San Diego-based Ligand Pharmaceuticals (NASDAQ: LGND) said today it has received $2 million in milestone payments as part of research collaboration with Merck that is due to expire next month. The partnership started with Organon, which was later acquired by Schering-Plough, which was then acquired by Merck.

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Gloucester Pharmaceuticals has won clearance to start selling its first cancer drug in the U.S.

The Cambridge, MA-based biotech company said today it has gotten the green light from the FDA to start marketing its romidepsin treatment, under the brand name Istodax, for patients with a rare malignancy of the skin known as cutaneous T-cell lymphoma. The drug is expected to be commercially available starting in January, the company said in a statement.

The news comes as little surprise since Gloucester won a unanimous recommendation in early September from an advisory panel to the FDA. Gloucester built its application to the FDA around a pair of mid-stage clinical trials of 167 patients in which about 40 percent experience a reduction in tumor size after getting intravenous infusions of romidepsin. Nausea, fatigue, infections, and vomiting were the most common side effects, and were mostly mild to moderate in severity.

The company looked like such a sure bet that less than one month before it made its pitch to the FDA panel, it raised $29 million from Novo A/S, Apple Tree Partners, ProQuest Investments, Prospect Venture Partners, and Rho Ventures.

Romidepsin is a member of a class of drugs known as histone deacetylase inhibitors. These treatments have been around a long time and have traditionally been used in neurological conditions: only relatively recently have they been considered potential cancer treatments, as I described in a preview story of the FDA panel review back in September. Merck introduced the first drug in this class for cancer, after it won FDA approval in October 2006 for vorinostat (Zolinza), also for cutaneous T-cell lymphoma. Zolinza generated just $9 million in sales in the first six months of this year, so Gloucester has to be hopeful that it can enlarge the market. The patient population with this condition is a small one—the disease affects about 1,500 people each year in the U.S.

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I’ve heard about serial entrepreneurs who start a company, build it up to a certain point, sell it to someone bigger, and then repeat the whole cycle again. But I had never heard of a true biotech sequel until I met Randall Woods a couple weeks ago.

Woods is the CEO of San Diego-based Sequel Pharmaceuticals, and a well-known entrepreneur who’s also the chairman of Biocom, the local biotech trade association. The two-year-old startup is literally the sequel to his previous company, Novacardia, a company that Woods led until it was sold for $350 million to Merck on Sept. 6, 2007.

Sequel came less than 24 hours later. The same nine employees, in the same office, with the same management team, and the same board (except for one), set their sights on a new goal. The idea was to take a drug in the early stage of development, steer it to the later stage of trials until the concept is more proven, and then sell it for a bundle to big drugmaker. Novacardia took a drug into pivotal studies for congestive heart failure, then passed the baton to Merck for the final phase of development. Sequel aspires to do the same thing with a different drug for a different heart ailment—atrial fibrillation.

“We didn’t even have a 24-hour break,” Woods says. “We just changed the sign on the door.”

This group of people clearly has skill in cardiovascular disease, so it knows something about the new problem. Atrial fibrillation is an abnormal heart rhythm that can cause acute attacks, or a chronic condition whose symptoms include shortness of breath, chest pain, or stroke.

Randall Woods

About 2.2 million people in the U.S. are estimated to be affected, and it caused 470,000 people to be hospitalized in 2003, according to the American Heart Association. The incidence is thought to be increasing as the Baby Boomers get older. There haven’t been many new developments in treatment either, except Sanofi-Aventis’ dronederone (Multaq), which first won FDA approval in July. That drug showed it could reduce hospitalizations from cardiovascular disease and deaths from all causes by 24 percent when compared to a placebo. Other than that, patients sometimes take beta-blockers to slow down their heart, or warfarin to thin their blood, Woods says. Another treatment from Vancouver, BC-based Cardiome Pharma is seeking FDA approval.

Sequel’s drug, called K201, is designed …Next Page »

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What type of drugs have the greatest potential to fill the void in Big Pharma company pipelines, as the industry barrels toward the well-documented patent expiration crisis of coming years? What are the best techniques pharma companies can use to stimulate innovation at smaller biotech companies? How can drugmakers raise the odds of success in this notoriously risky business? And why is Big Pharma continuing to bet big R&D dollars in partnerships, venture investing, and its own research centers in the greater Boston area?

These are some of the questions we are planning to dig into at the next Xconomy Forum— Pharma’s Bet on Boston Innovation—which is coming up the afternoon of Nov. 4 at the Hyatt Regency in Cambridge, MA. We are thrilled to have assembled a top-notch group of pharmaceutical executives, biotech CEOs, and venture capitalists with a wide range of perspectives on how to take some of the best ideas at Boston’s great academic centers and help them find new ways to survive and thrive inside some very big companies during the later stages of development.

The keynote speakers for this event will be Deborah Dunsire, the CEO of Millennium: The Takeda Oncology Company, and Christoph Westphal, the CEO of Sirtris, and the senior vice president of GlaxoSmithKline’s Centre of Excellence for External Drug Discovery. They both have gone through the experience of leading a growing biotech company, getting acquired by a Big Pharma concern, and then being given more resources and a big mandate to push innovation in Boston instead of being kicked aside and replaced by new leadership, as is often the case.

We also have brought together several biotech CEOs who have put together partnerships or attracted investment from Big Pharma companies, including Joseph Yanchik of Cambridge-based Aileron Therapeutics; Russell Herndon of Cambridge’s Hydra Biosciences; and David Steinberg of Enlight Biosciences. From venture capital, a sector that looks to develop technologies pharma companies might want to buy, we will hear from Campbell Murray of Novartis Venture Funds; Maggie Flanagan LeFlore of MedImmune Ventures (which is owned by Astra Zeneca); Jean George of Advanced Technology Ventures; and Daphne Zohar of PureTech Ventures.

And we’re thrilled to say we have a late addition to the program with Natarajan Sethuraman, the senior director and GlycoFi site head for Merck. He plans to talk about how GlycoFi, the New Hampshire-based company acquired by Merck for $400 million three years ago, is now weaving its faster, cheaper production method for making antibody drugs into Merck’s global operations.

Tickets for this event are selling fast, and there are only nine days left to register. You can find more information about the agenda and how to register here. I’m personally planning to attend, and I look forward to seeing many of our regular readers there at the event. See you next week.

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Some tech companies seem to be at their best when things are at their worst. Those are the ones you really need to keep an eye on, especially in a recession. Isilon Systems is one of those companies.

The Seattle-based data storage firm (NASDAQ: ISLN) is announcing its third-quarter earnings this afternoon, and it will be interesting to see how well its products are selling across a wide range of industries—everything from movie studios and media companies to financial institutions and biomedical research organizations. I recently sat down with Isilon’s founder and CEO, Sujal Patel, for a wide-ranging interview about the nine-year-old company’s technology and business strategy. It makes for a pretty compelling case study of a tech startup’s growing pains, and how it has bounced back from adversity to become a leading player in a crowded and competitive field.

In case you don’t know all the twists and turns in Isilon’s history, here’s a quick recap. Patel, a former engineer at Seattle-based RealNetworks (NASDAQ: RNWK), co-founded Isilon in January 2001. The basic idea was to provide cheaper and more efficient data storage for companies needing to host or deliver video, music, and other multimedia content that requires a lot of storage space. In his previous role as chief architect of RealNetworks’ media delivery software, Patel had seen many customers struggle to upgrade their storage capabilities. So there was a real problem to solve. But the tech bubble had collapsed, so customers weren’t necessarily in the mood to buy. Patel says he “pretty much timed the worst spot of the decade to start a company.”

What’s more, there were already about 250 venture-funded storage companies out there, Patel says, and about 50 of them sounded just like Isilon. Patel says he built his business plan around solving the specific problem Real’s customers had, and “how that problem would be pervasive across all mid-range to large enterprises over the next decade.” To start with, he set an incredibly narrow customer focus on photo-sharing and streaming media websites, and media companies.

Isilon’s technology approach was to cluster together a large number of storage “bricks”—each one includes disks, memory, processing, and networking—into a single storage unit. It was a novel approach in the field of network-attached storage, which today is a $4 billion industry with big players like NetApp, EMC, and Hewlett-Packard. Isilon’s technology requires solving some very tough software problems, but the payoff is better storage performance that is also cheaper and easier to manage, for companies dealing with huge amounts of unstructured data. “We can build one gigantic network drive, and we can scale it as the customer’s needs change over time,” Patel says.

Venture capitalists were sold. In August 2001, Isilon closed an $8.4 million funding round …Next Page »

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Seattle has more than its share of brilliant biologists for a medium-sized American city. But if people and ideas are going to properly mix to create a thriving local biotech industry over the next two decades, we could use a few more common places with intellectual sparks—like bars. At least according to one of the region’s top life sciences entrepreneurs.

When in Boston and San Francisco, Stephen Friend says he gets most of his work done by socializing with scientific colleagues he meets for coffee or a drink. Not so here.

“The way Seattle is currently set up, I don’t have a place I go for a coffee or a drink. A place where I run into the people who are ready to try a new idea. That’s an important anchoring ingredient that we’re missing, and should be happening,” says Friend, the former senior vice president of cancer research at Merck, and co-founder of Seattle’s Rosetta Inpharmatics.

(Coffee itself is certainly easy to find, but Stephen may want to check out Xconomy’s handy Greater Seattle Coffee Cluster guide for the spots that are best known as innovation mixing pots.)

That was one of the many insights that emerged during Seattle Life Sciences 2029, a sold-out event Xconomy organized on Monday night at Seattle Biomedical Research Institute (see the photo gallery here). This event brought together a group of industry visionaries who have rarely, if ever, appeared on the same stage in front of a local audience: Ben Shapiro, the former executive vice president of basic research at Merck; Steve Gillis, the managing director of Arch Venture Partners who co-founded Immunex and Corixa; and Friend. The panel was moderated by Carl Weissman of Accelerator and OVP Venture Partners, and biotech pioneer Leroy Hood offered his thoughts in a video message on how Seattle can make strides to get bigger and better at biotech over the coming two decades.

This came up during a freewheeling audience Q&A, which covered a lot of ground. I’m not going to recap everything here—I think with some of the jokes, you probably just had to be there—but here were some of the best little acorns that that I squirreled away with my digital recorder, which are edited as always for length and clarity:

Steve Gillis

Steve Gillis on what entrepreneurs need to do to adapt in today’s financial climate: “Entrepreneurs need to be open to combining their ideas with existing organizations. Or combining those ideas with like-minded new proposals from other folks, as opposed to always wanting to have what I call their own pie. In the world in which we live, in which money is quite tight, people have to be open to joining forces earlier in evolution. That will result in everyone having a smaller slice of the pie, but it will also result in the possibility of someday eating pie. Instead of just dreaming about it. It’s a fundamental mind-set that needs to change.”

Stephen Friend on how universities need to relax rules on how inventive faculty spend their time: “The concept that you are either inside or outside of the university, and that some fraction of your time has to be spent inside the university, and that some percentage of your time has to be spent in your role as a tenured professor at the university, that has to go away. It’s the concept that someone could teach courses, and can be a role model for education, has to be kept separate from someone who’s actually running a company. The best example I know of is what MIT is trying to do. That organization, the person who leads it, she [Susan Hockfield] feels the university has to become, in a broad sense, the incubator. I don’t think many people, particularly at some universities in this town, are ready to think that creatively. It’s a mistake.”

Ben Shapiro on how Seattle ranks as a hub for life sciences innovation: “It’s worth …Next Page »

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I still have one more feature story I hope to bang out this afternoon, but the Xconomy team will soon be heading over to Seattle Biomedical Research Institute tonight for our big event on the 20-year outlook for the Northwest’s life sciences cluster.

This sold-out event will bring together some of the world’s leading life sciences visionaries, who have rarely, if ever, appeared on the same stage. The highlight will be a panel discussion, moderated by Carl Weissman of Accelerator and OVP Venture Partners, that will include Steve Gillis of Arch Venture Partners; Ben Shapiro, former executive vice president of worldwide basic research at Merck; and Stephen Friend, the co-founder of Rosetta Inpharmatics, and now co-founder and CEO of Sage Bionetworks. We will then feature short presentations from some of the potentially transformative life sciences startups in the region, before the networking portion of the evening.

Thanks to the many people who have helped make this happen. That includes our event sponsors: Fenwick & West, Cooley Godward Kronish, and Christensen O’ Connor Johnson Kindness. We also want to thank our underwriters—Alexandria Real Estate Equities, Fenwick & West, Cooley Godward Kronish, and the Science and Technology Directorate of the U.S. Department of Homeland Security, as well as our venture members, Arch Venture Partners and Polaris Venture Partners. Thanks also to SBRI for serving as the event host, and to the Washington Biotechnology & Biomedical Association for serving as our event partner. Lastly, we have to give a shout out to all the Xconomy Seattle partners: The Alliance of Angels, Northwest Entrepreneurs Network, Technology Alliance, the WBBA, and the Washington Technology Industry Association.

We expect this event to be a highly interactive conversation, so come ready to fire away with some questions.

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What is the single best thing that has happened in Seattle life sciences in the past five years? How might that make a difference over the next two decades as this region strives to become a more vibrant cluster for life sciences innovation?

These are the kinds of questions you don’t see explored much in the real-time frenzy of news headlines, the grind of quarterly earnings reports, or election seasons. But this long-range view of the future will be the central theme of an event Xconomy is organizing for Monday night here in town, under the name Seattle Life Sciences 2029.

We’re excited to have pulled together a unique mix of some of the most accomplished life sciences visionaries in the world, who have rarely, if ever, appeared together on the same stage. They are Steve Gillis of Arch Venture Partners; Ben Shapiro, former executive vice president at Merck and now a partner with Boston-based PureTech Ventures; and Stephen Friend, co-founder and CEO of Sage Bionetworks and formerly of Merck and Rosetta Inpharmatics. Carl Weissman, the chairman and CEO of Seattle-based Accelerator and a managing director with OVP Venture Partners, will be the moderator. We also expect to have a special video message from Leroy Hood, the president of the Institute for Systems Biology.

After the panel discussion, we will introduce four Seattle companies with the potential to transform their respective fields of biotech—Calistoga Pharmaceuticals, Immune Design, VLST, and VentiRx. Executives from those companies will deliver “bursts,” or brief introductions of their work, right before the networking portion of the evening.

The event will be held from 5:30 pm to 8 pm this coming Monday, Oct. 19, at the Seattle Biomedical Research Institute in Seattle’s South Lake Union neighborhood. You can get more information on how to register here. Only a few tickets are left. We expect this to be a highly interactive conversation with the audience, so if you have a question for this group, we want to hear from you. We look forward to seeing you there on Monday night.

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One of the inconvenient truths of the biotech and pharmaceutical industry is that only about one out of every 10 drug candidates good enough to enter clinical trials passes all the tests to graduate as an FDA-approved therapy. Every major drugmaker is searching for ways to boost that success rate, and yesterday I got an interesting glimpse into how the world’s largest biotech, Amgen, thinks about how to raise its game.

Amgen is based in Thousand Oaks, CA, but has 900 employees in Seattle and about 200 more in Cambridge, MA, many of whom play critical roles in the perilous early steps of R&D where a lot of time and money get wasted. I got an overview from Amgen’s senior vice president of translational sciences, Joe Miletich, while he was in Seattle this week to meet with employees (and briefly enjoy the view of Elliott Bay from the office CEO Kevin Sharer sometimes uses).

Amgen (NASDAQ: AMGN) had $15 billion in revenues a year ago, largely from products for patients with anemia, autoimmune diseases, and cancer. About one-fifth of that revenue, $3 billion, was poured into the R&D budget. Much has been written about how Amgen coasted on the success of its first two blockbusters in the 1990s, acquired another one in 2002 from Seattle-based Immunex, but has more recently sought to re-ignite its innovation engine, particularly for cancer drugs, this decade under R&D boss Roger Perlmutter, a former Merck executive and University of Washington immunology professor.

Since it often takes a decade or more to develop a new drug, this effort is still a work in progress, but Amgen now has 50 drugs in the pipeline from the late discovery stage through Phase III clinical trials. Amgen has organized the pipeline with three key guys who report to Perlmutter from beginning to end. David Lacey runs the early discovery, Miletich handles translational steps from there through early-stage clinical trials, and Sean Harper is responsible for late-stage clinical trials.

Amgen's Joe Miletich

Miletich was formerly a professor of internal medicine and pathology at Washington University in St. Louis and a Merck executive. His team in the middle of the R&D machine takes drugs after they’ve graduated from the discovery phase, and then runs them through a battery of genetic tests, cell-based tests, animal tests, models of disease, and biomarker studies to see which types of people might respond to such a treatment. The goal is to test whether the candidates are safe, and whether there’s “evidence of biological impact” that gives the company “a high degree of certainty” on whether the drug is actually hitting the desired target and doing what it is supposed to do in people, he says. If done right, this work is supposed to answer which of those 50 drugs on the roster, and which of the 6 to 8 new ones that enter human trials each year, are truly worthy of putting major-league resources behind in the ultimate proving grounds of Phase II and III clinical trials. The rest of the candidates, Miletich says, may need more long-term observation in people, while some should be killed early before too much money is wasted, he says.

This isn’t revolutionary stuff—it’s what other companies do, Miletich acknowledged. But it is an effort to weave together basic research and clinical development in a closer way than had been done in the past, when research might just hand over a drug to development to see if it worked, Miletich says. He says this more integrated, or “translational,” approach should pay off directly by raising Amgen’s success rate above the usual industry rule of thumb.

“Over the next five years, I’d like to see us have about a 20-30 percent higher success rate over the historical average,” Miletich says.

That sounded pretty bold, but Miletich was quick to throw in qualifiers. There are …Next Page »

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

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

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

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

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

Stephen Friend

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

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

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Adimab, the Lebanon, NH-based developer of technology to quickly make antibody drugs, has raised $8.2 million in a venture round, according to a regulatory filing. Adimab collected the Series D financing from Google Ventures, SV Life Sciences, Polaris Venture Partners, OrbiMed Advisors, and Borealis Ventures, as Ryan reported last week before the dollar amount became public. Adimab is led by CEO Tillman Gerngross, who sold his previous antibody company, GlycoFi, to Merck for $400 million in 2006.

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The first half of this year, Amylin Pharmaceuticals CEO Dan Bradbury was absorbed in the closest thing corporate America has to political warfare—a boardroom challenge from billionaire Carl Icahn and another unhappy shareholder, Eastbourne Capital. The second half has been more about doing the basics Amylin (NASDAQ: AMLN) must do if the San Diego diabetes specialist is ever going to enter the top tier of big, profitable biotech companies.

Now that the dust appears to finally have settled on the proxy fight—new director Paulo Costa was elected the chairman last month—Bradbury has been back hammering away at the company’s need to make sure it nails the potential blockbuster diabetes drug in its pipeline. Yesterday, he was happy to talk about it by phone while he visited Amylin’s new biotech drug factory in West Chester, OH.

The importance of Amylin’s new factory to its future is hard to overstate, so there’s good reason for the CEO to drop in and make sure the troops keep their collective eye on the ball. Amylin and its partner Eli Lilly have made a $500 million investment in the factory, dating back to December 2005, in order to meet market demand for what they hope will be the next big thing for diabetes, exenatide once-weekly. This plant, which now has 250 employees, is getting ready to undergo an FDA inspection in the next six months as Amylin and Lilly seek clearance to start selling the drug in the U.S. It’s the only place in the world with the expertise, and capacity, to meet the first three years of market demand for exenatide once-weekly, which will seek to grab big market share among the 25 million people in the U.S. with diabetes.

To hear Bradbury tell the story, this is the time to execute on the fundamental game plan with things like manufacturing, and not for Monday morning quarterbacking about whether the coach is calling the right plays.

Dan Bradbury

“Certainly in the first half of the year there were a lot of distractions for me. I have more time now to focus on actually running the business as opposed to board issues,” Bradbury says, during a break from meetings with Amylin’s Ohio staff. “It’s all about execution at the moment.” He adds,”We need to make sure everyone is fully on board with where we are as a company. The launch of exenatide once-weekly next year is critical to the future of the company.”

Why does getting this new drug right matter so much? Amylin generates almost 90 percent of its revenue from exenatide (Byetta), a novel peptide drug that was first approved by the FDA in April 2005 for patients who weren’t able to control their blood sugar with existing meds. The drug has gone on to become a commercial success, generating $678.5 million in sales last year, just its third full year on the market.

But the existing product has its limits, partly because it must be injected twice-daily. So Amylin and Lilly have sought to make this drug a lot more appealing to millions of patients by obtaining a license to drug delivery technology from Cambridge, MA-based Alkermes (NASDAQ: ALKS). That technology encapsulates the same peptide in a polymer microsphere that slowly dissolves in the bloodstream, so patients only need to get stuck with a needle once a week, not twice a day.

This new-and-improved drug has generated clinical trial data so far that Bradbury says are good enough to beat the biggest selling drugs in the diabetes market—Merck’s …Next Page »

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As the flu season nears, it’s still unclear how severe the H1N1 strain of swine flu will be. But several San Diego companies are nevertheless riding a wave of investor enthusiasm for the public companies that could benefit. Get that and other biotech news here.

—The financial health of San Diego’s public life sciences companies appears to be improving, according to Luke’s recent analysis of available data about the companies’ cash balances, burn rates, and financial projections. Luke concluded that 15 of the 27 public biotechs in the San Diego area are in stronger financial shape now than they were at the end of 2008.

—After presenting highlights of a clinical trial that enrolled more than 4,000 patients, San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) says its obesity drug candidate meets at least one FDA benchmark for effectiveness and is “safe and well-tolerated.” Arena CEO Jack Lief said the company has “accomplished what we set out to accomplish.”

—San Diego-based Ambrx, which has drug development partnerships with Merck, Eli Lilly, and Merck KGaA of Germany, has signed up another major partner—Wyeth. Ambryx will work with Wyeth to create new engineered antibody drugs against multiple diseases, and since New Jersey-based Wyeth (NYSE: WYE) is in the process of being acquired by Pfizer, it means Ambryx will continue to work on the antibody partnership with Pfizer—as long as the buyout goes through.

—San Diego’s Quidel (NASDAQ: QDEL) is among five San Diego biomedical companies that have benefitted from investor interest in swine flu-related products or services in recent months. But as Denise found, not all five companies will generate much additional business if the H1N1 flu season proves to be as serious and some health officials have predicted. The official start of the flu season is Oct. 4.

—Soon after Denise’s profile of San Diego “virtual” biotech Tioga Pharmaceuticals, Luke visited virtual company VentiRx, which has employees in Seattle and San Diego. VentiRx co-founder Rob Hershberg says VentiRx has enrolled 18 patients in its first clinical trial of a drug for cancer, and so far it appears safe.

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Ambrx has ginned up yet another potentially lucrative Big Pharma deal. The San Diego-based biotech company has struck a worldwide partnership with Madison, NJ-based Wyeth to create new engineered antibody drugs against multiple diseases.

Financial terms aren’t being disclosed, but Ambrx says it is raking in an upfront payment, research funding, milestone payments based on progress developing drug candidates, as well as royalties on sales of work that translates into marketed products. This deal, combined with Ambrx’s partnerships with three other major drugmakers, means that Ambrx now has enough cash in the bank to operate “multiple years” without seeking additional financing, according to CEO Steve Kaldor.

“We have no lack of interest in the company,” says Kaldor, who adds that he had talks with five different prospective partners before settling on Wyeth in the latest alliance. “We’ve actually been turning down deals.”

The Ambrx story began back in 2003. That’s when Peter Schultz, director of the Genomics Institute of the Novartis Research Foundation (and the founder of eight biotech companies) had a new idea for creating new amino acid building blocks for a different class of biotech drugs. These drugs could potentially do whatever you wanted, like last longer in the body, or carry potent cell-killing agents. That work has enabled Ambrx to raise about $106 million in venture capital, build a scientific team of about 80 people, and score five different partnerships with three other major drugmakers to date—Merck, Eli Lilly, and Merck KGaA of Germany.

Ambrx’s two best-known drug candidates are designed to be longer-lasting versions of protein drugs that treat growth deficiencies and multiple sclerosis. But Wyeth, a major drug maker that’s in the process of being acquired by Pfizer (NYSE: PFE), was interested in something new that emerged at Ambrx …Next Page »

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[Editor's Note: this piece was co-authored by Hari Kumar of San Diego-based Amira Pharmaceuticals.]

The benefits of partnerships between emerging biotech companies and major drug developers are numerous and well known. The smaller biotech company gets cash to support its innovative R&D, and the Big Pharma company gets hot new patented drug candidates to replace its aging blockbusters as they start to face competition from cheaper generics. However, obtaining these partnerships is becoming increasingly difficult for biotech companies in the current climate of increased economic pressures and mergers and acquisitions between major drug developers.

In recent months, major drug developers such as Genentech and Schering-Plough, who were previously partnering targets, are now going through the process of mergers (with Roche, and Merck, respectively). This means it is likely that there will be a continued gradual decrease in the number of potential partners looking to acquire co-ownership of new drugs going forward.

As big drugmakers continue to merge, the consolidated portfolios will also change. At first glance it would seem like the mergers and acquisitions would allow the combined company to expand its portfolio. However, these mergers often result in management trimming off ‘excess’ to increase focus on the most profitable areas. Therefore, not only is the number of companies decreasing, but the number of disease indications being pursued by these companies is also likely to continue to decrease.

Consequently, as small companies have ever decreasing choices, major drug developers have more options from which to choose when selecting a partner. It is no longer enough for a start-up biotech to be first-in-class. Instead, it is more important than ever for biotechs to see their own programs from the perspective of major drug developers and create fully enabled programs that are attractive to potential partners in multiple ways.

Identifying a Target

The discovery and the identification of game changing therapeutics have been central to the success of the likes of Genentech and Amgen. Others, such as Gilead Sciences, emerged as a leader in their field through the demonstration of being the best-in-class.

The right decisions at the earliest stages of target selection are instrumental in eventually attracting partners. One of the first questions to ask is, “If we have a program in the clinic in 3 or 4 years, will there be a partner across the table from us?” Or, simply ask, “Is this therapy going to make any difference to the treatment paradigm?”

Companies need to identify targets that will be appealing in the future, which may not necessarily be attractive now. This selection process should include …Next Page »

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Seaside Therapeutics, a stealthy biotech startup in Cambridge, MA, has raised $30 million to further develop research from MIT neuroscientist Mark Bear that has the potential to create the first drugs that treat the underlying neurological disorder at work in patients with Fragile X syndrome and autism.

Seaside raised the money from a private, family investment firm that wishes to remain anonymous, says CEO Randy Carpenter. The company, founded in 2005, has now 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, Carpenter says. It hasn’t raised venture capital, and it hasn’t needed any, he says.

“We’re thrilled,” Carpenter says. “The end game for us is not to sell the company for a profit. The end game for us is to develop effective new therapies.”

Autism has been surging in public awareness in recent years and is now estimated to affect one out of every 150 children in the U.S. Yet autism has stumped scientists for generations, because they don’t really know what causes it, or how to classify all the various symptoms like social isolation, obsessions like staring at ceiling fans, or having trouble with language. That’s made it hard for pharmaceutical and biotech companies to even know where to begin with strategies to develop new therapies. But that’s beginning to change, partly because of work done by Bear, a co-founder of Seaside, Carpenter says.

Carpenter and Bear collaborated together earlier this decade at Sention, a Providence, RI-based company that eventually went out of business. But Carpenter says Sention had a “skunk works” project on Fragile X and autism that eventually gave birth to Seaside. The newer company is built …Next Page »

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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[See update at 3:35 pm Eastern with FDA panel vote in favor.]

You can bet that the people who just put $29 million into Gloucester Pharmaceuticals a few days ago will be watching very closely today for signs they got their money’s worth.

The Cambridge, MA-based biotech company will try to make its case today at a public hearing of an FDA advisory panel that will recommend whether the drug should be made available on the U.S. market. Gloucester, which raised money last week, is seeking FDA clearance to start selling romidepsin (Istodax) for people with relapsed forms of a lymphoma that affects the skin—cutaneous T-cell lymphoma.

Gloucester is basing its application on a pair of mid-stage clinical trials of 167 patients that found that about 40 percent had their tumors completely or partially shrink after getting intravenous infusions of romidepsin. The most common side effects were nausea, infections, and anemia, according to company documents filed with the FDA. If the drug can win clearance from the FDA, it will be a new option for about 1,500 people in the U.S. who get diagnosed with cutaneous T-cell lymphoma each year.

Romidepsin is a member of a class of drugs known as histone deacetylase inhibitors. These drugs have been around a long time and have traditionally been used in neurological conditions: only relatively recently have they been considered potential cancer treatments. Merck developed the first drug in this class for cancer, when it won FDA approval in October 2006 for vorinostat (Zolinza), also for cutaneous T-cell lymphoma. Zolinza generated just $9 million in sales in the first six months of this year, so Gloucester has to be hopeful that it can enlarge the market.

“Romidepsin offers an important additional therapeutic option for the treatment of patients with cutaneous T-cell lymphoma,” Gloucester said in its briefing document filed with the FDA.

The FDA’s staff, according to its briefing documents for the panel, plans to ask the panel whether the evidence is persuasive enough for market approval, particularly since the studies weren’t designed so that some patients were randomly assigned to get another treatment for comparison’s sake.

The last question in the FDA’s briefing document is the one that investors will focus on the most: Is the risk/benefit ratio of romidepsin favorable? If the FDA advisory panel says it is, then Gloucester will likely get the official green light from the FDA, and the venture investors could find their new shares of Gloucester to be worth quite a bit more than they are today.

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

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

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

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

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

The Rosetta talent pool has branched out …Next Page »

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