We’ve brought you a lot of third-quarter venture data in the last week or so—and we’re not done yet (hint: I have something special coming up for you baseball fans). But we haven’t gotten around to our usual Top 10 deals list.

So let me remind you, it was a pretty good quarter here in Massachusetts. Overall venture investment into Bay State startups climbed substantially over Q2, capped by a strong September in which VCs invested some $228 million in 25 deals, according to data from ChubbyBrain, a New York-based information services company.

And now let me show you the list of the top 10 venture deals in New England—all of which happen to be from Massachusetts. This comes from a different set of data provided by Dow Jones VentureSource.

Top 10 New England Venture Deals of the Third Quarter

Epizyme (Cambridge) — $32 million
Second round
(Investors: Amgen Ventures, Astellas Venture Capital, Bay City Capital*, Kleiner Perkins Caufield & Byers, MPM Capital)

Avila Therapeutics (Waltham) — $30 million
Second round
(Investors: Abingworth Management Inc., Advent Venture Partners, Atlas Venture, Novartis Venture Fund*, Polaris Venture Partners)

Gloucester Pharmaceuticals (Cambridge) — $29 million
Later stage
(Investors: Apple Tree Partners, Novo*, ProQuest Investments, Prospect Venture Partners, Rho Ventures)

iWalk (Cambridge) — $20 million
First round
(Investors: General Catalyst Partners*)

Aveo Pharmaceuticals (Cambridge) — $20 million
Corporate financing
(Investors: OSI Pharmaceuticals)

PrimeraDx (Mansfield) — $19.8 million
Later stage
(Investors: Abingworth Management Inc., Burrill & Company, CHL Medical Partners*, InterWest Partners, Invus Group, Malaysia Technology Devt Corp, MPM Capital)

Rapid Micro Biosystems (Bedford) — $18.6 million
First round
(Investors: Kleiner Perkins Caufield & Byers, Quaker BioVentures, TVM Capital GmbH, VIMAC Ventures)

MooBella (Taunton) — $18 million
Later stage
(Investors: Inventages Venture Capital*)

Pervasis Therapeutics (Cambridge) — $17 million
Later stage
(Investors: Flagship Ventures, Highland Capital Partners, Polaris Venture Partners)

Advanced Electron Beams (Wilmington) — $14.3 million
Later stage
(Investors: Atlas Venture, Flagship Ventures*, GE Energy Financial Services, General Catalyst Partners, RockPort Capital Partners)

* Lead investor

I have to mention the 11th ranked deal—iMedX, which took in $13 million in first-round funding. The company hails from Shelton, CT, and was the biggest third-quarter deal in New England outside of Massachusetts.

Comments | Reprints | Share:        

It’s a nice change from previous weeks this year to be writing about IPOs and big exits for venture firms. At least in Boston and environs, big paydays for investors and entrepreneurs seemed to be materializing. And startups from a variety of innovation sectors secured capital to fuel their movement toward hoped-for exits.

Not sure which transactions we’re talking about? Here’s our weekly roundup of Boston-area deals news:

Boston University apparently made a wise bet on A123Systems when it accepted equity in lieu of cash for office rent in 2002 from the then-fledgling startup. Sources told Bob that BU’s stake in Watertown, MA-based A123 has become significantly more valuable since the developer of next-generation lithium-ion battery systems completed its IPO last month. Base the company’s (NASDAQ:AONE) share price last week, BU’s stake in the firm was estimated to be worth more than $12 million.

Gomez, the Lexington, MA-based provider of performance-management software for Web and mobile applications, gave its investors something to smile about this week. The company accepted a $295 million buyout offer from Canada’s Compuware (NASDAQ:CPWR). The buyout appears to provide a nice exit to the venture firms—ABS Ventures, AdAstra, Dolphin Equity Partners, and Doughty Hanson & Company—who have backed Gomez over the past decade.

Nashua, NH-based eCopy is also going the way of the M&A exit. Burlington, MA-based Nuance Communications (NASDAQ:NUAN) said it has paid $54 million in stock to acquire eCopy and the firm’s printer software for image scanning and indexing. For Nuance, this deal appears to be another in a line of acquisitions that include its buyouts of Seattle-based voice-to-text firm Jott this summer and texting software company Zi, of Alberta, Canada, earlier in the year.

On the life sciences front, Cambridge, MA-based Epizyme took in $32 million in a Series B round of venture capital to fund development of its drugs in the field of epigenetics. San Francisco-based Bay City Capital led the round, which included founding venture backers MPM Capital and Kleiner Perkins Caufield & Byers, as well as newer investors Amgen Ventures and Astellas Venture Partners. Luke noted that Epizyme could be looking more broadly than its main focus on cancer therapies.

There was more talk about the potential for Cambridge, MA-based Alnylam Pharmaceuticals to spin off some of its gene-silencing technology into a new startup, like it did with Regulus Therapeutics back in 2007. Barry Greene, president and chief operating officer of Alnylam, talked about a potential “Regulus-like” deal at the MassBio Investors Forum in Boston, where we picked up some other bits of deals news from biotech startups such as Waltham, MA-based EyeGate Pharma and Cambridge’s Cequent Pharmaceuticals.

We try to leave no stones unturned in this shop. Last week Lebanon, NH-based antibody discovery firm Adimab made headlines because Google Ventures led its fourth-round financing. Adimab CEO Tillman Gerngross declined to tell me how much money was raised in the round, but this week Luke learned from an SEC filing that Adimab raised $8.2 million in the round.

On the smaller side of the deals scale, Farmington, CT-based LegiTime Technologies reported in an SEC filing that it has raised $1.5 million in equity financing. The company is developing software products that organize and secure SMS text messages on mobile phones. Its backers include Connecticut Innovations, which invests in startups in the Nutmeg State, and Montreal’s iNovia Capital.

Comments | Reprints | Share:        

It was a busy week in the land of New England life sciences. Let’s dive in.

—Luke did a massive analysis of the financial health of all the public biotech companies we follow the Boston area and the news… Well, it wasn’t good.

—Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ:VRTX) brought in $155 million in cash by selling $120 million in debt and $35 million for the rights to potential milestone payments. Both deals were related to the potential European commercialization of telaprevir, Vertex’s experimental drug for hepatitis C.

—Adimab, a Lebanon, NH-based biotech startup developing a new platform for discovering antibody drugs, raised $8.2 million in a Series D round of venture financing. Google Ventures led the financing and Polaris Venture Partners, SV Life Sciences OrbiMed Advisors, and Borealis Ventures participated as well.

—Merrimack Pharmaceuticals of Cambridge forged a co-development and co-marketing deal with French pharmaceutical firm Sanofi-Aventis. The partnership, focused on Merrimack’s antibody cancer drug MM-121, will bring the Cambridge firm $60 million upfront and as much as $470 million more in milestone payments, not to mention double-digit percentage royalties, should the drug reach the market.

—Luke chatted with Peter Hecht, CEO of Cambridge -based Ironwood Pharmaceuticals, which recently recruited former Genentech CFO David Ebersman to its board. Does the move signal that Ironwood—whose lead, potential blockbuster, drug is in late-stage clinical trials—is preparing to go public? Hecht wouldn’t say so, but Luke explains why Ironwood might fare well on Wall Street.

—The FDA followed an earlier advisory panel recommendation that clofarabine (Clolar), a leukemia drug from Genzyme (NASDAQ: GENZ), not be approved for use in a broader population of patients. The agency said that Cambridge-based Genzyme should conduct another trial of the drug in patients over age 60; it’s currently approved just for children with leukemia.

—Ryan spent the day at the MassBio Investors Forum in Boston, checking in with folks from Cambridge-based RNAi-drug developer Alnylam Pharmaceuticals (NASDAQ:ALNY), (which referenced a potential spin-off company perhaps in the works); Waltham, MA-based EyeGate Pharma (which has rounded up $12 million of a planned $20 million to $25 million financing); Cequent Pharmaceuticals, another Cambridge-based RNAi-drug developer (which is moving its first drug into clinical trials); and Pathogenica (a brand-new diagnostics firm spun out of George Church’s lab at Harvard Medical School). He also gleaned some insights (and arguments) about the future of biotechnology from Harvard Business School professor Gary Pisano and life sciences investment firm CEO Steven Burrill.

—Epizyme, a Cambridge startups out to turn the science of epigenetics into new drugs that work by turning genes on and off, raised $32 million in a Series B venture round led by Bay City Capital. Amgen Ventures, Astellas Venture Partners, MPM Capital, and Kleiner Perkins Caufield & Byers participated as well.

—Boston-based antibiotic developer Paratek Pharmaceuticals struck an exclusive development and commercialization deal with Swiss drug giant Novartis. The deal, which could be worth as much as $485 million in initial milestone payments, focuses on Paratek’s PTK 0796, which is in late-stage clinical development for treating complicated skin and skin structure infections as well as certain cases of pneumonia.

—Immuneering, which is developing computer models to predict patients’ responses to cancer drugs, became the first life sciences startup to join Polaris Venture Partners’ new Dog Patch Labs startup incubator in Cambridge. The move will take the company out of CEO Ben Zeskind’s apartment in Boston’s Back Bay.

Comments | Reprints | Share:        

Epizyme, the Cambridge, MA-based biotech company developing drugs based on insights from epigenetics into how to turn specific genes on and off, said today it has raised $32 million in a Series B venture round.

San Francisco-based Bay City Capital led the round, which included Amgen Ventures, Astellas Venture Partners and the company’s original investors, MPM Capital and Kleiner Perkins Caufield & Byers. The company has now raised $46 million since its initial financing in February 2008.

Epizyme has concentrated on making conventional small-molecule drugs designed to be the first in their class that block certain enzymes implicated in cancer, known as histone methyltransferases (HMTs). By blocking enzymes like these, the new drugs use insight from epigenetics, which says that certain genes can be turned on or off without altering the underlying DNA. Epizyme told Xconomy back in April that the company’s main focus was developing these drugs for cancer, but in today’s statement, the company said new data is emerging to suggest that drug that block HMTs might also be useful as therapies for inflammatory diseases, metabolic disorders, and neurodegenerative conditions.

“Rapid progress has been made at Epizyme,” said Kazumi Shiosaki, Epizyme’s CEO and a managing director with MPM Capital, in a statement. “With the support of our new investors as well as our existing investors, we are now in a position to progress a number of these lead programs into proof-of-concept studies.”

The new cash infusion puts Epizyme in a similarly strong financial position as a crosstown competitor, Cambridge’s Constellation Pharmaceuticals. That company, which also intends to make drugs based on the science of epigenetics, raised a $32 million Series A venture round in 2008.

Comments | Reprints | Share:        

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

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

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

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

Theraclone CEO David Fanning

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

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

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

Comments | Reprints | Share:        

The big news this week was obviously the A123Systems IPO, but quite a few other New England tech and life sciences firms had deals to report as well.

—Mansfield, MA-based PrimeraDx—a developer of automated lab equipment spun off by Providence, RI-based Sention four years ago—raised $20 million in a Series C financing round. New investor CHL Medical Partners of Stamford, CT, led the round; existing investors Abingworth, Burrill & Company, InterWest Partners, the Invus Group, Malaysian Technology Development Corporation, and MPM Capital participated as well.

—Biogen Idec (NASDAQ: BIIB) of Cambridge, MA, launched a $14.50-per-share tender offer for Facet Biotech (NASDAQ: FACT). The board of the Redwood City, CA-based company rejected Biogen’s $355 million offer earlier this month; the tender offer will expire October 19.

—Cambridge-based online game maker Conduit Labs raised $3 million in new equity financing. The new funds were reportedly from the same investors who put $5.5 million into Conduit in August 2007: Charles River Ventures of Waltham, MA, and Prism VentureWorks of Westwood, MA.

—Waltham, MA-based Inverness Medical Innovations (NYSE: IMA), a diagnostics maker and avid acquirer of other firms, picked up Seattle-based Free & Clear for $100 million in cash, plus up to $30 million more, depending on the Seattle firm’s 2010 revenues.

—Battery maker Boston-Power of Westborough, MA, inked a deal with Dr. Battery, of Vancouver that will put Boston-Power’s long-lasting laptop batteries on the market as …Next Page »

Comments (1) | Reprints | Share:        

New England’s diagnostics developers provided more than their fair share of life sciences news this week.

—Rick Jones, CEO of Cambridge, MA-based Ascent Therapeutics, talked with Ryan about his startup’s progress developing new cancer drugs using so-called pepducin technology. Ascent’s lead candidate is emerging in recent tests as a potential rival to Genzyme’s plerixafor (Mozobil), which is used to aid the process of stem-cell transplantation in patients with certain types of blood cancer.

—3PrimiR, a Yale University spinoff based in Westport, CT, raised $2.1 million of a proposed $4 million round of equity financing from unnamed investors, according to an SEC filing. The startup is developing new cancer diagnostics based on research into mutations in a type of molecule called micro RNA.

—Genetic analysis instrument maker Helicos Biosciences (NASDAQ: HLCS) of Cambridge raised $10 million from new and existing investors, after announcing earlier this month that it was running low on cash and exploring “strategic alternatives.” Atlas Ventures, Flagship Ventures, Highland Capital Partners, Versant Ventures, and CEO Ron Lowy contributed to the financing.

—A private family investment firm poured $30 million into Seaside Therapeutics, a Cambridge-based startup aiming to translate research from the lab of MIT neuroscientist Mark Bear into treatments that address the underlying neurological causes of Fragile X syndrome and autism. Founded in 2005, Seaside has never needed venture capital, according to CEO Randy Carpenter, having raised a total of $66 million from the family, the National Institutes of Health, and disease foundations like Autism Speaks and the Fragile X Research Foundation.

—New Haven, CT-based Optherion collected $5 million of a planned $9.5 million convertible notes and warrants offering, according to an SEC filing. The startup is developing a treatment for age-related macular degeneration as well as other drugs and diagnostics for eye and kidney diseases.

—Mansfield, MA-based PrimeraDx raised $20 million in a Series C financing round led by new investor CHL Medical Partners and joined by existing investors Abingworth, Burrill & Company, InterWest Partners, the Invus Group, Malaysian Technology Development Corporation, and MPM Capital. A spinoff of Providence, RI-based Sention, PrimeraDx is developing technology it says can speed up a host of medical tests.

—Having been turned down by the board of Redwood City, CA-based Facet Biotech (NASDAQ: FACT), Cambridge-based Biogen Idec (NASDAQ: BIIB) went straight to the California firm’s shareholders, commencing a $14.50-per-share tender offer for Facet. The offer, which expires October 19, could be worth $355 million in total.

—Diagnostics behemoth Inverness Medical Innovations (NYSE: IMA) of Waltham, MA, acquired Seattle-based Free & Clear for $100 million in cash, plus up to $30 million in potential follow-on payments, depending on the Seattle firm’s 2010 revenues.

Comments | Reprints | Share:        

PrimeraDx, a four-year-old startup in Mansfield, MA, said today it has closed a $20 million Series C financing round to continue work on automated lab equipment that, according to the company, could vastly speed up a host of medical tests.

New investor CHL Medical Partners of Stamford, CT, led the round. Existing investors Abingworth, Burrill & Company, InterWest Partners, the Invus Group, Malaysian Technology Development Corporation, and MPM Capital also participated. PrimeraDx, also known as Primera Biosystems, has now raised roughly $55 million in all, including a $21 million B round in January 2008 and a $1.15 million debt funding round earlier this month.

PrimeraDx, a spinoff of Providence, RI-based Sention, is developing a machine called “ICEPlex” that can measure the quantities of up to 60 separate disease-related DNA or RNA sequences in a single biological sample. The company says the device can, for example, determine a patient’s “viral load”—or the amount of a particular virus circulating the the patient’s bloodstreams—within about 3 hours, compared to 7 to 10 days for conventional techniques.

In a statement, CHL partner Ronald Lennox said PrimeraDX is “positioned to dominate” the market for such equipment, and he called the startup “an excellent investment opportunity.”

Comments | Reprints | Share:        

A basic search of scientific literature says that Cambridge, MA-based Acceleron Pharma is trying to do something that won’t work. Past experiments suggest that a drug like its lead candidate is more likely to cause people to get anemia, not help treat it.

But Acceleron has witnessed the unexpected in small human studies, and it’s a big reason why this little company says its drug, ACE-011, has a shot to challenge the dominant player in the $11.5 billion worldwide anemia market, Thousand Oaks, CA-based Amgen (NASDAQ: AMGN).

“This has the opportunity to completely reverse the conventional wisdom in anemia,” says Steve Ertel, Acceleron’s vice president of corporate development. Adds CEO John Knopf: “Now there’s a lot of interest, but it was such an unexpected finding.”

Anemia is one of the first diseases that really benefitted from the biotech revolution, when Amgen created the first genetically engineered version of the erythopoeitin protein 20 years ago to stimulate the body to make more red blood cells. This business has become so big that Amgen lost $29 billion of stock market value in 2007 after its two anemia drugs were tied to a higher risk of heart attack, stroke, and death when used at high doses. Still, the drugs are considered critical tools in the modern treatment of patients with various states of kidney disease, and cancer patients who get anemia from chemotherapy.

Amgen’s drugs are injectable, and a number of competitors over the years have tried another route of treating anemia with oral pills that block enzymes, which is supposed to enable the body to regain its natural ability to produce red blood cells. San Francisco-based Fibrogen, GlaxoSmithKline, and San Diego-based Palkion are a few of the companies trying to develop drugs that interfere with these HIF prolyl hydroxylases.

Acceleron’s ACE-011 is completely different. It’s a genetically engineered protein that’s made to block a protein on cells known as the activin receptor type IIa. The main idea is that by hitting this target, the drug is supposed promote bone formation, which ought to be helpful for cancer patients who suffer from bone density loss. Past research has suggested it’s involved in red blood cell growth, so blocking it might cause people to become anemic, or so the thinking went, Knopf says.

What Acceleron found in its first clinical trial was that its drug appeared to improve bone formation like it was supposed to. But it had the opposite effect on red blood cells than would have been predicted. One single dose at the highest dose tested in the trial showed ACE-011 was basically like giving patients a transfusion with three full units of blood, without provoking any of the worrisome safety signals that the FDA has warned doctors about with high doses of the anemia drugs made by Amgen.

“No one really questions that it’s working,” Ertel says of the Acceleron drug.

Since anemia is such a big market, this says a lot about why Acceleron has been able to keep growing in the midst of a recession. The company announced back in May that it was expanding …Next Page »

Comments | Reprints | Share:        

Archus Orthopedics, the Redmond, WA-based developer of implants to help people retain flexibility after back surgery, is shutting down its operations and dissolving after it was unable to raise enough capital to bring the product all the way to the U.S. market, Xconomy has learned.

Archus filed paperwork with the Delaware Secretary of State to dissolve the company and wind down the business, according to a legal notice on The Seattle Times website. Archus CEO Jim Fitzsimmons, reached by phone, said he had no comment.

We broke the story back in May about financial troubles at Archus, which had been one of the rising stars in the Seattle medical device industry for years. The company had a veteran medical device entrepreneur in Fitzsimmons as CEO, and raised more than $63 million in equity since its founding 2001 from a group of big-name venture firms—MPM Capital, InterWest Partners, Polaris Venture Partners, and Johnson & Johnson Development Corporation, as well as a loan from GE Capital. Cash ran low this spring when Archus was sponsoring a big clinical trial of 450 patients, and it was forced to lay off most of its 45 employees. In the last few months, it tried to find a partner or some other way to finish the clinical trials it needed to start marketing its experimental device.

“Although Archus Orthopedics has been performing very well, we have the unfortunate luck to be a relatively mature, but still pre-revenue company, in need [of] sustaining capital in an extremely challenging financing market,” Fitzsimmons said in a statement back in May.

Archus had been developing artificial facet (fuh-set) joints in the spine, with a technology called the Total Facet Arthroplasty System. These facet joints—not to be confused with artificial spinal discs—play a role every time we bend forward, bend backward, or twist laterally. These joints typically get fused together when people have back surgery, because conventional wisdom says cutting down movement will reduce the pain. It also greatly cuts down on people’s mobility, and puts extra pressure and twisting movements on the non-fused parts of the spine, Fitzsimmons said.

One patient who received an Archus implant, Larry Kirschner of Baton Rouge, LA, said he was disappointed to hear of the dissolution because his device worked “superbly.”

Kirschner, a 62-year-old microbiologist, had his surgery in May 2006. Six weeks later, he helped load a moving truck and drove it more than 1,600 miles from Pasadena, CA to Baton Rouge. Last year, he felt good enough to go on a snowshoeing and camping trip above 9,000 feet in the Sierra Nevada mountains.

“The Archus device freed me from the vast majority of the debilitating pain I was experiencing (there is still a small spot on my right shin that aches a little from time to time, but nothing significant),” Kirschner wrote in an e-mail. “I haven’t started in-line skating again but may this winter when things cool off around here.”

Comments (4) | Reprints | Share:        

New England companies raised more venture dollars and completed more VC deals in the second quarter of 2009 than they did in the first three months of this year, according to two reports on venture investment activity released recently. Still, the total number of deals and capital invested in the region during the three months that ended June 30 are way off from a year ago.

Firms in New England invested a total of $640.1 million in 85 deals during the second quarter, down from $1.05 billion that went into 94 deals during the same period last year, according to Dow Jones VentureSource. Perhaps some solace can be derived from the fact that the 85 deals done during the quarter amounted to a 57 percent increase over the 54 VC deals completed during the first quarter of 2009. Total VC dollars invested, however, increased by less than 2 percent, to $640.1 million in the second quarter from $629.2 million in the first three months of 2009. (See our Top 10 Deals list for the quarter on page 2 of this article.)

Regional data from The MoneyTree Report released yesterday by PricewaterhouseCoopers, the National Venture Capital Association, and Thomson Reuters shows a similar trend. The MoneyTree survey counted $466.9 million invested in 76 deals during the second quarter, down from the $825.8 million that went to 128 deals during the same quarter of 2008. (The rival surveys use different methods, sources, and criteria to prepare their respective reports.) MoneyTree showed a 15 percent uptick in venture capital invested from the previous quarter, but only an 8.6 percent increase in the number of deals.

Despite the rise in venture activity compared to the first quarter, the recession still appears to be weighing on VC firms’ willingness or ability to dole out money to tech startups. The Dow Jones figures show that deal amounts in New England are getting smaller even in sectors like healthcare where venture-backed companies are keeping pace with the number of deals they completed last year. And if what venture investors tell us is true, many recent deals involve older companies in need of capital to stay afloat until those companies can go public or find a corporate buyer. That could mean less money for new startups in search of capital to get their operations off the ground.

Here are some of the key figures that Dow Jones reported:

—The median deal amount across all sectors in New England was $4 million in the second quarter of 2009, way down from the median deal size of $7.6 million during the same period last year.

—The number of the region’s healthcare deals—involving biotech, medical devices, healthcare IT, and health services firms—was up slightly in the second quarter compared to the same period last year, from 28 to 29 financings. But total dollars invested fell to $370.3 million in the second quarter from $444.6 million in Q2 of 2008.

—Energy companies in the region raised only $8.2 million in four deals in the second quarter of this year, down from $24.4 million in six deals in the same quarter last year.

—The number of IT deals held relatively steady at 35 in the second quarter, down from 40 deals in the same period of 2008. Still, the total raised declined from $398.4 million to $150.2 million in the same quarter-to-quarter comparison.

See next page for the region’s Top 10 venture financings of the second quarter. …Next Page »

Comments | Reprints | Share:        

It was a fairly quiet week for deals in the Northwest, with some activity in biotech, software, materials, and devices.

—Seattle-based Arzeda, a developer of artificial enzymes, formed a partnership with DuPont to create new crop seeds that incorporate Arzeda’s technology, which should increase the productivity of the plants for food, as Eric reported. Financial terms were not released.

—Arlington, WA-based MicroGreen Polymers raised $1.6 million from WRF Capital and angel investors including Northwest Energy Angels, Alliance of Angels, and Atlas Accelerator, as Luke reported in an exclusive. The company has developed technology to recycle plastics into cheaper and more environmentally friendly coffee cups, food packaging, and other items. The money is part of an ongoing round that MicroGreen expects will net $3 million to $4 million this month.

—In another Xconomy exclusive, we talked with the founder of Santa Clara, CA-based Data Domain (NASDAQ: DDUP), Kai Li, a Princeton University computer science professor who has been visiting the University of Washington for about a year. Data Domain just got bought by Hopkinton, MA-based EMC (NYSE: EMC) for $2.1 billion in cash. Li spoke in depth about the ideas behind Data Domain, its growth and acquisition, and the future of data storage.

—Luke reported that Seattle-based Kineta, a biotech firm with an unusual business model, acquired the licenses to an array of compounds from Redwood City, CA-based Airmid with the goal of reaching clinical trials for drugs to tamp down autoimmune diseases like rheumatoid arthritis and multiple sclerosis. Kineta is looking to run promising drug candidates through early-stage clinical trials and then form partnerships with bigger drugmakers to run bigger trials, collecting upfront payments, milestones, and royalties on any product sales.

—EndoGastric Solutions, a medical device company based in Redmond, WA, and Redwood City, CA, raised $7.5 million from undisclosed investors. The firm, which was originally incubated in Kirkland, WA, at Scout Medical Technologies, makes devices that treat heartburn and obesity. It previously raised $79 million in venture capital from MPM Capital, Advanced Technology Ventures, and other investors.

—Seattle-based Cozi, a startup that makes family organizing and activity planning software, formed a partnership with Nestle to launch its service on the food company’s website, as Eric reported. Cozi’s software will be rebranded on the site with both companies’ names. Financial terms of the deal were not announced.

—Earth Class Mail, a Seattle company that delivers physical mail to businesses digitally, is providing key technology for Kansas City, MO-based Perfect Output’s document management service, as Eric reported. Financial details of the partnership were not given.

Comments | Reprints | Share:        

Seattle biotech is quieting down these days, so it’s a good time for your local life sciences correspondent to step away on vacation. See you back here on July 20.

—EndoGastric Solutions, the medical device firm based in Redmond, WA, and Redwood City, CA, raised $7.5 million from investors. The company makes devices to combat heartburn and obesity. It was originally incubated at Scout Medical Technologies in Kirkland, WA, and has previously raised $79 million from investors including MPM Capital and Advanced Technology Ventures.

—The writing has been on the wall for months at Seattle-based Targeted Genetics (NASDAQ: TGEN), and this week the company may have pulled an important last-ditch maneuver to avoid bankruptcy, or at least hold on a while longer. By paying a $500,000 termination fee, Targeted Genetics escaped a $12 million lease obligation on a manufacturing facility in Bothell, WA, that Targeted Genetics never occupied. This could clean up the balance sheet enough, the company hopes, to entice a partner or other investor to provide capital to keep the doors open beyond August.

—Amgen (NASDAQ: AMGN), the world’s largest biotechnology company, said its lead experimental drug, denosumab, reached all its goals in a clinical trial of more than 2,000 women with breast cancer. The Amgen drug, which is also vying for FDA approval as an osteoporosis treatment, has been studied for more than a decade as a cancer drug at Amgen’s Seattle research center, as I described in a feature in October. So this result has been a long time coming. Detailed results will be presented later at a medical meeting, Amgen said.

—I profiled Kineta, a Seattle-based biotech company formed by a team that worked together at Seattle-based Illumigen before that company was sold to Lexington, MA-based Cubist Pharmaceuticals (NASDAQ: CBST) in October 2007. Team members don’t want to create the next fully integrated biotech company, like Amgen, but instead want to zero in on one delicate spot in the drug development process they know well—early-stage clinical trials.

—Seattle-based Theraclone Sciences received some good news this week when the International AIDS Vaccine Initiative agreed to continue funding a program to develop antibodies that might have broad potential for HIV vaccines and drugs. Terms weren’t disclosed.

—Qliance Medical Management, a Seattle-based company that won’t accept insurance for primary care medical services and instead relies on patients paying a monthly membership fee for such services, raised $4 million from Second Avenue Partners, New Atlantic Ventures, and Clear Fir Partners. Qliance is aiming high, attempting to help form closer connections between patients and doctors by eliminating the insurance middleman, at a time when power players in Washington, DC, are talking about potentially sweeping reforms in how healthcare gets delivered in America.

Comments | Reprints | Share:        

Medical device firm EndoGastric Solutions, based in Redmond, WA, and Redwood City, CA, has raised $7.5 million in funding, according to a regulatory filing. The company makes devices to combat heartburn and obesity, and previously raised $79 million in venture funding from the likes of MPM Capital, Advanced Technology Ventures, and DeNovo Ventures. EndoGastric was originally incubated at Scout Medical Technologies in Kirkland, WA.

Comments | Reprints | Share:        

San Diego’s Somaxon Pharmaceuticals (Nasdaq: SOMX) says it has submitted a revised new drug application for its insomnia drug doxepin (Silenor), and the biotech raised about $6 million in a private stock placement to see it through the NDA process.

As I noted in February, the U.S. Food and Drug Administration turned down Somaxon’s initial application, asking the drug developer to address concerns about prolonging the heart’s QT interval—a key measure of the heart’s electrical rhythm. Somaxon said it intended to regroup and try again, and it met with FDA officials in April to gain a better understanding of the regulators’ concerns.

The company also spent some time on a financial makeover. Somaxon said in May it had erased $15 million in debt, although the company also had depleted its available cash from $14.3 million at the end of December to $3.8 million at the end of March. The company also reduced its operating costs. Somaxon reported a loss of $4.5 million for the first quarter that ended March 31, down from a loss of $7.1 million during the same quarter in 2008. As a development stage pharma, the company had no revenues.

The company also said in May it’s continuing to look for a Big Pharma partner to help further development of doxepin, and it signaled its intent to raise cash for another go at FDA approval. Several of the company’s existing investors are participating in the financing, including MPM Capital, Montreux Equity Partners, Scale Venture Partners, Prospect Venture Partners and Domain Associates, as well as Tavistock Life Sciences and other new investors.

In a statement today, Somaxon CEO Richard W. Pasco says, “We expect that the cash raised in this financing, together with our existing resources, will allow us to operate our business through the FDA review cycle of the NDA resubmission and extend our cash runway through the second quarter of 2010.”

Comments | Reprints | Share:        

[[Updated: see editor's note below.]]

Innovative Spinal Technologies, the Mansfield, MA, maker of minimally invasive spinal repair devices, has filed for Chapter 7 bankruptcy protection after running out of cash and shutting its doors earlier this year. VentureWire published the news this morning. Sources told Xconomy that the bankruptcy was in the works after Wade broke the story about the startup’s shutdown in January.

The seven-year-old startup—which had raised $75 million from New York-based Orbimed Advisors, JPMorgan, MPM Capital in Boston, and corporate partners such as GE—burned through millions of dollars when it scaled up its operations with a relocation from Texas to a larger facility Mansfield in 2006 and a hiring plan that swelled its staff to more than 100 workers at one point, sources have told Xconomy. Yet sales of the company’s products—which included bone screws, plates, and a delivery system used in procedures to stabilize spinal segments in patients with damaged vertebral disks—were insufficient to support the expanded operations. Last year the startup was forced to cut its staff to 10 employees or fewer.

According to documents filed May 15 with the U.S. Bankruptcy Court for the District of Massachusetts, IST owes between $10 million and $50 million to a group of creditors that numbers between 100 and 200. The company’s current assets are between $1 million and $10 million.

Much of the blame for the startup’s demise has been pinned on president and CEO Scott Schorer, a former Army Ranger and Olympic rower, who had been with the company since it was spun off from the Texas Back Institute under the name MusculoSkeletal Research Corporation in 2002. He is also credited, however, with engineering the growth of the company from a research incubator to a venture-backed provider of medical devices. Obviously, the growth of the operation and its expenses outpaced its sales traction in the competitive market for spinal devices.

After IST shuttered in late-January, Schorer told Wade that the company was trying to avoid bankruptcy through a sale of assets. Prior to that interview, at least one prospective buyer, the Biomet Spine unit of Warsaw, IN-based Biomet, walked away from buyout talks with the startup, according to sources.

Interestingly, in an exhibit attached to the May 15 bankruptcy filing, IST says that its real property includes nine human cadavers and 20 human and bovine tissue samples, kept in two separate freezers in a surgical suite at the company’s former place of business in Mansfield. The exhibit warns that if the facility’s electricity were turned off, the cadavers and samples “would defrost and pose a significant health threat to anyone entering the surgical suite that has not been immunized and wearing the appropriate attire to dispose of such items.” The document does not detail the company’s plans for disposing of the cadavers and samples.

[[Editor's note: The first paragraph of this story was changed to include a link to a story in VentureWire, which says it was the first to report IST's bankruptcy filing today, not peHub.com, which was initially cited in this story.]]

Comments (1) | Reprints | Share:        

This week saw a variety of small-to-medium deals—and one potentially huge one.

—Avila Therapeutics of Waltham, MA raised $5 million from existing investors in a debt and options financing that could reach up to $20 million, according to an SEC fling. Avila is developing drugs that form strong, covalent bonds with target proteins.

—Ashaway, RI-based greenBytes raised $7.5 million of an $8 million round of equity financing, according to an SEC filing. The startup, a provider of efficient data storage systems, did not disclose the investors participating in the deal.

—Elixir Pharmaceuticals of Cambridge, MA, raised $12 million in a funding round led by MPM Capital and joined by ARCH Venture Partners, Oxford Bioscience Partners, the Omega Fund, and Physic Ventures. The Cambridge firm also granted Swiss drug giant Novartis an option to acquire the entire company should Elixir successfully complete a Phase IIa clinical trial of its oral diabetes drug. That deal, should it come to pass, could be worth more than $500 million in initial and milestone payments.

—Marlboro, MA-based Evergreen Solar (NASDAQ:ESLR) announced a public offering of $60 million in common stock. Evergreen, a manufacturer of low-cost silicon-based solar power products, plans to use the proceeds for the construction of a new factory in Wuhan, China, and the expansion of a facility in Midland, Michigan.

—Stylefeeder of Cambridge, MA, raised $500,000 from return investors Highland Capital Partners and Schooner Capital. Stylefeeder, which runs an online personalized shopping recommendation service, is profitable—and hiring.

—BigBelly Solar, a Needham, MA-based maker of solar-powered, trash-compacting public waste bins, reported in a filing with the SEC that it has raised $3.2 million in additional financing. The investors were not disclosed.

Comments | Reprints | Share: