—It wasn’t exactly news when the board at San Diego-based Illumina (NASDAQ: ILMN) said it had rejected the $5.7 billion hostile takeover offer from Swiss drug maker Roche. Now Wall Street’s arbitragers are placing their bets on whether Roche can prevail. The most intriguing news about the deal, however, came from The Wall Street Journal, which revealed potential conflicts of interests with Illumina’s key adviser, Goldman Sachs.

—A new molecular diagnostics startup stepped into the light in San Diego. Applied Proteomics named Peter Klemm as CEO, and disclosed it raised $22.5 million in venture capital last summer from Vulcan Capital and Domain Associates. Applied Proteomics also said it moved to San Diego last June from the Los Angeles area, and double its staffing over the next year.

—San Diego-based Tocagen and Siemens Healthcare Diagnostics disclosed a partnership that will begin with Siemens’ support of clinical trials Tocagen has planned for its viral gene therapy treatments for primary brain cancer. Siemens said it will help provide companion diagnostics that are intended to help doctors decide the best course of treatments for patients, based on their unique genetic characteristics.

—San Diego’s OncoSec Medical, which was created out of a reverse merger less than a year ago, is beginning mid-stage trials of a treatment that combines electroporation and immunotherapy in patients with three types of skin cancer. Electroporation is a technology that causes cancer cells to take up higher concentrations of anti-cancer drugs by administering pulses of electricity directly to the cancer cells. OncoSec is trying it on patients with metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma.

—Brooks Life Science Systems, a Poway, CA-based division of Brooks Automation, (NASDAQ: BRKS), said it had established a development and commercialization partnership with The Scripps Research Institute (TSRI). Brooks plans to manufacture and commercialize a microplate imaging system under an exclusive licensing agreement with the biomedical research institute.

—San Diego-based Prometheus Laboratories Inc., a specialty pharmaceutical and diagnostic company, said it signed a research and collaboration agreement that provides its proprietary cancer diagnostic technology to an unnamed global pharmaceutical. Financial terms were not disclosed. Prometheus said its technology can detect the activation of specific cancer pathways with high levels of sensitivity and specificity.

—San Diego-based Synthetic Genomics and Ipswich, MA-based New England Biolabs (NEB) said they signed a non-exclusive licensing agreement allowing NEB to commercialize the “Gibson Assembly Master Mix,” a one-step, isothermal approach to enable the rapid assembly of multiple DNA fragments. The companies said Daniel Gibson and colleagues at the J. Craig Venter Institute (JCVI) developed the technology as part of a program sponsored by SGI. Financial terms were not disclosed.

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When Barry Fogel first started developing a new treatment 15 years ago, his main goal was to help his own patients. Fogel, a physician trained in both psychiatry and neurology, saw many patients with a movement disorder called tardive dyskinesia (TD). The condition—which can be caused by drugs that block dopamine, such as antipsychotics—is characterized by involuntary movements of the face like puckering, closed eyes, and grimacing. Some patients suffer writhing of their hands and feet, or difficulty moving their upper bodies. “At its worst, it’s quite disfiguring,” Fogel says. And there is no approved drug to treat TD.

Fogel developed a treatment for the condition in the late 1990s, patented it, and set out to try to get it on the market. On Monday, Fogel’s dream took a huge leap towards reality when his Waltham, MA-based company, Synchroneuron, announced it had raised its first round of venture capital—$6 million from Morningside Technology Ventures. It’s enough to take the drug through a substantial portion of the clinical trials Synchroneuron will need to complete to apply for FDA approval, says chief financial officer Marc Cote.

Synchroneuron’s journey from idea to Series A could be a case study in stick-to-it-tiveness—and the value of networking. Fogel, a clinical professor of psychiatry at Harvard Medical School, suspected that modulating two brain chemicals, glutamate and GABA, would relieve TD. So he did a bit of experimenting on his own patients, prescribing them existing drugs that targeted those chemicals but were approved to treat other conditions. “I established that if you modulate glutamate, in particular, the TD gets better,” Fogel says.

So Fogel developed and patented a method for using a drug called acamprosate to do just that, and in 2004, he licensed it to San Diego-based Somaxon Pharmaceuticals (NASDAQ: SOMX). But Somaxon was developing an insomnia drug, which took precedence over the acamprosate program, Fogel says. “They didn’t give sufficient resources to acamprosate,” he says. “The progress was disappointing.” Somaxon declined to comment. (A sidenote: Somaxon eventually did get its insomnia drug on the market, but has struggled to make it stand out in a competitive market.)

In 2007, Fogel got his patents back from Somaxon and began looking for an alternate path to FDA approval. It wasn’t easy: Fogel and his wife had to do all the work to … Next Page »

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New England Patriots owner Robert Kraft may still be smarting from his team’s loss to the New York Giants in the Super Bowl, but at least one of Kraft’s other organizations has some good news to cushion the blow: Boston-based Acetylon said today that it has received a $15 million equity investment from Celgene (NASDAQ: CELG), the biotech giant based in Summit, NJ.

Acetylon was founded in 2008 and backed with $40 million from several individual investors, including Kraft. The company is working on a class of drugs that inhibit enzymes called histone deacetylases (HDACs). These enzymes regulate gene expression and play a role in many cancers. Last fall, Acetylon began human trials of its lead compound, ACY-1215, in multiple myeloma. Celgene is a leader in that field with its blockbuster myeloma treatment lenalidomide (Revlimid). “Celgene has a strong strategic and market interest in hematological malignancies and other cancers, and we will benefit from their guidance and input,” says Walter Ogier, CEO of Acetylon.

In the past, drug developers have tried to inhibit several HDACs at one time, but Acetylon’s compound targets only one, HDAC6. That selectivity may cut down on side effects such as fatigue and nausea—and it was one of the main reasons Celgene was attracted to Acetylon’s research. “Acetylon has established itself as the leader in developing next generation, selective HDAC inhibitors for cancers as well as non-cancer disease indications and we believe the company’s approach could significantly benefit patients,” said Mark Alles, Celgene’s chief commercial officer, in today’s release.

Acetylon’s scientists plan to test ACY-1215 in combination with bortezomib (Velcade), made by Millennium Pharmaceuticals. “We anticipate a similar opportunity to test it in combination with [Celgene's lenalidomide] and potentially the next-generation of the drug,” which Celgene is currently testing in clinical trials, Ogier says.

Celgene’s investment in Acetylon is a pure equity deal, and Celgene will not receive rights or options to the startup’s technology. Alles will take a position on Acetylon’s board as a non-voting observer—meaning he’ll mostly have an advisory role. “They’ll have a closer view on our progress,” Ogier says. As for whether or not Celgene might become interested in forming a closer research alliance in the future, Ogier says, “anything could happen.” In the meantime, the deal “doesn’t preclude us from forming other partnerships,” he says. “I think this is good for both companies.”

Celgene has taken quite a bit of interest in the Boston biotech scene of late. On January 26, the company announced it was buying Bedford, MA-based Avila Therapeutics for $350 million. Last year, Celegene participated in a $30 million funding of Cambridge, MA-based Acceleron and it extended a partnership with Cambridge-based Agios, adding $20 million to a $130 million alliance. In May 2011, Celgene signed on to use Boston-based Foundation Medicine’s genomics testing technology in trials of cancer drugs, with the goal of identifying patients who are most likely to respond well to the medicines.

For Acetylon, the Celgene infusion kickstarts an already ambitious plan for ACY-1215. The company is currently finishing up the first stage of a Phase 1 trial, and plans to begin the combination phase of the trial later this year, Ogier says. The $15 million investment “is significant for a company at our stage,” Ogier says. “It will allow us to augment our cancer program.”

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New York is home to several organizations that are uniting the city’s disparate academic institutions in pursuit of common goals. This month will mark the opening of the New York Genome Center, an effort among 11 colleges to collaborate on genomics research. In November, the New York eHealth Collaborative held its first conference, which was designed to bring together top players in the field of health IT. And just yesterday, the Academy for Medical Development and Collaboration (AMDeC) rolled out a set of enhancements to its year-old online registry—the only resource in the region that provides real-time access to technology and resources for biomedical researchers around the city who want to work together.

Maria Mitchell is the president of AMDeC, a 14-year-old consortium of nearly 20 medical research institutions, including Cold Spring Harbor Laboratory, Memorial Sloan-Kettering Cancer Center, and Weill Cornell Medical College. The group’s online registry is called FIRST (for Facilities Instrumentation Resources Technologies), and, says Mitchell, it’s one of the biggest undertakings AMDeC has ever tackled.

Mitchell sat down recently with Xconomy to chat about the state of academic research in NYC, and how her group is fostering collaboration among far-flung and often competitive institutions.

Xconomy: How did AMDeC’s mission evolve over the years?
Maria Mitchell: One of the original goals of AMDeC was to create a venture capital fund that would help commercialize technologies from the institutions. But every investor said, “We have no interest in investing in a bunch of institutions that have no … Next Page »

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OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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Plans for IPOs and venture funding dominated the New England deals news this week.

—A new seed fund, backed by venture firm New Enterprise Associates and hosted by Harvard, came out of the woodwork last week. The Experiment Fund will invest up to $250,000 in seed funding in selected startups, with a focus on technologies that come out of Cambridge, MA. The news broke just a few days ahead of Facebook—the one that got away—revealing its plans to go public.

—Radius Health, a Cambridge-based startup working on treatments for osteoporosis, filed paperwork indicating its plans to raise as much as $86 million in an initial public offering.

—A PricewaterhouseCoopers and National Venture Capital Association report shows a mixed picture for life sciences investing in 2011, my colleague Arlene reported. Biotech companies raised $4.7 billion, showing a 22 percent increase over 2010, but the deal volume for the sector dropped 9 percent to 446 transactions. Medical devices companies also showed an increase in funding dollars but a drop in number of deals.

—Cambridge-based Brightcove set the price range of its initial public offering at $10 to $12 per share, according to an amended filing with the SEC. The video hosting startup plans to sell 5 million shares, and give underwriters the option to purchase another 750,000 shares. Brightcove first filed paperwork last August indicating it intended to raise $50 million in an IPO.

—Synchroneuron of Waltham, MA, nabbed $6 million in Series A funding from Morningside Technology Ventures. The startup is developing treatments for movement disorders such as tardive dyskinesia.

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At first glance, a report released last week by PricewaterhouseCoopers and the National Venture Capital Association seems to portend rich times for life sciences startups. Biotech companies raised $4.7 billion in 2011—more than any other sector except for software and enough to help make last year one of the top three years for venture fundraising in the past decade.

But drill down into the report, based on data provided by Thomson Reuters, and the numbers tell more of a mixed story. Total VC dollars poured into the life sciences sector, which also includes medical devices, increased 21 percent to $7.5 billion in 2011. The biotech portion of the haul marked a 22 percent increase over 2010. But the volume of biotech deals dropped 9 percent to 446. What’s more, the medical device portion rose 20 percent in dollar terms (to $2.8 billion) but dropped 2 percent in deal volume (to 339).

What it all means is that VCs in life sciences remain supportive of the sector, but uncertain about its future, says Tracy Lefteroff, global managing partner in PwC’s venture capital practice. “There are still some major challenges ahead in terms of getting the FDA to provide transparency to young companies about what they need to do to get their products out of the pipeline,” Lefteroff says. “For anything [in investing] to be sustainable, FDA issues will need to be worked out.”

Still, some investing trends last year showed clear signs of optimism in life sciences. During the fourth quarter, for example, VC investing in early-stage companies totaled $987 million—a 47 percent jump from … Next Page »

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Cambridge, MA-based Radius Health, which is on a quest to enter the multibillion-dollar market for osteoporosis treatments, said today it has filed to go public. The company hopes to raise $86 million in the proposed offering. The IPO will be underwritten by UBS Investment Bank and Leerink Swann, and co-managed by Cowen and Company and Rodman & Renshaw.

Radius’s lead compound, BA058, is a new type of “anabolic,” or bone-building, drug. In early trials, patients have re-grown bone with little risk of developing hypercalcemia, a dangerous overload of calcium that can result from current treatments. If the drug proves effective in pivotal trials, which the company is running now, it could become a major contender in a very large market. A recent study by Global Industry Analysts of San Jose estimated that the annual market for osteoporosis treatments will reach $8.8 billion by 2015.

The current iteration of Radius’s drug is an injection, but the company is working on a more convenient dosing option—a patch it’s developing in a collaboration with 3M (NYSE: MMM). Using 3M’s “microneedle” technology, Radius developed a patch containing 360 tiny needles that deliver a full dose in about 15 minutes.

Radius last made news in May, when it raised a staggering $91 million and merged with an unlisted shell company in preparation for an IPO. The company’s investors include MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, the Wellcome Trust, HealthCare Ventures, Scottish Widows Investment Partnership, BB Biotech, Brookside Capital, Saints Capital, Nordic Bioscience, and Ipsen Pharma.

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Applied Proteomics hasn’t exactly been operating in stealth mode since it was founded five years ago. Co-founders David Agus, a cancer specialist at USC, and Danny Hillis, the MIT-trained computer scientist, gave TedMed talks about the startup’s technology, which provides a 40-gigabyte snapshot of all the proteins circulating in a drop of blood. By pure coincidence, I watched John Stewart’s Feb. 2 interview with Agus last night on “The Daily Show.”

“Danny and David had the foresight to build the tool before trying to use the tool,” says John Blume, a molecular biologist who joined API in 2008 as chief scientific officer. “Although the company wasn’t in stealth mode, the first several years were spent in taking the time to make it right, and then to use it and avoid some of the stumbling blocks.”

Now Applied Proteomics is raising the curtain on several steps that mark its progress beyond a seed-stage startup that was incubating at Applied Minds, an industrial think tank that Hillis founded in Glendale, CA, with a colleague from Disney Imagineering. After moving the headquarters to San Diego late last year, Applied Proteomics is today naming a new CEO—Peter Klemm, a veteran in molecular diagnostics and the former CEO of Lexington, MA-based Predictive Biosciences.

Danny Hillis

The company known as API says it also secured $22.5 million last June in Series B funding from Domain Associates (San Diego partner Jim Blair joined the board), Seattle’s Vulcan Capital, and returning angel investors. Klemm tells me the company raised $4 million from angel investors (who prefer to go unnamed) in what amounted to API’s Series A round in 2007.

David Agus

API’s goal, Klemm says, is nothing less than to “elevate molecular diagnostics to another level beyond the genome” by measuring the proteins made by genes—a long-sought technology that is expected to help doctors improve medical care for individual patients. Because proteins carry out most cellular functions, the company says a snapshot of all the proteins circulating in the body at a given moment represents “the most powerful source of information” in terms of understanding a patient’s health status.

Quantifying all the proteins in the body, Klemm says, can help doctors optimize the course of treatment for individual patients by making it easier to identify the specific drugs that would have the greatest effect on blocking specific proteins or signaling pathways, which can vary dramatically from person to person.

In a statement from the company, Hillis says, “For the first time, we can look at all the proteins in the body with remarkable specificity and sensitivity and use proteomic technology to create … Next Page »

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If you’ve turned on your TV anytime in the last, oh, decade or so, you’ve no doubt been bombarded by ads imploring you to “ask your doctor” about Drug X. And you’re well familiar with the routine: You get treated to happy images of folks dancing, perhaps, or walking their dogs in pretty green meadows, while a soothing voice in the background tells you that Drug X may cause you to lose your ability to drive safely, lose your vision, or lose your mind.

Forgive the exaggeration but you get the picture.

Well, the FDA isn’t pleased with the pharmaceutical industry’s advertising practices. So it’s proposing a new set of rules that would not only limit the ability of drug advertisers to use so many cheerful images, but may indeed force them to place more emphasis on their products’ potential side effects.

The FDA actually proposed the new rules back in 2010. But it re-opened the matter to public comment on January 27, after it published the results from an experiment it sponsored to measure the impact of distraction on consumers’ ability to understand the risks and benefits of drugs being advertised. The rules would pertain to direct-to-consumer (DTC) ads for prescription drugs on television or radio.

The original proposal is rather bulky. But here are the basics of what the FDA is suggesting: The agency wants to amend the rules for DTC advertising to more clearly define the standards for determining whether side effects are presented in a “clear, conspicuous, and neutral manner.” For example, the new guidelines would dictate that the adds cannot include “distracting representations,” such as statements, images, or sounds that might draw the audience’s attention away from those laundry lists of potentially adverse events.

So what exactly makes an ad distracting? The FDA’s proposal doesn’t really spell it out clearly, but you can get a hint of what the agency was thinking in the newly released report on its study, which it titled, “Experimental Evaluation of the Impact of Distraction on Consumer Understanding of Risk and Benefit Information in Direct-to-Consumer Prescription Drug Television Advertisements.” The FDA planned the study to answer a number of questions. Among them: Do visual images that are positive in tone affect viewers’ ability to comprehend the risks inherent in a product? Do positive images influence how people feel about the product? And if the advertiser super-imposes text onto the images—spelling out the side effects—does that change how viewers perceive the product?

All good questions, to be sure. To answer them, the FDA asked 2,000 consumers to go online and watch an ad for a fake blood-pressure drug called Zintria. But the participants didn’t all see the same ad. Some heard the side effects cited while watching “mildly” positive images (rocks, chairs, metal arches), while others saw “strongly” positive images (babies, puppies, girls jumping with beach balls). Some viewers saw the side effects spelled out in superimposed text, while others didn’t.

Not surprisingly, those who watched cute babies and puppies while hearing about the side effects felt better overall about the product than those who watched the more boring images. Both groups, however, understood Zintria’s risks just fine—and they really got it when the side effects were displayed on the screen in clear text, too.

The FDA has published the study on the Web and re-opened the proposed rules to comments, which the public can submit up until February 27 (instructions below).

We here at Xconomy are plenty distracted by the plethora of peppiness in drug advertising. Here are our votes for … Next Page »

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…or really just one great one: Xconomy needs your help. We’re busy cranking out terrific tech and life sciences journalism and putting on stellar events across the six cities in our network, and we’re looking for a kick-ass marketing coordinator to help us get the word out about all of it.

Full details are here, but in a nutshell: This is a full-time position in our Cambridge, MA, headquarters, ideal for somebody who is happiest when juggling a bunch of diverse projects. We need a person who enjoys figuring stuff out as s/he goes along, and has just enough of the old OCD to pull it off without too many embarrassing typos. Some main areas of focus will include marketing our events, managing our social media efforts, and marketing reprints and premium products.

If doing all that in an extremely collegial, slightly wacky startup environment sounds like your idea of a good time we want to hear from you at jobs@xconomy.com.

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—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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News of FDA drug approvals shone the spotlight on some New England biotechs this week.

—Waltham, MA-based Alkermes (NASDAQ: ALKS) and San Diego-based Amylin Pharmaceuticals(NASDAQ: AMLN) won FDA approval for their injectable diabetes drug exenatide once-weekly (Bydureon). This was their third time seeking clearance for the drug, which uses technology from Alkermes to last long enough in the bloodstream to turn it into a once-weekly injection

—Additionally, the FDA cleared a drug developed by Lexington, MA-based Curis and its partner Genentech as treatment for a common form of skin cancer called basal cell carcinoma. The drug, vismodegib (Erivedge), is the first approved product for Curis.

—They say good news comes in threes. Cambridge-based Vertex Pharmaceuticals also got a faster-than-expected FDA OK to start selling its drug ivacaftor (Kalydeco) as a treatment for a rare form of cystic fibrosis. That’s the second drug approval for Vertex (NASDAQ: VRTX), which also sells a treatment for hepatitis C. Bonnie Ramsey, one of the key people involved in developing the drug, talked to my colleague Luke about the implications of the approval.

—But there was some bad news, too: A week after reporting data that its pancreatic cancer treatment saridegib (IPI-926) showed some success in a small study, Infinity Pharmaceuticals (NASDAQ: INFI) halted a bigger, mid-stage clinical trial of the drug when it showed patients were living longer in the placebo group. The Cambridge, MA-based company’s shares fell more than 30 percent after the news last Friday.

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In Michigan, technology spun out of the University of Michigan is firmly entrenched in the startup success stories that get the most press: HandyLab, Accuri Cytometers, and the like. What’s less publicized is the key role Wayne State University’s technology has played in major companies like Asterand and the California-based SciClone Pharmaceuticals.

Wayne State is particularly renowned for its contributions to chemical technology, and, earlier this month, the university hired Harl Tolbert—a former pharmaceutical executive with an extensive business development, licensing, and IP management background—as its associate vice president of technology commercialization tasked with building relationships with startups.

“Once upon a time, I wanted to be a researcher,” Tolbert says. “Then I became drawn more to the business part of science. I made my way out of the lab to a medical clinic in Illinois, and that whet my appetite for understanding how science, medicine, and business intersect.”

Tolbert comes to Wayne State after working in sales and business development at Abbott Laboratories and Pierce Chemical, both located in Illinois. When a job opened up in the technology transfer office at Tulane University, the Louisana native jumped at the chance to return to his home state and raise his children closer to family. Then, about a year later, Hurricane Katrina hit.

“We decided to leave New Orleans,” Tolbert says. “It was really painful, but everything was so uncertain. We didn’t know if we’d be able to rebuild our home or even re-occupy our neighborhood.”

He and his wife had a pact to relocate to the first city that offered both of them a job, and that ended up being Rochester, NY. Tolbert served as the associate director for biological sciences in the University of Rochester Medical Center’s Office of Technology Transfer before landing the job at Wayne State.

Though Tolbert was only slightly familiar with Detroit before accepting his position, he was very familiar with Wayne State, thanks to mentors throughout his career who had intimate ties to the university.

“Wayne State has a reputation for great achievements in chemistry,” he adds.

Tolbert says he plans to increase the school’s efforts to commercialize its technology by pitching both fresh technology and older technology to startups, particularly those in the realm of life science applications that involve human cells or tissue. He’s also seeking ways to develop technology despite the relative lack of funding that university research typically receives, such that the technology is “one or two steps” beyond the earliest stages.

“There’s a need for more bridge funding,” Tolbert says. “That’s true for all universities, and it’s true for Wayne State.”

One advantage Wayne State’s Office of Technology Transfer has is that it’s located in TechTown, the university’s startup incubator and a hub for local innovation. Tolbert imagines that his proximity to TechTown’s entrepreneurs will lead to “a lot of brainstorming in the hallways,” and the chance to not only interact, but keep tabs on companies that are interested in licensing Wayne State’s technology.

“We want to work with more startups in Detroit and the Southeast Michigan region,” Tolbert says. “Entrepreneurs tend to be a little more receptive to early-stage technology. We just have to be creative in how we engage them so that we can help them, and they can help us.”

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Employment in San Diego’s life sciences sector grew by 15 percent over the past two years, as biopharmas, medical device companies, and other employers added roughly 5,550 jobs here—raising employment in the sector to 41,937 in 2011, according to a report released today by Biocom. The report says overall employment in San Diego increased by 1.1 percent over the same period, gaining about 20,600 jobs to reach 1.83 million in 2011.

The 40-page economic study says San Diego’s life sciences cluster also is expected to outpace the nation in terms of job growth and economic impact over the next two years, as another 2,770 jobs are added by 2013. A broader snapshot that includes life sciences companies in neighboring Orange, Riverside, and Imperial Counties projects the region will add more than 6,000 workers over the next two years.

Despite a significant decline in venture capital funding, the report says the four-county region of Southern California will continue to retain its high standing and competitive advantage in the life sciences. By 2013, there will be 70 percent more jobs in the life sciences in these four counties than the national average.

While venture capital funding is a key indicator of entrepreneurial activity and business formation, the report says the sharp decline in Southern California VC investments, from $1.1 billion in 2007 to $553 million in 2010, reflects the severe economic downturn and other industry trends underway nationwide.

San Diego’s strength was especially apparent in federal funding for biomedical research. Of the top 10 research institutions receiving National Institutes of Health grants in 2011, nine are in San Diego. The $835 million in grants awarded last year to San Diego scientists accounted for more than 85 percent of the grants allocated in the four-county region.

The report says the four-county life sciences cluster comprises more than 3,500 companies and employs over 97,000 people. On average, salaries range between $54,141 and $116,462, well above the national and regional averages. Including direct, indirect, and induced employment, the report says this region supports a total of 248,800 jobs that pay over $17.7 billion in wages and generate $57 billion in economic activity.

San Diego County alone accounts for 1,700 companies that employ 41,937 people. Including direct, indirect, and induced job, San Diego’s industry supports more than 106,000 jobs that pay $7.5 billion in wages and generate roughly $22 billion in overall economic activity. A .pdf file of the full report can be downloaded here.

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Cambridge, MA-based Flagship Ventures, a $900 million fund known for its successes with companies such as Accuri Cytometers and Acceleron Pharma, is planning to open an office in Michigan in the next six months, says Sean O’Donnell, VP at Credit Suisse’s Michigan office.

The move comes after Venture Michigan Fund II (VMF II), a fund-of-fund which is managed by Credit Suisse, made a $15 million investment commitment in Flagship Ventures Fund IV, which invests in early-stage companies. As part of the agreement, Flagship will invest that $15 million in Michigan companies. Flagship has already found success in local companies with Accuri Cytometers, which is based on technology spun out of the University of Michigan.

“Flagship Ventures is a much larger fund than is typically involved in our program,” O’Donnell says. “We hope they’ll exceed that amount.”

The Venture Michigan Fund II was established in February 2011. Like the first Venture Michigan Fund, VMF II exists to primarily invest in early- and seed-stage Michigan companies. VMF II has $120 million in capital to invest in funds that target high-growth and emerging industries. The commitment to Flagship was the fourth investment it has made.

And what can we expect Flagship to invest in? O’Donnell admitted that Michigan continues to feel the effects of a difficult national fundraising environment, though he says there is actually an increased amount of capital available to Michigan companies compared to years past thanks to programs like VMF II. He pointed to the success of homegrown entities like Arboretum Ventures and HandyLab as helping to persuade investors that Michigan is a viable place to invest.

O’Donnell also says that, though Michigan’s life science sector will remain robust, he predicts movement away from therapeutics and devices in favor of anything that saves money. Where he expects to see increased investment is in the IT sector, particularly in software development, mobile apps, and social media, and the reason is simple: Those kinds of companies are cheap to start.

“I feel Michigan is on the right track,” O’Donnell says. “We’re always going to have gaps, but good deals will still be able to find capital.”

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Bonnie Ramsey said three years ago that a cystic fibrosis drug from Vertex Pharmaceuticals was a huge medical advance in the making, and would end up being an achievement on par with putting a man on the moon, at least for her patients.

Yesterday, she says, was the day it truly felt like she was part of a team that reached the moon-shot goal. The good news came when the FDA approved Vertex’s ivacaftor (Kalydeco) as the first drug of its kind to work by treating an underlying genetic defect for cystic fibrosis.

“It’s a really big day,” says Ramsey, a leading CF physician/scientist at Seattle Children’s Hospital and the University of Washington. “Even though it’s for a small subpopulation, the treatment paradigm has completely changed. It’s no longer about just treating the symptoms, it’s about treating the genetic defect. That’s a real game-changer.”

The drug from Cambridge, MA-based Vertex (NASDAQ: VRTX) is now FDA approved for patients age six and older who have what’s known as a Class 3 gene mutation called G551D. This mutation is found in about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis. The disease, the result of various mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs, and poor absorption of nutrients. It means patients have to endure hours a day of treatment their entire lives, and the median life expectancy is about 39 years. Doctors currently treat the symptoms of the disease, through things like inhalable antibiotics, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

Bonnie Ramsey of Seattle Children's Hospital

Ramsey has had an instrumental role in developing this drug since its infancy. As the executive director of the Cystic Fibrosis Foundation’s Therapeutic Development Network, back in 2000 she began collaborating with the drug’s original developer, San Diego-based Aurora Biosciences (later acquired by Vertex.)

Ramsey was the lead investigator of a pivotal study of 161 patients, known as Strive, which yielded results in February that laid the foundation for yesterday’s FDA approval. The study showed that patients age 12 and older on the twice-daily pill from Vertex had about a 10.6 percent absolute improvement in their ability to force out air from their lungs in one second—compared with a placebo. The effect held up over the full 48-week course of the study. Researchers also saw significant improvements in being able to gain weight, while also reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, and upper respiratory tract infections, researchers said, although more patients dropped out of the placebo group than the drug group. A second study verified the effect in younger patients, age six and above.

What excites scientists is that the drug has a compelling foundation in biology. It is designed to … Next Page »

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This week’s deal news covered a breadth of sectors: biotech, medical devices, mobile applications, software, and robotics. Not to mention a major venture capital fund raise.

—Waltham, MA-based drugmaker Avila Therapeutics was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million, with as much as another $575 million available in milestones. Avila is a maker of “covalent” drugs that are designed to shut down the activity of disease-causing proteins for a prolonged period of time.

—Verastem, a young Cambridge, MA-based biotech working on drugs targeting cancer stem cells, completed its initial public offering, led by UBS and Leerink Swann. The IPO (5.5 million shares sold at $10 apiece) represented a strong showing among investors, as Verastem originally indicated it planned to sell 4.5 million shares priced between $9 and $11 each. The underwriters have a 30-day option to buy another 825,000 shares.

—Burlington, MA-based ConforMIS, a maker of knee implant systems, raised $89 million in a Series E funding from private equity investors and government investment funds abroad. The company said it will put the money toward sales, manufacturing, and expansion of its technology.

—Co3 Systems, a maker of data loss management software, received new funding from Fairhaven Capital. The Cambridge, MA-based startup said it will put the money (whose sum was undisclosed) toward sales, marketing, and engineering.

—Malborough, MA-based medical device startup Navilyst Medical will be acquired by Albany, NY-based AngioDynamics (NASDAQ: ANGO) in a transaction valued at $372 million, based on the company’s $14.20 per share closing stock price Monday. Navilyst, which focuses on … Next Page »

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[Updated: 1:25 pm] Vertex Pharmaceuticals is now officially more than just a one-hit wonder.

The Cambridge, MA-based biotech company (NASDAQ: VRTX), best known for its hepatitis C drug, has won clearance from the FDA to start selling a new twice-daily pill called ivacaftor (Kalydeco) for a rare form of cystic fibrosis. The FDA said today the Vertex drug can now be used for patients age six and older who have a gene mutation called G551D. About 1,200 patients in the U.S., or roughly 4 percent of the total population of 30,000 cystic fibrosis patients, have the mutation.

The approval came faster than expected, as Vertex turned in its application in October, and the FDA had a deadline of April 18 to complete its review. The company plans to start shipping the drug to pharmacies this week, the company said.

“Kalydeco is an excellent example of the promise of personalized medicine—targeted drugs that treat patients with a specific genetic makeup,” said FDA Commissioner Margaret Hamburg, in a statement. “The unique and mutually beneficial partnership that led to the approval of Kalydeco serves as a great model for what companies and patient groups can achieve if they collaborate on drug development.”

The new cystic fibrosis drug has been highly anticipated for years, and the application to the FDA is based on clinical trial results that arrived in February. The study of 161 patients found that patients on the Vertex drug had about a 10 percent absolute improvement in their ability to force out air from their lungs in one second—a common measure of success in treating lung disease—compared with those on a placebo. The effect lasted over the entire 48-week course of the study. Researchers also saw significant improvements in reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, upper respiratory tract infections, nasal congestion, rash, and dizziness, although more patients on the placebo group dropped out of the study early because of side effects, Vertex said.

While the 10 percent absolute improvement in breathing ability for people with a deadly lung disease might not sound like much, it is a big step forward for the disease. Cystic fibrosis, the result of mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs. That effectively suffocates people over time, and often ends up killing people in their late 30s or early 40s. Doctors currently treat the symptoms of the disease, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

[Updated pricing information] Based on the small patient population that has the G551D mutation, and the significant benefit the drug provides to them, Vertex set the price at $294,000 per patient per year, Nancy Wysenski, Vertex’s chief commercial officer, told analysts today on a conference call. The company estimates that about 60 percent of eligible patients have private health insurance, while the rest are covered by government insurance, Wysenski says. As is common for companies selling high-priced medications, Vertex has established programs to help get the drug to patients who can’t afford it. Vertex said it will provide free medicine to uninsured families with household incomes of less than $150,000 a year, and it will provide assistance in making co-payments for those with insurance.

“We have a strong commitment to help patients 6 and older get Kalydeco,” Wysenski said on the conference call.

The drug was developed as part of a 13-year long collaboration with the Cystic Fibrosis Foundation, which put more than $70 million into the development program, along with Vertex, and the drug’s original developer that was acquired by Vertex-San Diego-based Aurora Biosciences. Because of its support, the Cystic Fibrosis Foundation will collect a royalty on Kalydeco sales that will start in the “high-single digit” percentage of sales, and escalate to “just below the teen level” as the drug reaches undisclosed sales milestones, according to Vertex finance chief Ian Smith.

Vertex has a number of plans ongoing to expand the use of Kalydeco beyond this initial small group of patients in the U.S. The company has applied for approval in the European Union, and hopes to receive clearance there to start selling in the third quarter. It is also running a trial of the drug in patients under the age of six; as a treatment for certain other gating mutations of the CFTR gene; and in combination with other medicines that seek to correct additional mutations.

Based on the price and number of patients in the U.S., Vertex can expect peak U.S. sales from the G551D patient population of about $550 million, said analyst Mark Schoenebaum of ISI Group, in a note to clients.

Vertex shares climbed 6 percent t0 $36.90 at 1:45 pm Eastern.

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Pfizer was where Pedro Lichtinger learned about pharmaceutical marketing from people who did some amazing things. For starters, New York-based Pfizer (NYSE: PFE) turned an old-school antifungal medicine into a $1.6 billion cash cow. Now as the CEO of San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR) Lichtinger is borrowing some ideas from that experience, looking to make the most of his company’s new antibiotic.

Optimer won FDA approval last May for its first marketed product, a twice-daily pill called fidaxomicin (Dificid). That drug is designed to fight a bug called C.difficile that causes diarrhea so severe it can kill patients, especially frail elderly people. It is a common problem in hospitals. The company got off to a respectable start, generating about $24 million in gross sales in its first six months. But the market for treating this pathogen, after it has been diagnosed in a hospital lab, isn’t huge. Optimer can expect to generate about $153 million in U.S. sales in 2015, according to analyst Eun Yang of Jefferies & Co.

So to get the biggest possible bang out of this new molecule, Optimer is thinking about not just treating “C.diff,” but preventing it. Like Pfizer did with fluconazole (Diflucan), Optimer sees a long-range future in which physicians will prescribe the product as part of a standard regimen as a preventive medicine for patients who are at high risk of getting C.diff and who are likely to face a lot of suffering and high-cost hospital interventions if they get the bug. The initial plan is to start with a clinical trial to prove the Optimer’s drug can help prevent that problematic result in patients undergoing bone-marrow transplants.

If this preventive strategy works, then Optimer’s new medicine could be used by up to 20,000 patients a year who undergo such transplants. Given that the drug is currently priced at $2,800 for a typical 10-day course, and it is likely to go up over time, so it could possibly add another $230 million to $380 million in annual sales by 2020, Lichtinger says.

“I came from Pfizer where this concept was applied to Diflucan, where years ago, it was the first major antifungal applied for prophylactic use,” Lichtinger says. “It’s still used today as a generic. I saw that drug go from a relatively small drug into a $1.6 billion drug as a result of this prophylactic approach.”

He was quick to add that he’s not forecasting Optimer’s drug will approach that rarefied sales figure, but he does add there is a wide variety of other patient groups that could benefit from getting preventive C.diff treatment, such as vulnerable patients undergoing heart or liver transplants, certain cancer patients, or those on ventilators in hospital intensive care units. “The opportunity is certainly even bigger than with the primary C.diff indication,” Lichtinger said during an interview earlier this month at the JP Morgan Healthcare Conference in San Francisco.

Bone marrow transplants seem like an obvious place … Next Page »

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