San Diego’s Trius Therapeutics, a venture-backed biotech developing a new antibiotic for treating acute and life-threatening bacterial infections, submitted a regulatory filing Friday to raise as much as $86 million in an initial public stock offering. It marks the third IPO filing by a company in the San Diego area so far this year.

The biotech was founded in 2004, and has posted a loss every year since then. No pricing terms were disclosed in the filing. Trius plans to list on the NASDAQ under the symbol TSRX.

The San Diego biotech passed a key Phase 2 test of its antibiotic in June, with an overall cure rate of 96 percent at three different doses for patients with complicated skin infections. The company has been looking to proceed to Phase 3 clinical trials of its antibiotic, torezolid, which Trius describes as a second-generation successor to linezolid, the Pfizer antibiotic known as Zyvox.

Even when I sat down with Trius CEO Jeff Stein seven months ago, he was looking ahead to fund its Phase 3 trials from another fundraising round, or by striking a development deal with a strategic partner.

Trius licensed torezolid from South Korea’s Dong-A Pharmaceuticals, but the company says it has developed new techniques that use antisense technology to identify other potential antibacterial drugs.

Trius says its lead antibiotic, like Pfizer’s linezolid, is particularly effective against drug-resistant strains of bacteria, such as MRSA (methicillin-resistant Staphylococcus aureus). Torezolid also appears to be more potent than linezolid, allowing for lower dosing, and can be administered intravenously. Stein told Luke an estimated 19,000 people in the U.S. die from bacterial infections each year. Total U.S. sales for the four existing antibiotics labeled for MRSA grew from $778 million in 2005 to $1.4 billion in 2008, according to Trius’ IPO filing. Sales of linezolid alone were $1.1 billion.

With the additional funding, Trius says it plans to conduct two Phase 3 clinical trials to evaluate the 200 milligram dose of torezolid for treating acute bacterial skin infections. The first trial, which is expected to begin by June 2010, is intended to evaluate the efficacy, safety, and tolerability of the dosage in adolescent and adult patients in comparison to linezolid. The second trial will begin by administering torezolid to patients intravenously and subsequently switch to oral tablets.

Trius has raised close to $51 million in venture capital, and recently secured a $19.2 million loan from a number of existing investors that is convertible to stock. According to its IPO registration, San Francisco-based Sofinnova Ventures holds a 21.3 percent stake in the company; Menlo Park, CA-based InterWest Partners holds a 17.7 percent stake; San Francisco-based Versant Partners, 17.7 percent; Westwood, MA-based Prism VentureWorks, 13.5 percent; and Kleiner Perkins Caufield Byers, 11.9 percent. None of the firms will retain their current shares following the IPO.

MaxLinear, a Carlsbad, CA, semiconductor designer, also filed for an IPO Friday. San Diego-based Bridgepoint Education went public through an IPO earlier this year.

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

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

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

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

Enigma ML device

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

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

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We all look for milestones in life, but several San Diego biotechs are approaching important junctures where they’re expected to report positive results from their drug development studies. Read on to find out which ones, and to catch up on the rest of San Diego’s life sciences news.

—San Diego’s Ardea Biosciences (NASDAQ: RDEA) reported some encouraging results last week for the drug it is developing to treat gout. A small number of patients found the drug lowered the amount of uric acid in their blood to acceptable levels within eight days. Still, Ardea is facing increasing competition, since the FDA approved Takeda Pharmaceutical’s gout drug in February and an FDA advisory panel recommended Savient Pharmaceutical’s gout treatment earlier this week.

—Trius Therapeutics CEO Jeff Stein told Luke the company plans to present full results from its recent clinical trial of a new antibiotic for treating MRSA at a conference in September. The startup also is working on a pivotal clinical trial strategy, and it is searching for a potential partner.

—San Diego’s Biocom, the life sciences industry trade group, hosted the CalAsia conference for the first time this week, and more than 300 representatives of the international biotech community attended. In a Q&A with Xconomy, Dr. Hui Cai of Inflexion BioPartners discussed the concerns that U.S. companies have about doing business in China—and China’s concerns about doing business with U.S. companies. In an e-mail yesterday, she adds, “A consensus out of CalAsia is [that] the line between U.S. and Asia certainly is becoming fuzzy. Gaps we see today in knowledge, processes, and other aspects will eventually disappear, and global standards will be established.”

—San Diego’s Lpath is nearing a make-or-break milestone in its development of sonepcizumab, an experimental cancer drug. The biotech stands to receive up to $8 million from Merck Serono for achieving performance targets related to the clinical trial Lpath is wrapping up, and an additional $31 million if the Swiss pharmaceutical company exercises an option to develop the drug.

—San Diego-based aFraxis, which is focused on developing treatments for Fragile X syndrome and autism, has raised $750,000 in early stage funding, according to a recent SEC filing. The startup is backed by San Diego’s Avalon Ventures, and Avalon’s Jay Lichter is listed as chief executive and director.

—Illumina, the San Diego biotech that provides DNA research tools for scientists, plans to offer a service that will enable consumers to get their DNA sequenced—at a cost of $48,000. As expensive as that may sound, it is half as much as the DNA sequencing service offered by Cambridge, MA-based Knome. The idea is to give patients access to comprehensive, personalized information about their vulnerability to disease.

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San Diego-based Trius Therapeutics saw what it wanted from a clinical trial of its new antibiotic against deadly MRSA infections, and now it’s gearing up this summer to take its game to a higher level.

Trius reported earlier this week some impressive results from a trial of 188 patients with complicated skin infections who took low, medium, or high doses of its drug, torezolid (TR-701). The treatment caused 98 percent of patients on the lowest dose to be clinically cured, with no side effects serious enough to make patients drop out of the study. While this is medically intriguing, and enough for Trius to pick the right dose, it’s not enough proof for FDA approval. So I followed up with Trius CEO Jeff Stein to find out what’s coming next.

Before getting too far into that, it’s worth a reminder of what Trius is trying to accomplish. The company’s experimental antibiotic is from the same class of treatment as Pfizer’s linezolid (Zyvox). The Pfizer drug generated $1.12 billion in sales last year, so a lot of people think it’s a worthwhile advance in the fight against dangerous infections, like MRSA bacterium that people tend to pick up in hospitals. Trius hopes to offer a better alternative—a pill that can be taken at a lower dose, over a shorter period of time, and be given once a day instead of twice. That’s important, because greater convenience means patients are more likely to follow doctors’ orders—taking an antibiotic as prescribed is critical to wiping out the bug, and reducing the chances of drug resistance.

The full clinical trial results are expected to be presented at the Interscience Conference on Antimicrobial Agents and Chemotherapy in September, but Stein said there’s nothing in the data that’s disappointing. The Trius group, with about 35 employees, is working on a pivotal clinical trial strategy that will enroll about 1,200 patients in a pair of studies required by the FDA. They are also putting some resources into an intravenous formulation of the drug. And they’re talking with potential partners with the money and manpower to take this drug the rest of the way.

“I’m not aware of results from other companies with an oral drug that’s this effective, in a once-daily pill given over a short course of treatment,” Stein says. “That’s our difference.”

The first big trial—still in a draft form—sounds like it ought to generate the kind of unequivocal answer that the FDA and doctors want to see about a new drug. It will randomly assign patients …Next Page »

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There was a lot of life sciences news over the past week in San Diego, with much of it coming out of the American Diabetes Association annual meeting in New Orleans.

—At a time when San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN) doesn’t need more challenges, Denmark’s Novo Nordisk announced that liraglutide, its once-daily diabetes drug, is substantially better at controlling blood sugar in type 2 diabetes than Amylin’s exenatide, which is injected twice-daily.

—If Amylin Pharmaceuticals’ rivals are targeting the diabetes specialist, at least the San Diego biotech is a moving target. Amylin says the latest clinical data for the new formulation of its exenatide diabetes drug (which only has to be injected once weekly instead of twice daily) shows patients were able to maintain control over blood sugar for two years, helped them lose weight, and lowered their blood pressure.

—San Diego’s Orexigen Therapeutics (NASDAQ: OREX) posted new results of its late-stage drug for treating obesity, showing that 41.5 percent of patients on the drug lost 10 percent of their body weight. That compared with 20.2 percent who did as well taking a placebo.

—Another San Diego drug developer, Arena Pharmaceuticals, (NASDAQ: ARNA) says patients on its lorcaserin treatment for a year generally had reduced their risk of heart attacks.

—San Diego’s Anadys Pharmaceuticals (NASDAQ: ANDS) is cutting its workforce by 40 percent and focusing its remaining resources on its lead drug candidate for treating the hepatitis C virus. The company also says it’s raising $17.5 million.

—Trius Therapeutics, a San Diego biotech developing a new antibiotic against deadly MRSA bacterial infections, said a study showed 98 percent of patients on the lowest dose of its new compound achieved a clinical cure. 

—Raj Krishnan, a bioengineering Ph.D candidate at UC San Diego, began entering student entrepreneur and business contests as a way to raise money for Biological Dynamics, the cancer diagnostics company he co-founded. It worked. He has now won 13 awards, and his most recent win included a check for $40,000. Krishnan, 27, says his research is focused on technology to identify a key biomarker for almost every type of cancer.

—After getting a $20 million infusion from investors last month, San Diego’s Vical (NASDAQ: VICL) says it has enough resources to continue operating through the end of 2011, which should be enough time to complete its clinical study of an immune-stimulating therapy for metastatic melanoma. Vical also is developing a vaccine to prevent life-threatening cytomegalovirus infections in bone marrow transplant patients.

—Bothell, WA-based Sonosite (NASDAQ: SONO) says it’s acquiring San Diego’s CardioDynamics International (NASDAQ: CDIC) in a deal valued at about $10 million. Sonosite makes portable ultrasound machines and CardioDynamics makes noninvasive medical diagnostic tools for cardiovascular disease.

—San Diego-based Tocagen, which is developing gene therapy treatments for terminally ill cancer patients, was among three biotechs that raised cash recently. Tocagen has raised $10.8 million in an $11.2 million equity offering that began in September. The startup was founded in 2007 by Harry Gruber, who previously founded Gensia Pharmaceuticals, Viagene, Aramed, and Metabasis, among others.

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Trius Therapeutics, the San Diego-based biotech company, has passed an important milestone in its quest to develop a more convenient, more effective antibiotic against deadly MRSA bacterial infections that people tend to get in the hospital.

Trius released results today from a study in which 188 patients with severe skin infections were randomly assigned to get a low, mid-range, or high dose of its experimental antibiotic, torezolid (TR-701). The study found the once-daily pill, given for five to seven days, helped 98 percent of patients on the lowest dose achieve what’s considered a clinical cure. There were no clinical relapses at follow-up visits three to four weeks after treatment.

“The nature of such infections usually warrants use of an IV antibiotic, but the trial results indicate that oral torezolid successfully treated these severe infections quickly and effectively,” said Joseph Surber, chief medical officer of Southwest Regional Research Group, and a clinical investigator on the study, in a company statement.

Biotech and pharmaceutical companies have been pushing hard for several years—without much success—to develop new antibiotics that can kill tough bugs like the MRSA pathogen that are becoming increasingly resistant to standard treatments. An estimated 19,000 people in the U.S. die from bacterial infections each year, more than die from HIV, Trius CEO Jeff Stein told me back in October. Two other companies trying to crack this market—South San Francisco-based Theravance, and Cambridge, MA-based Targanta Therapeutics—ran into various roadblocks and delays after applying to the FDA for market approval.

Trius’s goal is to develop a drug from the same chemical family, but with a superior profile compared to Pfizer’s linezolid (Zyvox), one of the fastest-growing antibiotics.

Antibiotics in this class are potent killers of drug-resistant bacteria, like MRSA. The Trius candidate appears to be more potent in animal tests than linezolid, meaning it can be taken at a much lower dose—which could offer fewer side effects and lower manufacturing costs. It also could be given once a day instead of twice a day, Stein has said. Both Pfizer’s drug and Trius’s can be taken as oral pills, but the added convenience of less-frequent dosing could be important, because antibiotic resistance thrives when patients fail to take all their required meds. Giving them a once-daily pill option may increase the odds that patients will stay in compliance with doctors’ orders.

The Trius therapy was considered well-tolerated, and 92 percent of the side effects considered possibly drug-related were graded as mild, researchers said. No patients dropped out because of adverse events. The least number of side effects were reported on the lowest dose, of 200 milligrams, Trius said.

The trial results have given Trius enough information to pick the lowest dose, 200 milligrams once a day, for the next step in development, a Phase III pivotal clinical trial in patients with severe skin infections. The company plans to complete an early-stage trial of an intravenous form of the drug later this year, and to merge the IV and oral development programs in Phase III trials early next year, Trius said in a statement.

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When Luke checked in at Trius Therapeutics almost six months ago, he reported that the San Diego life sciences startup was on a roll, but not quite ready to talk about results of its early stage clinical trials. These days, CEO Jeff Stein says Trius is assessing how best to move ahead in its development of a new anti-bacterial drug, based on results that he characterized as very encouraging.

In developing the drug known generically as torezolid, Stein told me Trius hopes to crack a market for treating MRSA and other drug-resistant infections that is now dominated by Pfizer’s linezolid (Zyvox). He described linezolid, which was approved by the FDA in 2000, as a “blockbuster drug” that generates over $1 billion a year. Linezolid is the only approved compound in the oxazolidinone class of drugs, Stein says, “so for years, just about every anti-infective company has been interested in getting a follow-up drug to Zyvox.”

Trius quickly completed its early stage trials last year, and in January enrolled 180 patients with nasty skin infections in a mid-stage clinical trial. It’s intended to examine the safety and efficacy of torezolid administered orally at three dosage strengths once daily over a five-to-seven day course of treatment.

Trius says more than 90 percent of the germs infecting patients in the trial were Staph infections, and 70 percent of the Staph infections were the “superbugs” known as MRSA, for Methicillin-Resistant Staphylococcus aureus. Trius intends to provide more detailed results of its trial in two or three months, but Stein told me, “Overall, we had about a 96 percent cure rate from our Phase 2 clinical trial.”

In order to go to Phase 3 trials, Stein says, “We’ll either have to do another round of fundraising or bring on a strategic partner.” He says he wants to begin those trials by early next year.

The company has advanced rapidly over the past two years, which Stein says is a testament to the company’s success recruiting key …Next Page »

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Most biotech stories in 2009 are about companies hunkering down or otherwise playing it safe with incremental advances, not people just getting started with an audacious dream. Malcolm Kendall has one of those dreams. He’s starting a company that aims to identify new targets on cells that haven’t been proven before, and create antibiotics to hit those targets. It’s all in the name of coming up with a creative way to fight dangerous pathogens that infect people in the hospital.

The new company, Indel Therapeutics, is based in Vancouver, BC, not far from where its intellectual property originated at the University of British Columbia. Kendall, a former venture capitalist with Durham, NC-based Intersouth Partners, is the CEO, and he told me the story a couple weeks back while he was fundraising in Seattle at Invest Northwest with chairman Mike Abrams, the former CEO of Vancouver, BC-based AnorMed.

Indel is trying to solve one of the problems that freaks out U.S. hospital administrators. There is growing incidence each year of nasty and sometimes deadly bacteria like MRSA or “C.Diff” plaguing U.S. hospitals. Every year, about 1.7 million people in the U.S. get hospital-acquired infections, which kill about 99,000 people a year. It costs the U.S. health system $27.5 billion annually—which is about the same amount the country spends on its entire biomedical research budget. Many of these bugs are becoming increasingly resistant to traditional antibiotics, and pharmaceutical companies have struggled to come up with anything good enough to pass muster with the FDA (see recent stumbles with new antibiotics from Theravance and Targanta Therapeutics). So Indel sees this as a pharmaceutical market that’s ready for new ideas.

“If this works, this is big,” Kendall says. “There’s a screaming need for new targets and novel compounds.”

The idea, from UBC scientist Neil Reiner (who is chair of the Indel scientific advisory board), is to look for subtle differences …Next Page »

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The concept is simple: a computer keyboard that self-sanitizes by zapping potentially deadly germs with ultraviolet light. The technology could help prevent the spread of nasty bacterial invaders like MRSA in hospitals and other institutions with shared computer facilities. That’s the idea behind Vioguard, a Bothell, WA, company co-founded by startup specialist Larry Ranta and his nephew, Craig Ranta, a former hardware engineering director at Microsoft. Larry is Vioguard’s president and CEO, while Craig is the chief technology officer.

Vioguard completed a $1 million first-round financing in January that included angel investors but no venture capitalists, Larry Ranta says. He adds that Vioguard has gotten an additional $250,000 in funding committed since then, and he’s looking to raise between $2.5 million and $3 million more by June, mostly from angel groups. He has been impressed so far with the reception he’s gotten from investors interested in Vioguard.

“This has been the easiest raise I’ve ever seen,” he says. “You show it, people get it, and it’s done. We’re doing another round now, and big players are interested. The next round will be more than we need, to get us through to full revenue. We’ve already designed the machine, so most of our cost will be sales and marketing.”

Vioguard, founded last June, now has five employees, plus six full-time contractors. Ranta has been around the block with startups for the past 25 years, usually in an advisory role—sometimes serving as a C-level executive or vice president, or providing specific help in areas like product marketing.

He seems to have hit on something big with Vioguard. Hospitals are especially motivated to rid their environments of deadly bacteria like MRSA and “C. Diff,” which are seeing fast-growing incidence. About 30 to 40 cases of C. Diff bacteria—which causes horrible and sometimes fatal cases of diarrhea—were reported per 100,000 people discharged from hospitals in 2001, and that figure tripled to about 100 cases per 100,000 discharges in 2005, according to data from the Centers for Disease Control and Prevention. Data is elusive on these kinds of bugs, because hospitals hate to admit any guilt and invite legal liability, but this is undoubtedly a growth market. (Pfizer’s anti-MRSA antibiotic, linezolid (Zyvox), topped $1 billion in worldwide sales last year.)

And hospitals know that bugs like these can spread from the hands of healthcare workers onto common areas like keyboards. What’s special about Vioguard’s patent-pending technology is …Next Page »

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MRSA is the headline-grabbing boogeyman of the day when it comes to the type of deadly infections that people can pick up in the hospital. But there are all sorts of other nasty bugs crawling around your healthcare facility, and San Diego-based Calixa Therapeutics says it is on its way to creating a new drug to fight one of them.

Calixa, which has remained stealthy for its first couple years in business, is announcing today that it has passed a Phase I clinical trial of 64 healthy volunteers, which shows its antibiotic for pseudomonal infections appears safe. The drug appears to have a good enough profile to move into the next phase during the second quarter, with a study of about 100 patients that will provide a measure of its effectiveness.

Calixa got its start when it raised a hefty $30 million in a Series A venture financing in November 2007 from some big-name venture firms, Domain Associates, Frazier Healthcare Ventures, and Canaan Partners. The investors are betting on Calixa’s ability to develop CXA-101, a new type of cephalosporin antibiotic, which is used against pseudomonas infections. This bug infects about four people out of every 1,000 discharged from the hospital, accounting for roughly one-tenth of all hospital-acquired infections, according to the Centers for Disease Control and Prevention. Like other better-known bugs like MRSA or “C.Diff”, it is developing resistance to many common antibiotics, and can kill people.

The basic premise behind Calixa is to give doctors more weapons to knock down the invader. This type of infection made headlines back in January when Mariana Bridi da Costa, a 20-year-old model, died after picking up pseudomonas through a urinary tract infection.

“This is a nasty bug, and there’s an unmet medical need,” says James Ge, the company’s chief scientific officer.

Calixa is led by CEO Eckard Weber, …Next Page »

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A group of biotech veterans and up-and-comers in the Boston area are forming a startup called Novophage to make engineered viruses that may help combat the growing problem of resistance to antibiotics.

It’s early days for Novophage. The firm has no office or venture backers to speak of, but it has formed an impressive roster of scientific co-founders that includes MIT’s prolific biotech inventor Bob Langer, Boston University bioengineering professor James Collins, and MIT chemical engineering professor Gregory Stephanopoulos. Research related to the firm’s science—led by co-founder Timothy Lu, a student at Harvard Medical School—was due to be published this week in the online version of the Proceedings of the National Academy of Sciences. I got the inside scoop on this company’s strategy from Lu and Collins yesterday.

Novophage’s engineered viruses have shown the potential to be used in combination with traditional antibiotics, offering what could be a new way kill bugs that have developed resistance, Lu says. This combination strategy offers an alternative to developing new stand-alone antibiotics, which have been slow to reach the market the past couple of years. For example, the FDA late last year shot down Cambridge, MA-based biotech firm Targanta Therapeutics’ bid to garner approval of an antibiotic called oritavancin for complex skin and skin-related infections caused by antibiotic-resistant bacteria. Another contender, South San Francisco-based Theravance, has also been delayed by regulatory hang-ups.

“We wouldn’t have to worry about antibiotic resistant bacteria if there were a lot of new antibiotics coming out from the pharmaceutical industry,” Lu says. “Our technology provides the ability to extend the useful lifetime of antibiotics and to solve the growing antibiotic-resistance problem.”

Lu and his fellow researchers have engineered bacterial viruses, called bacteriophages or phages, to strike at the natural DNA repair mechanism in bacteria that helps them resist antibiotics. To accomplish this, BU’s Collins explained to me, the phages serve as Trojan …Next Page »

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Cubist Pharmaceuticals (NASDAQ:CBST) plans to mount a lawsuit against Teva Parenteral Medicines after Teva made known that it plans to seek U.S. approval of a generic version of Cubist’s top-selling antibiotic daptomycin (Cubicin), Cubist announced this morning.

Lexington, MA-based Cubist says that Teva informed the company in a letter that it planned to gain approval of its daptomycin copy before two of Cubist’s patents on the drug expire in September 2019 and June 2016, telling Cubist that the patents are either invalid or not infringed. Cubist now has 45 days from receiving the letter to file a patent infringement lawsuit, which would block the FDA from approving Teva’s version of the drug for 30 months or until a district court rules that Cubist’s patents are invalid or not infringed upon by the Teva drug.

Daptomycin is key to Cubist’s current business. The injectable antibiotic, which is used to treat skin and blood stream infections caused by resistant bugs such as MRSA, brought the company $414.7 million of its $433.6 million in total revenue last year, according to the firm.

News of Teva’s bid to muscle in on Cubist’s daptomycin franchise had a chilling effect on Cubist’s stock price, which fell about 15 percent in pre-market trading from its close of $22.25 per share on Monday.

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Ryan McBride wrote:

Rib-X Pharmaceuticals has raked in $25 million in a debt financing to develop its pipeline of antibiotics for drug-resistant infections. The New Haven, CT-based biotech firm is expected this morning to reveal details of the financing and final results of a mid-stage clinical trial of its antibiotic delafloxacin.

Last time I spoke with Rib-X CEO Susan Froshauer, in September, she was on the hunt for a commercial partner to help fund further development of the firm’s lead antibiotics. The company has yet to land such a partner, but Froshauer was pleased that some previous equity backers—Warburg Pincus, ABS Ventures, Axiom Ventures, EuclidSR Partners, MedImmune Ventures, Oxford Bioscience Partners, SR  One, and Vox Equity Partners—opted to support her company in the debt round. Rib-X, founded in 2001, had previously raised $123 million in equity financing.

Rib-X says that delafloxacin showed positive results in the recent mid-stage clinical trial as a treatment for certain skin and tissue infections caused by bacteria such as the infamous antibiotic-resistant strain MRSA as well as bugs resistant to quinolone antibiotics. The 150-patient study showed that delafloxacin had efficacy comparable to that of the antibiotic tigecycline (Tygacil), marketed by Madison, NJ-based drug firm Wyeth, and better tolerability than the already-approved drug, according to Rib-X.

Rib-X has developed delafloxacin to treat the same types of bugs as South San Francisco-based Theravance’s (NASDAQ:THRX) telavancin and Cambridge, MA-based Targanta Therapeutics’ (NASDAQ:TARG) oritavancin. The FDA shot down Targanta’s bid to gain approval of oritavancin in late 2008, indicating that the company didn’t have enough data, particularly on the ability of oritavancin to treat MRSA. Froshauer notes that her firm’s recent delafloxacin study was completed last year with a higher percentage of MRSA patients than the oritavancin studies. She adds that delafloxacin is available in both intravenous infusions and oral pills, which enable patients to easily continue treatment after they leave the hospital. Oritavancin and other competing antibiotics are available in IV form only.

“We think of course that we’re in really good shape because we can look to those experiences and have a lot of take-home messages [from the FDA],” Froshauer says.

Still, Rib-X is considering additional uses of delafloxacin. Froshauer says that the company may decide to develop the antibiotic as a prophylactic treatment given to patients before surgeries to prevent infections. But the company is going to let its hoped-for development partner to weigh in on whether to develop delafloxacin for pre-surgical prophylaxis, she says, adding that its partner would also impact the design and timing of its next clinical trial of the drug.

Rib-X—which has a pipeline of other antibiotics discovered internally—licensed delafloxacin in 2006 from Japanese drug-maker Wakunaga Pharmaceutical Company. Froshauer says that health-care products giant Abbott Laboratories had previously developed delafloxacin in pill form for bronchitis and pneumonia, but opted to drop the program after two successful trials due to a change in strategy at the Abbott Park, IL-based firm. Rib-X developed the IV form of the antibiotic.

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Lots of innovation is happening inside nondescript office buildings in Bothell, but this activity gets little attention because it takes place at branch operations of companies headquartered elsewhere. Cepheid, the maker of molecular diagnostic tools based in Sunnyvale, CA, is one of those companies.

So I jumped at an opportunity to interview CEO John Bishop a couple weeks ago to learn more about why a fast-growing company like Cepheid (NASDAQ: CPHD) made a strategic decision to build a 30-person chemistry team in Bothell, and why the venture is expected to grow.

First, though, a little background about the company. Cepheid’s revenues have boomed over the last six years, from about $15 million to a forecast of about $175 million for this year. One of the key drivers is a precise test for detecting MRSA bacteria—a common cause of staph infections. These bugs are growing fast, and represent about two-thirds of hospital acquired infections.

The Cepheid test tackles this problem by putting complex DNA amplification processes into a box that someone without expert lab training can operate. This is a big deal, because only about one-third of U.S. healthcare facilities have labs certified and staffed to run the DNA amplification tests needed to identify MRSA, so they have to turn to contract labs that can take three or four days to get a result. Instead of fearing the worst and putting patients on potent antibiotics, even when it isn’t necessary, hospitals can shell out as much as $60,000 for a fully-equipped Cepheid machine that can give them the answer in about an hour.

More conventional diagnostic tests use antibodies to bind with proteins in the blood, but they can be less reliable and sometimes late to set off an alarm bell. This is why companies like Roche, Abbott Laboratories, Celera, and Becton Dickinson are all pushing to grab bigger stakes in the more precise world of molecular diagnostics. “With molecular, you can see what’s going on at a causative level,” Bishop says.

So Cepheid sees demand rising, particularly as it adapts the technology to hospitals that want to spot other worrisome bugs, like multi-drug resistant tuberculosis.

But how does the Bothell team fit into a company with 500 employees in North America and Europe? It all started in late 2003 when Alexander Gall, a chemist who formerly worked at Seattle Genetics and Epoch Pharamceuticals, told Bishop he was looking for a new job (right around the time when a lot of Seattle biotechs were laying off scientists). Bishop saw an opportunity to build something around Gall, so he hired him, and put him in charge of R&D.

Gall, and the people he oversees at the Bothell group, brought an important skill in their ability to modify the individual nucleic acid base chemicals—the building blocks of DNA—that make the Cepheid machines proprietary, Bishop says. “They are brilliant nucleic acid and organic chemists,” he says.

These modifications make the difference in the test’s reliability, and speed, Bishop says. This work is so integral to the company and its ability to make specialized probes and primers that Cepheid is planning to build up manufacturing capability near the chemistry group in Bothell. This work shouldn’t be outsourced, and will be kept close by the chemistry group, because “it’s high-value work for us, and we want to keep it with technically competent individuals,” Bishop says.

Bishop wouldn’t be specific about how many people it plans to hire here, but he was unequivocal about the fact that growth is coming here. “This will be a long-term growth program in Washington,” Bishop says.

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Targanta Therapeutics (NASDAQ:TARG) faces an uphill journey now that the FDA has decided to not to approve the Cambridge, MA-based biotech firm’s antibiotic oritavancin. The FDA, in summary, told Targanta to conduct an additional clinical trial to show the safety and effectiveness of oritavancin before it seeks approval again. The drug is intended to treat antibiotic-resistant bugs, like the notorious MRSA.

After writing a brief post on the FDA’s decision yesterday, I caught up with Targanta CEO Mark Leuchtenberger a few hours later. He was his normal upbeat self, yet he did acknowledge that his company has quickly gone from one with a projected marketing launch date for oritavancin in 2009 to one that will instead have to focus resources on another late-stage clinical trial for the next one or two years before it can ask the FDA for approval a second time. The drug’s development timeline is critical to the company, because it is vying to become Targanta’s first moneymaking product on the market.

What’s more, the company needs to raise money to support further development of oritavancin in a harsh financial climate to fund the clinical trial. How much? Leuchtenberger says he won’t know until the FDA provides guidance on the size and scope of the trial. The company finished September with $42.6 million in the bank, and Leuchtenberger tells me that money will fund the company in its current form into the third quarter of 2009.

“We knew [before the FDA's recent decision on oritavancin] we had a hefty challenge in front of us in what is a difficult fundraising market,” Leuchtenberger says. “We actually think that there will be interest and there has been interest in investing [in Targanta].”

Leerink Swann analyst Howard Liang wrote in a note to investors yesterday that there were already uncertainties in the market for antibiotics to combat MRSA due to a likely generic drug challenge for for a big brand-name antibiotic, daptomycin (Cubicin)—made by Lexington, MA-based Cubist Pharmaceuticals (NASDAQ:CBST). “In an already difficult capital market environment,” Liang writes, “this uncertainty makes it more difficult for financing the additional Phase 3 trial [for oritavancin].”

Leuchtenberger says his firm will also need to “take the appropriate steps” to ensure that it is using existing funds most appropriately, yet he declined to say which specific steps the company would take. (I think it’s safe to expect Targanta to cut at least some of the commercial workers it had hired in anticipation of the oritavancin launch in 2009, given that the company now has to focus its resources in the coming years on the next late-stage trial for oritavancin.)

Targanta had already expected to raise money for a late-stage trial next year of oritavancin in a single dose or less frequent doses than were given to patients in studies it used to apply for FDA approval. (In September Luke spoke to Leuchtenberger about the potential to treat patients with antibiotic-resistant germs with a single shot.) That study was supposed to take place as marketing began for oritavancin in more frequent doses. Leuchtenberger mentioned this study, but we didn’t discuss how the FDA response his firm got on Monday would impact plans for the single- or less frequent-dose trial of oritavancin.

After Targanta released the details of the FDA response late Monday night, the company’s stock predictably slid 40 percent yesterday, falling from $2.25 to $1.34 per share.

The FDA response followed an agency advisory committee’s 10-8 vote last month to recommend against approval of oritavancin.

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Rib-X Pharmaceuticals, a New Haven, CT-based developer of antibiotics, announced that its antibiotic delafloxacin in both 300 mg and 450 mg doses was as effective as an FDA-approved antibiotic in treating patients with complicated skin and skin structure infections in a mid-stage clinical trial. In October I wrote a feature profile about Rib-X and its next-generation antibiotics for treating antibiotic-resistant infections caused by MRSA and other lethal bacteria.

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If San Diego-based Adnavance Technologies plays its cards right, it won’t be long before it’s selling a simple DNA test that will tell doctors within a couple hours whether their patients have a potentially deadly MRSA bacterial infection. There will be no more need to send samples to a highly-skilled technician running an expensive DNA amplification machine for half a day, or wait three to four days to get results back from an outside contract laboratory.

I heard this vision for a faster, cheaper way to detect MRSA infections from Adnavance’s CEO, V. Randy White. He’s a 35-year veteran of the diagnostics business, who previously led San Diego-based Nanogen (NASDAQ: NGEN) and Xenomics.

MRSA, or drug-resistant bacteria, is a fast-growing problem in U.S. hospitals. It represents almost two-thirds of hospital-acquired infections, and is fatal about 18 percent of the time, White says. Only about one-third of U.S. healthcare facilities have labs certified and staffed to run DNA amplification tests needed to identify these bugs, so most of the time, doctors ship out a sample to a contract lab like Quest Diagnostics or LabCorp of America. Then they wait three or four days for the result. While they wait, fearing the worst, many doctors put patients on vancomycin antibiotics even if it isn’t necessary, which contributes to resistance, White says.

“If you suspect MRSA, you can’t just sit around and wait,” White says.

Adnavance’s approach is different from the traditional amplication process, known as polymerase chain reaction, in favor of what it calls “direct detection.” This involves looking directly at the DNA sequence of a bug to see if it carries a genetic hallmark of drug resistance. This machine can work faster because it can get a definitive reading based on a small amount of sample from a patient, without having to go through amplification steps, White says. A couple other companies, Nanosphere of Northbrook, IL, and Nanomix of Emeryville, CA are also working on direct DNA detection methods. “There’s a race to be first, and I hope we’re it,” White says.

Adnavance was founded in Vancouver, BC, in 2002 based on discoveries of Jeremy Lee, a researcher at the University of Saskatchewan. It is backed by a trio of Canadian venture firms—GrowthWorks, JovInvestment Management, and the Business Development Bank of Canada. White joined the company in February to lead it out of research and into the commercial phase, on the condition that it be based in San Diego, where he lives. That also enables him to recruit from a deeper talent pool of people with skills in regulatory affairs and product development for diagnostics. The company now has 12 employees, he says.

The Adnavance test still isn’t completely ready for prime time, and its team is finishing up modifications before it goes ahead with full-bore product development, White says. …Next Page »

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When people walk into the hospital with nasty flu-like symptoms, and doctors don’t know where the bug came from, the custom is to take a fluid sample and grow it in a lab dish for a day or two to get enough material to find out what it is. Then microbiologists use tools to try to identify it. Ibis Biosciences thinks it has a tool that can give a more definite answer within eight to 16 hours, by looking at the bug’s DNA.

Ibis is a subsidiary of Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS). So while I was in the neighborhood meeting that company recently, I stopped by to hear the Ibis story from its president, Michael Treble, who is headquartered right across the parking lot from Isis.

Ibis is working these days to reach milestones that will lead Abbott Laboratories to acquire the company, Treble says. The giant health products company invested $20 million in Ibis in July, and got the exclusive right to acquire Ibis for another $175 million to $190 million before next June 30. The interest stems from Ibis’ T5000 machine, which is used for research that can identify something new and unfamiliar like a SARS virus. It isn’t yet being used as an everyday diagnostic tool in hospital labs to screen for any number of infections, but that’s the vision.

“Molecular technologies have been around 20 years, but you can’t run 100 different PCR reactions to hunt down what the bug is. It’s cost-prohibitive,” Treble says. “With ours, within five hours you have an answer from a sample.” (He’s talking about polymerase chain reactions, or PCR, which amplifies DNA to get enough sample to identify an organism’s unique signature.)

The Ibis systems leans heavily on its connection to a massive database of the genomes of various bugs, so the machine can quickly find a match, or a near-match, to an infectious agent, Treble says.

This kind of machine isn’t cheap, running $300,000 to $400,000 for the instrument and proprietary chemical kits. Ibis, or rather Abbott, wants to sell them to hospital microbiology labs and infectious disease labs. Already, the Centers for Disease Control and Prevention uses one for research, as do Johns Hopkins University, the Naval Health Research Center, and others, Treble says.

Ibis got its first two orders in October 2006 to U.S. government agencies that wanted to do forensic analysis on human remains when the samples are too scarce or too degraded to be analyzed with other tools.

“Governments, organizations like the CDC, hospitals, and health providers throughout the world need better tools to deal with the growing risks associated with SARS-like epidemics and hospital infections. The Ibis T5000 Biosensor System represents a compelling approach,” said Garth Ehrlich, executive director of the Center for Genomic Sciences at Allegheny Singer Research Institute, in an Ibis statement.

Ibis is betting that hospitals will be motivated to buy its tool because of new reimbursement rules imposed by insurers seeking to crack down on them for allowing patients to get infected with costly hospital-acquired infections. If patients get infected at the hospital, insurers are “pushing the costs onto the hospitals’ books,” Treble says. Every year, the CDC estimates that 200,000 people in the U.S. get these kind of infections, like C. difficile or MRSA, which often force patients to be hospitalized for longer periods to take powerful antibiotics like vancomycin. Hospitals may want to screen patients with the Ibis tool before admitting them to the hospital in order to isolate those who are contagious before they pass a bug on to others and run up a big tab, Treble says.

“You can ask, ‘Where is this coming from?” Treble says. “Now you can effectively change things if you know what the source is.”

Treble has been with Ibis for more than three years, and before that was CEO of Madison, WI-based NimbleGen Systems, a company sold to Basel, Switzerland-based Roche in 2007 for $272.5 million. Ibis, he says, should have even more impact. “This is the biggest opportunity I’ve seen in 30 years,” Treble says. He’s hoping his enthusiasm is contagious.

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Targanta Therapeutics (NASDAQ:TARG) has released detailed data from its Phase 2 study of its antibiotic oritavancin in single or infrequent doses, showing that the fewer doses were as safe and effective as a three-to-seven day course of therapy, according to the Cambridge, MA-based firm. Luke wrote earlier this month about Targanta’s hoped-for FDA approval of oritavancin—which is intended to treat skin infections, including those cause by antibiotic-resistant bugs such as MRSA—this year.

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Trius Therapeutics is on a roll. The San Diego-based biotech company has received a five-year $28 million contract from the National Institutes of Health to develop novel antibiotics against some of the nastiest possible bioterrorism bugs on the planet.

Trius will work in a collaboration with researchers at Lawrence Livermore National Laboratory (folks that know a little bit about security) to identify and hone new drug candidates against gram-negative bacteria that could be used as bioterrorist threats—so this work is at a very early stage of development. The drugs will be tested against some well-known nasty bugs like Yersinia pestis (also known as the plague), Francisella tularensis (tularemia or rabbit fever) and Burkholderia pseudomallei (melioidosis or Whitmore’s disease). The grant comes from the National Institute of Allergy and Infectious Diseases, a unit of NIH.

The company, which has raised $50 million in venture capital since its founding in 2007, is in the midst of gearing up for a series of presentations on its lead antibiotic in development, at the Interscience Conference on Antimicrobial Agents and Chemotherapy in Washington D.C. Its candidate, TR-701, is from the same class of drugs as Pfizer’s linezolid (Zyvox), used against drug-resistant MRSA bacteria. The Trius compound is designed to be more potent, and may be given once a day instead of twice a day.

If Trius can duplicate that kind of success with the bioterror bugs, I’m guessing Uncle Sam will be grateful when it comes time to buy these things.

“We will focus our efforts to address the NIAID mission to develop new medical countermeasures against biological agents most likely to be used in a terror attack on civilian populations,” said Jeff Stein, Trius’ CEO, in a statement. “Trius offers a novel approach to develop effective new drugs to treat infections caused by such deadly pathogens.”

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