatment options beyond chemotherapy. With little notice, Ambit is gearing up this month to start a pivotal clinical trial of this product and is even in partnership talks. If this drug can match striking results seen in an earlier study, then Ambit could have this product on the market by the first half of 2011, Salka says.

“It’s a great story for San Diego biotech,” Salka says. “Hopefully we can deliver the goods.”

Ambit drew some attention for its drug last December at the American Society of Hematology meeting in San Francisco. That was where researchers reported that 16 of the first 54 patients with relapsed forms of acute myeloid leukemia had tumor shrinkage …Next Page »

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Complete Genomics, the Mountain View, CA-based company with a goal of sequencing full human genomes for $5,000, is announcing today that it has completed 14 full human genome sequences for commercial customers like March. The company says it has a dozen customers, including Pfizer, Duke University, the Institute for Systems Biology in Seattle, and the Broad Institute of MIT and Harvard. Last month, we reported on how Kirkland, WA-based OVP Venture Partners joined a syndicate that invested $45 million in Complete Genomics.

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One of the Seattle biotechs that’s been flying low on the radar this year popped back up on the scene with news of an important partnership.

—Seattle-based Trubion Pharmaceuticals had its best day of the year last Friday, when it said it secured a partnership with Redwood City, CA-based Facet Biotech (NASDAQ: FACT) to co-develop a drug for chronic lymphocytic leukemia. The deal provides Trubion with $20 million in upfront cash, plus $10 million in equity investment from Facet. Shares in Trubion (NASDAQ: TRBN) shot up more than 40 percent on news of the deal.

—Bad news hit one of the stars of the Seattle medical device cluster this week as Redmond, WA-based Archus Orthopedics filed paperwork to dissolve the company. The company raised more than $60 million from a prominent group of venture investors since 2001, before it ran out of cash this year. Archus showed great promise, at least according to one patient who got its spinal implant in a clinical trial in 2006.

—Merck (NYSE: MRK) looked like it delivered a body blow to Seattle biotech last October when it said it was shutting down its Rosetta Inpharmatics division, sending 300 workers into an uncertain job market. It didn’t turn out to be as damaging to the region as first feared, as more than 110 Rosetta alumni will keep doing what they’re good at in local jobs at Covance, Microsoft, and Sage Bionetworks.

—Biotech companies haven’t had much progress to brag about toward a real treatment of the underlying cause of Duchenne Muscular Dystrophy, the crippling genetic disease in young boys, but Bothell, WA-based AVI Biopharma has a chance to be a trailblazer, University of Washington neuroscientist Jeff Chamberlain told me during an in-depth interview.

—UW’s entrepreneurial bioengineering professor, Buddy Ratner, organized a conference on campus last week that attracted one of the top life sciences entrepreneurs of the past decade, Tufts University chemistry professor David Walt. I caught up with Walt, the co-founder of San Diego-based Illumina (NASDAQ: ILMN), for an exclusive interview on where he thinks genomics is heading, and his next big idea for a company.

—The Seattle-based Infectious Disease Research Institute licensed some technology from an Israel-based company for “microneedles” that might be a less painful way to inject its experimental vaccines, and might have the added benefit of better stimulating powerful immune system cells just under the surface of the skin.

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Merck was the only Big Pharma company with a toehold in Seattle a year ago, so when it decided to shut down its Rosetta Inpharmatics research center last October as part of global cost-cutting, some local biotechies moaned about how this was another sign of the apocalypse for a once-thriving life sciences scene.

But after almost a full year, the picture is more clear: Merck’s closure of Rosetta didn’t hurt the Northwest as much as many people thought at first, and it might even spur more innovation.

Rosetta has long held symbolic importance to Seattle biotech, because it was one of the region’s big biotech success stories of the 1990s before it was bought by Merck for more than $620 million in 2001. Merck spent gobs of money building it a shiny new Vulcan facility in South Lake Union, and trying to integrate Rosetta’s cutting-edge genetic analysis tools throughout its global research centers. The hope was to give scientists a better idea of which drugs were likely to succeed or fail in clinical trials, and to determine which patients might respond differently from others. About 300 people worked there at the peak when the closure was announced last fall.

Where has all of this genetics talent gone? Merck wanted to recruit about 100 people to its research centers on the East Coast, and about 70 people accepted those offers, says Doug Bassett, Merck’s executive director of molecular profiling and head of the Seattle site which is still winding down. But an even larger number, about 110 people, have remained in Seattle to carry on work related to what they did at Rosetta in other organizations. That certainly leaves some people who lost their jobs and may or may not have landed on their feet, but it’s clear that many Rosetta alumni, maybe even a majority, will continue to contribute to the local life sciences cluster.

“What started with a perception of a shutdown of a site has been translated into the sowing of seeds for new research that can grow,” says Bassett.

The Rosetta talent pool has branched out …Next Page »

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Complete Genomics, the Mountain View, CA-based company that says it can sequence entire human genomes for as little as $5,000, has pinned down a $45 million venture round which includes support from two of its founding backers—Kirkland, WA-based OVP Venture Partners and San Diego-based Enterprise Partners Venture Capital.

The rest of the capital is coming from Prospect Venture Partners, Highland Capital Management, and a pair of new life sciences investors with deep pockets—Essex Woodlands Health Ventures and OrbiMed Advisors. It’s the fourth round of financing for Complete Genomics since it was founded in 2006, and brings its financing total since inception to a little more than $90 million. The company plans to use the money to continue building what it says is the world’s largest commercial human genome sequencing center, in Silicon Valley.

The genome sequencing field has been on an audacious drive to get better, faster, and cheaper, and Complete Genomics has made some of the boldest predictions on how far it can push the frontiers. The company made headlines last October when it declared it intended to start sequencing full genomes this year for as cheap as $5,000, and deliver them in as little as four days. This would be an astounding leap forward in democratization of genome sequencing, which until recently has been so costly and time-consuming that only a handful of genomes have ever been completely sequenced. If the technology were made more widespread to do that, researchers say, it could shed valuable light on how small, individual variations in genetic code can lead to diseases.

Complete Genomics plans to make this possible partly through proprietary sequencing technology and with a different kind of business model. The established players—Carlsbad, CA-based Life Technologies, San Diego-based Illumina, and Switzerland-based Roche—make money by selling expensive equipment and supplies to researchers. Instead, Complete Genomics plans to establish its own in-house sequencing center in Silicon Valley, and ask researchers to send in their samples to get them sequenced for a fee. Complete Genomics just needed the latest round of financing to build its own proprietary machines to do the work at commercial scale.

“Our equipment is orders of magnitude better than anything the others guys make,” says Chad Waite, a managing director of OVP Venture Partners, and a founding investor in the company. “That’s the only way we can do it so cheap.”

Still, not everything has gone exactly according to plan. When I wrote about the company in October, Waite said Complete Genomics intended to start offering its commercial sequencing service starting in the second quarter of 2009, and pledged to deliver 100 full genome sequences to the Institute for Systems Biology in Seattle during calendar year 2009. The company fell behind on its schedule. Now Complete Genomics won’t be able to deliver all 100 sequences to the Seattle-based Institute this calendar year, Waite says.

Chad Waite

“We’re a bit delayed because the financing took a bit longer than we expected,” Waite says. “But we have already shipped a significant number of completed sequences to commercial customers.”

Skeptics have raised doubts about whether Complete Genomics really has superior technology, whether it can do the work so cheaply, and whether the data it produces will be full of errors. The company plans to answer these doubts in future scientific publications, Waite says. He wouldn’t say specifically how many sequences have been completed, or which customers have received them, although he noted that Leroy Hood of the Institute for Systems Biology and George Church of Harvard Medical School, a pair of giants in the genomics world, are scientific advisers to the company.

If Complete Genomics can show in a major scientific paper that it can do this many complete sequences at a high degree of accuracy, it will surely make headlines around the world. The actual number of genomes that have been sequenced is disputed, but at least according to a recent story in the New York Times, only eight have ever been completely done.

The latest financing should be enough to bring the company up to a commercial scale that can meet demand for many more sequences than that, Waite says, although it may not be the last financing for Complete Genomics. Waite raised the possibility of an IPO. I laughed out loud because I thought he was joking. He wasn’t.

“They’re probably bold enough to make an attempt in the not-so-distant future,” Waite says. “The question will be if it’s possible, and when.”

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Quite a few scientists at Amgen could breathe sighs of relief over the weekend—that years of their work didn’t go down the drain. The world’s biggest biotech company, which has scientific operations in Seattle and Cambridge, MA, scored a victory in its quest to make cancer drugs tailored to specific genetic subgroups, when the idea passed muster in a major, rigorous clinical trial.

Amgen (NASDAQ: AMGN) said its lone marketed anti-tumor drug, panitumumab (Vectibix), kept tumors in check for a significantly longer time for colon cancer patients with a normal form of a gene called KRAS, compared with patients who have a more aggressive, mutated form of the gene. Results were from a study of more than 1,100 patients who were newly diagnosed.

Most drug companies try to market their products to the broadest possible group of patients who might benefit, but Amgen is taking the opposite tack. Last month, the company persuaded the FDA to incorporate new language into the prescribing information of Vectibix, first approved in September 2006. The updated wording essentially says that instead of prescribing it broadly among colon cancer patients who have failed prior therapy, the drug appears beneficial only for patients with a normal KRAS gene, and doesn’t work at all for those with a mutated form. Amgen is hopeful that by targeting about 40 percent of colon cancer patients with the normal gene, who are much more likely to benefit, it will increase the confidence of doctors and patients (and insurers) to try its drug, which sells for about $8,000 a month.

The drug isn’t a huge seller in the Amgen portfolio, but the finding is sending a ripple effect through the organization nonetheless. Mounting evidence for its genetic stratification strategy gives it greater confidence to push ahead with tests of other genes that might boost the odds of success with its other eight cancer drugs in clinical development. About 240 people inside Amgen—including computational biologists and immunologists in Seattle, and molecular biologists in Cambridge—have been working for five years to show that identifying these genetic biomarkers is the best way to increase the odds of success in cancer drug development, and help patients avoid needless side effects when the treatments are bound to fail.

“This really underscores the value of using KRAS as a predictive biomarker,” says David Reese, executive director for oncology. “We’re very pleased with the results.”

A little bit of statistics is required to understand why this latest trial is a watershed. Amgen has been making its case, to the FDA and others, for well more than a year that Vectibix works better …Next Page »

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Stephen Friend had it all at Merck. The lucrative salary, the national media fame, the respect of peers, the power to snap his fingers and command a corporate army of some of the brightest minds in biomedicine. This year, he gave it all up for a startup dream.

Friend, 54, is best known in Seattle as the founder of Rosetta Inpharmatics, the cutting-edge genome analysis company that was acquired by Merck in 2001 for more than $600 million. For the past eight years, he worked on the East Coast as a senior vice president for the pharmaceutical giant, and spent much of his time running the company’s worldwide cancer research. Now he’s back in Seattle, dreaming big again as founder and CEO of a global nonprofit collaborative called Sage Bionetworks.

Sage, as we first described back in March, is attempting to do for biology what Facebook and Twitter have done for social networking, and Linux has for open-source software. Sage is needed because biologists are beginning to see how vast networks of genes get perturbed in complex diseases like cancer, diabetes, and multiple sclerosis. All of this genomic data is too complex for any individual, or team of scientists—even at a place as big and rich as Merck—to fully grasp. Yet researchers scattered around the world are capturing huge volumes of genomic data on their computers, hoping it will someday be fodder for groundbreaking discoveries. Sage wants to get all these biologists to now start sharing their data in a free, open database, so they can pool their brainpower to come up with insights that one person, or team, never would discover in isolation. The ultimate result would be more effective drugs, just like open-source computing can create better software.

Friend has been pushing for this type of collaboration for years at Merck, but it wasn’t really possible inside the proprietary walls of a company. That’s why he had to start something new. He told me how thrilling, and terrifying, it was to suddenly shed all the support he had at a big company, and be back in startup mode, pouring every ounce of his energy into the one thing he’s most passionate about.

“It feels like I’m moulting,” he says.

Since the original story broke in March, many essential organizational tasks have been done. The first checks have been deposited from donors (Friend won’t say how much) out of the original $5 million in commitments. Accounting systems have been set up. The intellectual property that Merck agreed to hand over, that represents eight years and $150 million of work, has been signed over and transferred. Through help from his friend, Nobel Laureate Lee Hartwell, the new nonprofit has set up office space at the Fred Hutchinson Cancer Research Center. Fifteen of the bright minds from Merck’s Rosetta operation have come to work at Sage full-time. Phones and e-mail are up and running.

Sage still isn’t fully disclosing who its supporters are, although the Bill & Melinda Gates Foundation and the U.K-based Wellcome Trust are “stakeholders” that have said they would like to participate as the ground rules are being framed, Friend says. One foundation, the Cure Huntington’s Disease Initiative, has agreed to disclose it contributed …Next Page »

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Last week’s heat wave did nothing to slow the deal announcements in the Northwest. We saw plenty of action in software, Internet, and biotech.

—The big news was the Internet search deal finally announced between Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO), who have been hammering out the details for months. As Eric and I reported, the 10-year partnership puts Microsoft in charge of both companies’ search engine technology, while Yahoo will run advertising sales and distribution for Yahoo Search and Microsoft’s Bing. (Bing technology will be used on both companies’ search sites.) The deal is structured around revenue sharing, whereby Yahoo gets 88 percent of the money made through the partnership for at least five years. Bing will get some much-needed scale and resources, and Microsoft said it plans to spend several hundred million dollars on the integration process.

—Redmond, WA-based Concur (NASDAQ: CNQR) acquired European business software developer Etap-On-Line, as Eric reported. Financial terms were not released. Concur makes software to help companies process and manage expenses, travel, and vendor invoices.

—Portland, OR-based Webtrends acquired Seattle firm Widemile, which focuses on multivariate testing and site optimization technology. Financial details were not announced. Webtrends makes Web analytics software for business intelligence applications.

—Seattle-based Delve Networks, a video management and media platform company, formed a partnership with Akamai, the Cambridge, MA-based digital media content distributor. Financial terms were not disclosed. The two companies are teaming up to provide an online video platform to help customers publish videos online and distribute them to any digital media player (including mobile devices). The move is seen as an effort to better compete with online video firms like Brightcove, also based in Cambridge, MA.

—Seattle-based Amnis raised the first $839,000 of a venture round expected to be worth $1.5 million, as Luke reported. Amnis, which makes a scientific instrument used to produce detailed images of large numbers of cells, raised the money from existing investors CVF LLC, MedVenture Associates, OrbiMed Capital, and angels. The company’s customers include the National Institutes of Health, the Pasteur Institute in France, and large drugmakers like Amgen and GlaxoSmithKline.

—Wilsonville, OR-based electronic design automation firm Mentor Graphics (NASDAQ: MENT) bought Embedded Alley Solutions, based in San Jose, CA, for an undisclosed price, as Eric reported. Mentor plans to use Embedded Alley’s mobile software development programs to improve its own operating system.

—Covance (NYSE: CVD), the Princeton, NJ-based drug development services company, has agreed to acquire a Seattle laboratory run by Merck’s Rosetta operation, as Luke reported. Merck has been winding down this operation since October, but has agreed to pay Covance $145 million over five years for genomic analysis services from the Seattle lab, called the Rosetta Gene Expression Laboratory, based in South Lake Union.

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The usual suspects in Seattle biotech were quiet this week, but we reported on an intriguing cancer drug developer with Paul Allen’s fingerprints all over it, as well as some compelling life sciences companies from British Columbia.

—Vulcan Capital, the investment vehicle that controls billionaire Paul Allen’s fortune, quietly dialed back its biotech investing a couple years ago. But it planted one very promising seed back in 2005, BiPar Sciences, which has produced a windfall $100 million return on a $13 million venture investment. We’ll see exactly why researchers are so excited about this company’s cancer drug at the American Society of Clinical Oncology meeting this weekend.

—Most of the glory for developing RNA interference drugs goes to Cambridge, MA-based Alnylam Pharmaceuticals, but the company relies on an important partner in Vancouver, BC, Tekmira, to help deliver these drugs through the body. I got some insight into Tekmira from CEO Mark Murray.

—I profiled another Canadian biotech that tends to fly below the local radar, Victoria, BC-based GenoLogics. This company received $5 million from venture backers in February, including OVP Venture Partners. It aspires to stitch together a dizzying mosaic of data from lab samples, patient medical records, and genomic analyses into something useful for biologists.

—Individual genomes will soon be as done for as little as $1,000, so what will this fast-moving technology mean for how medicine is practiced, and for society? Here’s the recap from a fascinating conversation between Leroy Hood of the Institute for Systems Biology, and Irving Weissman of Stanford University, who held court during the OVP Tech Summit in Seattle.

—We captured some of the entrepreneurial spirit of the University of Washington’s Business Plan Competition in our pages last week, including this post for the Xconomist Forum from Anthony Rodriguez. He’s a Ph.D. candidate in bioengineering, fired up about a new company called Shockmetrics that aims to detect medical shock at an earlier, and more treatable, stage.

—Fate Therapeutics, the high-profile company that aims to use stem cell biology to create new treatments, started its first clinical trial this week. Fate is based in La Jolla, CA—right next door to the Xconomy San Diego bureau—but we like to keep tabs on this company in Seattle as well because it has ties to the University of Washington and Arch Venture Partners.

—We had one significant biotech financing for the week, as Seattle-based Uptake Medical raised $3 million. Uptake is developing a minimally-invasive method for sealing off diseased portions of lungs, for people with emphysema and chronic bronchitis, otherwise known by the umbrella term chronic obstructive pulmonary disease.

—MDRNA (NASDAQ: MRNA), the Bothell, WA-based developer of RNA interference drugs, said it is shrinking its board from eight to five members as part of its effort to save money. Former CEO Steven Quay, Alex Cross, and Jack Pollack are out.

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