Biotech rivalries are sometimes a bit like boxing matches, where you have two lone fighters vying for the prize. But the hepatitis C market is turning into a battle royal that’s more wide open and unpredictable, with all the competitive maneuvering, surprise crashes, and comebacks you might expect from the Daytona 500.

The medical advances in hepatitis C have been dizzying this year, especially in what it means in terms of multi-billion dollar business implications. The safest thing to say is that there’s plenty of good news for patients this year, but that shareholders in the major hepatitis C drug developers had better hold on tight as a new standard of care gets established.

Some commentators figured that Gilead Sciences (NASDAQ: GILD), the world’s biggest maker of HIV drugs, had essentially locked up the dominant position in this new drug class through its $11 billion acquisition last month of Princeton, NJ-based Pharmasset (NASDAQ: VRUS). But it’s still too soon for anyone to declare victory over the wily and fast-mutating virus that causes hepatitis C. Given the way drug development is going now, it’s possible we could have dueling antiviral drug cocktails that cure almost 100 percent of patients within five years. And before we get there, we’re going to see some fascinating chess moves—and probably a few surprising collaborations—from companies like Vertex Pharmaceuticals, Merck, Roche, Johnson & Johnson, Bristol-Myers Squibb, and Abbott Laboratories, as well as several smaller biotech startups like Alpharetta, GA-based Inhibitex (NASDAQ: INHX).

The Pharmasset compound that prompted Gilead to write such a big check, PSI-7977, is “certainly not a panacea, not the lone answer,” says Kleanthis Xanthopoulos, the CEO of San Diego-based Regulus Therapeutics, and the co-founder of another hepatitis C drug developer, Anadys Pharmaceuticals.

Regulus Therapeutics CEO Kleanthis Xanthopoulos

Xanthopoulos says Gilead was “taken to the cleaners,” and that the hepatitis C market is still up for grabs. “It’s going to take some time before people figure out how it plays out,” he says. The Pharmasset drug “is a powerful player, but you will need other direct-acting antivirals. You want to go to a 100 percent cure rate. I can guarantee the Pharmasset compound isn’t going to do it alone.”

Hepatitis C has never really captured big headlines in the U.S., as it has never benefitted from massive awareness boosting campaigns that have supported research for, say, HIV, or breast cancer. But hepatitis C has clearly emerged as one of the biggest opportunities in pharmaceuticals over the past few years. There are more than 3 million people in the U.S., and an estimated 170 million worldwide, with this liver infection that can lead to cirrhosis and liver cancer. Most people have never bothered to get treated, partly because the infection takes years to fully wreak havoc. The other reason is the standard of care with a combination of drugs—pegylated interferon alpha and ribavirin—causes flu-like symptoms that last for almost a year, and usually cures only 30-40 percent of patients. Essentially, most people figure the treatment is worse than the disease.

Vertex Pharmaceuticals changed the equation back in May. The company won FDA approval for a direct antiviral drug, a protease inhibitor called telaprevir (Incivek), that is added to the usual two-drug combo regimen. By adding the Vertex drug, researchers saw the cure rate boom to almost 80 percent of patients, while cutting the treatment time with the other drugs in half. The Vertex drug also significantly raised … Next Page »

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Seattle-based Groove Biopharma has nailed down another $6 million in venture capital to continue its quest to create a class of drugs that work unlike anything else on the market today.

Groove, the microRNA drug developer founded at the Seattle-based Accelerator in 2008, has secured its Series B financing from the same investors who put $3.9 million into the company in April 2010. The group includes Alexandria Venture Investments, Arch Venture Partners, OVP Venture Partners, Versant Ventures, and WRF Capital. The money is expected to run through the end of 2012, as Groove looks to select its lead drug candidates that it believes can make it through the final preclinical studies needed before the FDA will allow clinical trials to begin.

The company, formerly known as Mirina, is attempting to stake out its position in one of the emerging fields of biology today—microRNA drug development. Groove is one of a handful of startups seeking to make drugs that can inhibit specific stretches of RNA that regulate how networks of proteins are expressed. While many drugs have had success aiming specifically for one specific disease-related protein, scientists are hopeful that by hitting master switches that control broad networks of proteins, they will have more success against complex diseases like diabetes, cancer, and autoimmune conditions.

Years of work will still need to be done before microRNA drugs can generating the kind of medical proof that can only come from large clinical trials. But startups like San Diego-based Regulus Therapeutics, Denmark-based Santaris Pharma, Boulder, CO-based Miragen Therapeutics, and Austin, TX-based Mirna Therapeutics are all looking for their edge in the microRNA drug development field. Groove’s contention is that it has an advantage with what chief scientist David McElligott calls “unexpected benefits in pharmacologic behavior.”

What that means is that Groove thinks its microRNA drugs can be delivered as liquid injections which circulate through the bloodstream, while still reaching the molecular target of interest in specific tissues. There’s no need to create special chemical delivery packages, like lipid nanoparticle capsules, which have made it difficult to efficiently deliver other RNA-based therapies.

“We don’t have to do anything extra to our molecules,” says Carl Weissman, the chairman and CEO of Accelerator. The financing, he says, shows that “this group of investors is very impressed with the progress of the technology, and realize it’s truly differentiated.”

Thong Le, a managing director with WRF Capital, said, “we’re excited about Groove and think the technology has proven to be compelling. The new funding is testament to our strong endorsement of the potential of the technology and the quality of the scientific/development team.”

So far, Groove has shown it can deliver its microRNA molecules both in the petri dish, and in different species of rodents, McElligott says.

That kind of progress in years past might have been enough for Groove Biopharma to raise a big Series B investment in the $20 million range, so that it could leave the nest of Accelerator and become a more independent company. But in an especially tough environment for biotech financing, the company is being kept on a tight leash, with just five full-time employees and a network of contractors doing much of the heavy lifting. Accelerator has sought to adapt to the new reality by housing companies for longer periods of time, and providing its usual business support while the entrepreneurs focus on hitting their scientific goals, Weissman says.

“The way financings are being done these days isn’t to throw tens of millions into a company and let them go. Things are meted out a bit more carefully,” Weissman says.

McElligott said he may do a little bit of hiring with the new financing in hand, but not much. “Our intent is to keep the company as lean as possible, as long as possible,” he says.

And as a self-described “notoriously conservative” scientist, McElligott showed that whatever venture capital validation he just got isn’t going to his head.

“So far, the technology has withstood everything we’ve thrown at it. It’s exceeded my own expectations,” McElligott says. “But you’re only as good as your next experiment.”

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There are big companies out there—Apple, Google, Amazon—that most people today would consider innovative developers of new products. But can a company that seeks to create new drugs get too big to innovate? Is there something about life sciences that requires it to stay small if it wants to create?

The question has been on my mind for a while, but especially over the past few weeks since I read a riveting piece of journalism called “Inside Pfizer’s Palace Coup” by Fortune. This is basically a Shakespearean tragedy of mismanagement at the world’s biggest drug company. Some of these insights have been reported before in other places. But if you care about innovation in life sciences, and wonder why it’s been stagnant despite billions and billions in investment, this is a must-read.

Fortune‘s August cover story describes in detail how former CEO Jeff Kindler was under enormous pressure to lift the company’s earnings and stock price. When the company failed to come up with a follow-on hit to its $10 billion a year cholesterol-lowering drug, and the R&D pipeline didn’t deliver another option, Kindler felt compelled to grow top-line quarterly revenues through the $68 billion acquisition of Wyeth. That created huge organizational headaches that go with integrating teams of more than 100,000 employees around the world. Then there was what Fortune called “micro-micro management,” combined with crippling indecisiveness, second-guessing, messy office politics, and on and on.

There were so many layers of dysfunction in this story, I decided to ask a couple of biotech leaders for their own take on what was wrong. I got some fast, and eager replies when seeking comment, so this story clearly hit a nerve. Josh Boger, the founder and former CEO of Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), tapped out a lengthy reply on his iPad while he was apparently relaxing in the South Pacific.

Here’s what he wrote, when asked if Pfizer got too big to innovate:

“I am a devout believer that size per se has nothing to do with innovation or its absence. Bell Labs was highly innovative for decades as part of one of the world’s largest companies. Merck was highly innovative from about 1950-1990. The key is culture, and you can throw away an innovative culture when you are small or you can drive it away when big. There are certain well-greased decline paths that larger companies often take that lead to stifling of innovation, but these are not inevitable. What the excellent and groundbreaking Pfizer article makes clear is that the arrogant and ignorant mismanagement of the motivations and rewards of the top leadership was at the core of Pfizer’s decline. It wasn’t about the failure of thousands but the failure of a few. Once low emotional intelligence takes hold in the executive suite, value destruction follows. Too often shareholders and advisors ignore or deprioritize the kind of values-based culture in which innovation thrives. They over-control and over-measure and reward the wrong behaviors in favor of short-term objectives. This is the cause of innovation decline, not bigness.”

Kleanthis Xanthopoulos, the CEO of San Diego-based Regulus Therapeutics, and an Xconomist, brought up some similar themes about the cultural problems … Next Page »

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There won’t be any more Mirina vs. Marina stories to kick around here anymore.

Seattle-based Mirina, the privately-held developer of microRNA therapies, has dropped its trademark infringement lawsuit against Bothell, WA-based Marina Biotech (NASDAQ: MRNA). Mirina, a startup at Accelerator, has changed its name to Groove Biopharma, according to Accelerator CEO Carl Weissman.

“Every single time we are out talking to potential partners or potential investors, who have any knowledge of Seattle or the microRNA space, they get confused about which company they are talking to,” Weissman says. “We were sick of the confusion, so we changed our name.”

Regular readers may recall that Mirina filed a trademark infringement lawsuit last August, shortly after the public company mentioned above changed its name from MDRNA to Marina Biotech. Both companies pronounce their names Muh-REE-nuh, just like a place where you dock boats. And they work in similar fields of technology, with drugs designed to fight disease by specifically interacting with RNA or microRNA in cells.

The company formerly known as Mirina staked its claim to the name when it was founded in August 2008. The little Mirina, irked when the other company changed its name to Marina, asked Marina to change its name last summer. Those talks went nowhere, and so the suit was brought.

The lawsuit ended up costing Accelerator about $50,000 in legal fees, Weissman says. Accelerator decided to pull the plug on the case after it was unable to get a judge to issue a preliminary injunction to force Marina Biotech to change its name while awaiting trial, Weissman says. If the case had gone to trial, scheduled for December, it would have cost an estimated $750,000 to $1 million, plus unknown amounts of time and attention on depositions and legal discovery, he says.

Carl Weissman

“It could have gotten very time consuming, and would have cost a ton of money which we’ll put toward pushing Groove forward,” Weissman says.

Marina Biotech’s chief financial officer, Pete Garcia, didn’t immediately respond to a request for comment this morning.

So given all the wrangling, how did Accelerator come up with the new name, Groove Biopharma? The company’s base technology is built on what are called minor groove binders that affect cellular processes. Weissman added that there’s also some symbolism here, in that “the company is very agile and innovative, and we think Groove brings that to mind.”

And, just to be sure, I had to ask one more thing. The new name is available, right?

“That was part of our decision, you better believe it,” Weissman says. “We filed a trademark.”

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Everywhere you look this spring, there are signs of bubbly enthusiasm for technology. Microsoft just paid $8.5 billion for a company that isn’t profitable. Facebook has racked up more than 600 million members around the world. LinkedIn is teed up to go public this week at a valuation of more than $3 billion.

It may be hard to remember, but the history books say there was once a time when broad swaths of the American public got that fired up about biotechnology. I’ve now been writing about the industry for 10 years, and have never encountered that feeling myself. The only biotech industry I’ve ever known is populated by a small group of hard-core specialists. When I venture outside biotech circles and tell people I write about new biotech drugs, devices, and diagnostics, I usually get greeted with a blank look. I’ve learned the best option is either to pass the celery sticks, or change the subject to something popular, like Facebook, or something else I may have in common with the other person, like being a fan of the Green Bay Packers.

There are good reasons biotech lives in such a zone of public indifference. The industry has overpromised and underdelivered since its beginnings in the late ’70s. The investing public has learned, appropriately, to be skeptical of claims about revolutionizing medicine. Drug development is way more risky, requires more money, and takes a lot longer than anybody realized back in the early days. Even when a new biotech drug does make a big difference, it only really affects people with a certain disease, and maybe their family members, so it never enters the vast sea of pop culture awareness (except, perhaps, for Viagra).

All of this collective indifference has consequences for the industry. When an industry shrinks down to a small core of specialists, you naturally see little appetite for new IPOs among generalist investors who control most of the capital on Wall Street. And the lack of an IPO market makes it difficult for biotech companies to gain negotiating leverage they need to sell their companies for a mint to Big Pharma. When biotech fails to captivate the public imagination, it can’t get good returns for venture backers, and companies have to slash their payrolls, and, often, their ambitions.

The return of investor enthusiasm for tech has made me wonder whether there are any signs that biotech might, just might, ride the tech industry’s coattails. The verdict isn’t in yet on that question, but there are some signs of a modest (let me repeat, modest) renewal of interest in biotech.

This year, biotech/healthcare specific mutual funds have seen more capital flowing into them, rather than out, for 16 of the first 19 weeks of 2011, according to a report last week by Chris Raymond, an analyst with Robert W. Baird in Chicago. More than $2 billion of new investment capital has flowed into biotech/healthcare specific mutual funds this year, with more than half of that coming in the past two weeks, Raymond said. Investors apparently have noticed that biotech stocks are doing … Next Page »

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San Diego-based Regulus Therapeutics, the developer of mircoRNA therapies, said today it has named Neil Gibson as its new chief scientific officer. Gibson was most recently the chief scientific officer and oncology therapeutics head at Pfizer’s oncology research unit in La Jolla, CA. Gibson replaces Peter Linsley, who left last month to join Bothell, WA-based AVI Biopharma (NASDAQ: AVII).

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San Diego-based Regulus Therapeutics, the developer of microRNA therapies, said today it has formed a research collaboration with UC San Diego. The partners will seek to develop microRNA therapies that work to block new blood vessel formation (anti-angiogenesis), as a way to treat various diesases, Regulus said in a statement. Financial terms of the deal aren’t being disclosed, although the work is being supported by a UC Discovery Grant, Regulus said.

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A debate over the sustainability of the venture biotech ecosystem continues to percolate, and the San Diego Venture Group is even planning a breakfast debate on the topic. We’ve got the rest of what’s brewin’ in life sciences too.

—San Diego’s Ligand Pharmaceuticals (NASDAQ: LGND) is pursuing a fundamentally different strategy under CEO John Higgins. Instead of trying to develop billion-dollar drugs internally, Higgins said he has acquired 60 new drug candidates through acquisitions over the past three years. He intends to generate more chances to develop successful drugs by keeping Ligand’s costs low and forging partnerships with pharmaceutical companies as soon as possible.

—Antoine Papiernik of Sofinnova Partners in Paris responded to criticism that Avalon Ventures founder Kevin Kinsella leveled against the pharmaceutical industry a few weeks ago. Papiernik says the issues that Kinsella identified as “predatory business practices” are a predictable result due to the weakness of venture-backed life science companies—and the weakness of their VC backers.

—Luke argued in his BioBeat column that Big Pharma isn’t realizing many advantages through its spate of recent consolidations. He said mega-mergers create a lot of internal bureaucratic headaches, and that companies spend months, sometimes years, trying to figure out exactly what they acquired through a merger.

—Vertex Pharmaceuticals (NASDAQ: VRTX) reported that its cystic fibrosis drug, VX-770, is working about as well in children as it did in previous trials with older patients who have the genetic disorder. The Cambridge, MA-based company, which has operations in San Diego, said the drug is intended to improve the function of a defective protein with a specific mutation called G551D.

—San Diego’s Regulus Therapeutics said it got exclusive rights from New York University to develop treatments for a couple of microRNA targets that are believed to be involved in atherosclerosis and metabolic syndrome. Financial terms of the license weren’t disclosed.

—San Diego’s Carefusion (NYSE: CFN) sold its Onsite Services business to affiliates of Seattle-based Frazier Healthcare Ventures without disclosing terms of the deal. OnSite offers medical instrument repair and instrument management programs to hospitals.

—San Diego-based Arena Pharmaceuticals (NASDAQ: ARNA) raised $35.5 million through a PIPE stock offering, a private investment in a public entity. Arena plans to use about half of the proceeds to pay off debt to Deerfield Management that comes due in June 2013. Deerfield, a New York hedge fund manager, also was the investor in the PIPE. It is buying 12.15 million common shares of Arena stock for $1.46 each and 12,150 shares of preferred shares for $1,460 each.

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Regulus Therapeutics, the San Diego-based developer of microRNA therapies, said today that it has obtained exclusive rights from New York University to develop treatments against a couple of microRNA targets (miR-33a and miR-33b) which are thought to have potential to affect athersclerosis and metabolic syndrome. Financial terms of the license weren’t disclosed.

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AVI Biopharma (NASDAQ: AVII), the Bothell, WA-based developer of RNA-based therapies, said today it has hired Peter Linsley as its chief scientific officer. Linsley, 59, had previously been the chief scientist at San Diego-based Regulus Therapeutics, a company formed by Alnylam Pharmaceuticals and Isis Pharmaceuticals to develop microRNA treatments.

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Jeff Bluestone has one of those jobs in academia where you almost expect the guy to wear a flak jacket to work.

As executive vice chancellor and provost, part of the gig is to make sure UCSF’s 2,400 very smart, very strong-willed faculty remain happy, and keep doing world-class work in research and teaching. He also has to make sure ethics rules are being followed. Then there’s the task of trying to prove the institution isn’t just full of ivory tower daydreamers, and delivers on the promise of biomedical research, so that folks in Washington D.C., and the corner offices of Big Pharma, will continue to help pay the bills, especially when budgets are tight.

Bluestone, 57, took on this responsibility about a year ago, joining the new leadership team around Chancellor Susan Desmond-Hellmann, the former president of product development at Genentech. Before taking the job, Bluestone was best known in academia as a world-class diabetes researcher, and as a leader of the well-known Immune Tolerance Network. But Bluestone is also well known in the business world, having served as a scientific advisor to numerous biotech companies over the years, like ViaCyte, MedImmune, Pfizer, Biogen, and XDx. Now through one of the top jobs at UCSF, he has applied his experience in both academia and industry to help craft new institutional partnerships with Pfizer, Sanofi-Aventis, and Bayer.

I have plenty of things I want to ask Bluestone, as he’s one of the featured speakers at Xconomy San Francisco’s big event on the 20-year outlook for Bay Area life sciences, coming up next Wednesday. But before that, I wanted to dive into some issues specific to UCSF that won’t exactly fit into the context of that program. Here are excerpts from our conversation earlier this week, edited for length and clarity as always.

Xconomy: How long have you been at UCSF?

Jeff Bluestone: I’ve been here 10 years. I came from the University of Chicago, which is a great institution with a great tradition of research and clinical care. What’s different here, obviously, is being in this environment. It’s the West Coast, the Bay Area, and it’s full of entrepreneurs. We’re starting companies every week. We’re thinking about how to take our discoveries into drug development. We’re working on novel technologies. It feels and functions very differently out here.

X: Have you noticed much of a cultural change at UCSF now that Sue Desmond-Hellmann has been in there for a little over a year and a half? The impression I get, right or wrong, is that for years UCSF had a reputation of not being friendly to industry, as a difficult place for industry to work with. Do you think something has changed?

JB: I’d say two things. The perception is a misperception. If you think about it, UCSF over the last several decades has been an incredible partner with industry in the Bay Area, from the early Boyer patents that helped start Genentech. We’ve started 50-60 companies over the past 30 years and that’s not counting the 40 or so companies we’ve started in the last couple of years in the incubator. Faculty have been involved with industry, they’ve started companies. But like all public institutions, there has always been a balance of the public good, and making sure to protect the interests of the state, while at the same time allowing investigators to be as entrepreneurial as possible. I think UCSF has struck a good balance.

Sue certainly came to the institution with an understanding … Next Page »

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My head is spinning from the whirlwind of presentations and hobnobbing at this year’s Life Science Innovation Northwest. The regional biotech showcase drew by far the most people in its 11-year history, almost 1,000. More importantly, folks I talked to from outside the region were impressed with the technology here, combined with the community’s can-do spirit.

It could just be that everybody is breaking out of their shells after many years of being beaten down, but whatever it is, there was a really strong vibe at this year’s regional biotech conference.

“You don’t see anything quite like this in the Bay Area,” said Brian Atwood, a managing director at Menlo Park, CA-based Versant Ventures, who I sat next to at lunch on Wednesday.

That’s not to say everything’s peachy. There’s still no IPO market to speak of, the regulatory barriers at FDA are daunting, many VCs are fading away, political and legal uncertainties dog the patent system, and Big Pharma has been, shall we say, stingy in how it values new technologies.

All that said, there are plenty of hungry entrepreneurs out there brimming with optimism about what’s ahead for their companies in 2011. Here are some tidbits I gathered on a handful of interesting small companies at the conference, who often fly below the radar.

—PhaseRx. This Seattle-based company, a spinoff from Patrick Stayton’s lab at the University of Washington, is creating new polymers to help deliver RNA interference drugs to the places they need to go in cells. PhaseRx raised a $19 million Series A venture round in February 2008 from Arch Venture Partners, 5AM Ventures, and Versant Ventures—and has said very little publicly in the three years since.

RNAi is one of the hot fields of pharma R&D, because it has the potential to specifically silence genetic targets of disease that are inaccessible to traditional small-molecule drugs, or protein therapies like antibodies. Delivering these small, interfering RNA molecules has been the primary challenge for this field, since a plain RNAi molecule basically gets chewed up by enzymes and flushed through the kidneys in minutes.

Lots of ideas are percolating to improve RNAi delivery, and one of the more promising is up the road at Vancouver, BC-based Tekmira Pharmaceuticals, which uses lipid nanoparticles to help keep the siRNAs stable in the bloodstream long enough so they can hit the desired target. PhaseRx has taken a different tack, making polymers.

Bob Overell

PhaseRx CEO Bob Overell, a former partner at Frazier Healthcare Ventures, says his company has been working these past three years to show that its polymers can be manufactured in a scalable, reproducible manner—which is vitally important to any prospective Big Pharma partner. The company has shown its delivery system can specifically hit an undisclosed genetic target of interest in mice, that it can make the drug accumulate in tumors, and that anti-tumor responses get better at higher doses.

This year, PhaseRx expects to enter into a “major partnership” with a Big Pharma company to license rights to the delivery technology, Overell said. The company will explore co-development opportunities as well, he said.

One thing Overell didn’t mention in his slidedeck was his existing cash position. He wouldn’t comment on where PhaseRx stands financially, but it sounds like he’s planning for a cash infusion. He said he plans to hire a VP of business development, and … Next Page »

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The notion that Regulus Therapeutics might go public in 2011 sounds like nonsense at first blush. The San Diego-based startup doesn’t have a shred of evidence that says its experimental drugs are safe, or even a little effective, in human beings. And it will be at least another year before the company enters the vital proving ground of clinical trials.

Yet Regulus, the microRNA drug developer that’s barely three years old, just might provide a litmus test on the mood for biotech investment in 2011. It spoke volumes last month when a company as young as Regulus, with a big scientific idea and a couple key partnerships, was able to win a coveted presentation slot at the biggest biotech investing event of the year, the JP Morgan Healthcare Conference.

Even more improbable—about 50 people showed up to hear CEO Kleanthis Xanthopoulos tell the Regulus story at what amounted to the graveyard shift at the conference—1 pm on Thursday afternoon, long after most attendees had flown home. When I met with the tireless chief of Regulus a couple hours later, he still had three more meetings left that day.

“There is a lot of interest in Regulus,” Xanthopoulos says. “People are now beginning to view microRNA as not just a big idea with potential to be disruptive, but something that is much closer to reality than people had anticipated even a year ago.”

Xanthopoulos knows the drill of the IPO process, having been the founding CEO at San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS), which he helped take public six years ago. He wouldn’t answer directly when I asked him if he’s gearing up for an IPO this year, but he did make it clear he’s paying attention to the markets. He pointed out that he noticed that a number of biotech companies went public in 2010, many are lined up to go out this year, and most have drugs in clinical trials that offer lower-risk/reward profiles than Regulus. That means he offers something different for portfolio managers looking to diversify their holdings with a classic biotech swing-for-the-fence story.

Kleanthis Xanthopoulos

“The fact that we were selected to present—it’s not serendipity,” Xanthopoulos says. He adds: “We spent a lot of time giving updates to investors, to bankers, to analysts.”

Alnylam CEO John Maraganore didn’t do anything to dispel the idea of a Regulus IPO. Maraganore has rooting interest, of course, since Alnylam pooled some intellectual property with Carlsbad, CA-based Isis Pharmaceuticals to found Regulus in late 2007—and Alnylam still has a 45 percent ownership stake in the spinoff. Maraganore is also chairman of the board of Regulus.

“If and when Regulus goes public, or gets sold, gee, we will own 45 percent of something that’s really valuable,” Maraganore says. “That’s more money for us, and we won’t have to sell a single share of Alnylam.”

The Regulus story at this point is mostly still about a big idea, and a lot of validation from its pedigree as an Alnylam/Isis spinoff. It has sizable partnerships with GlaxoSmithKline and Sanofi-Aventis. Those transactions have enabled Regulus to grow into a 55-person organization, with several years of cash on its balance sheet, without having to spend time … Next Page »

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After consulting with the Oracle at the Temple of Apollo at Delphi, here are a few of the trends I was told to watch for in 2011…

Two revolutionizing pharmaceutical frontiers are on the horizon—RNA therapeutics and stem cell therapies:

—RNA therapeutics will become a big reality in 2011. Mipomersen, a LDL lowering drug from Isis, completed four Phase III trials and is expected to be approved as the first major RNA therapeutic. There will be more than two dozen clinical trials currently involving RNA therapeutics, including siRNA drugs. In 2011, the microRNA therapeutic platform will mature further and will advance in the clinic.

—Stem cell biology is rapidly advancing toward human patient trials. For example, Geron has just initiated a Phase 1 clinical trial in spinal cord injury using the injection of functional replacement cells manufactured from human embryonic stem cells.

Also, more effective and efficient clinical trials will remain a high priority for the drug industry, and new predictive biomarkers will be key:

—Predictive and companion molecular biomarkers will continue to be extremely important for drug development and clinical trials. Drug companies now understand the model of “one drug fits all” is not effective or economical. The new model is a more personalized approach that tries to identify the right patient cohort for a specific drug. Molecular biomarkers are an approach to identify which patient will respond, or are responding, to a particular drug treatment regimen. There is a possibility that drug developers will not even consider initiating a clinical development program without a biomarker associated with it.

—Biomarkers predictive of disease state and outcomes will be highly sought after.

New genomic technologies will emerge from centralized core facilities and spread into everyday laboratories. For example:

—Deep genomic sequencing using a platform that sits on a lab bench will replace large capillary electrophoresis equipment and potentially even chip-based array technology.

And my final prediction for 2011:

—All biotech companies will be very, very successful :-)…if they make the right choices…and pay homage to the oracle.

[Editor's Note: This is part of a series of posts from Xconomists and other technology and life sciences leaders from around the U.S. who are weighing in with the top surprises they've seen in their respective fields in the past year, or the major things to watch for in 2011.]

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Santaris Pharma, the developer of RNA-based therapies in San Diego and Denmark, said today it has expanded its alliance with Pfizer, which has agreed to pay the smaller company $14 million to continue developing its technology. Santaris is also eligible to receive milestone payments of as much as $600 million, and royalties on as many as 10 products Pfizer may develop over time using its RNA technology. The two companies started collaborating in January 2009, when Santaris struck the deal with Wyeth, which has since merged with Pfizer.

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Lee Hartwell would be excused if he wanted to rest on his laurels at the age of 70 and enjoy the sort of retirement that you read about in personal finance magazines. Instead, he’s now setting out to do the most ambitious things of his career. He wants to change the way the world thinks about personalized medicine, help make the world a more sustainable place, and improve how children learn about science.

“I’m not a person who looks back,” Hartwell says. “I don’t tend to miss things. I look upon each stage as an experience and a learning opportunity. I came into this to learn about medicine, and it was an enormously powerful experience. Now it’s time to move on and use that knowledge.”

Hartwell made his name as a basic scientist; his fundamental discoveries about cell processes in yeast earned him the 2001 Nobel Prize. Then as the president and director of the Fred Hutchinson Cancer Research Center in Seattle, he oversaw 13 years of growth and integration between basic science, clinical practice, and public health. Now that Larry Corey has been tapped as his successor, Hartwell is preparing for his next major challenge: chief scientist of The Biodesign Institute at Arizona State University, starting Oct. 1. He told me about his vision for the next chapter of his career when I recently visited his office in Seattle.

His vision is to create a new wave of precise and predictive diagnostic tests, based on systematic analyses of all sorts of proteins in the blood that could be early warning signs of disease. These tests will enable physicians to answer basic problems, like determining when an emergency-room patient’s chest pain is just garden-variety or an early warning sign for a heart attack or stroke. Armed with that kind of individualized knowledge, physicians would be able to make more informed decisions about patient care, saving resources that are currently wasted.

Many people see this as essential to fixing healthcare in the future, but Hartwell is looking through an even wider societal lens. He talks about how this more efficient model of healthcare will help the world focus resources on global sustainability, like clean air, clean water, or as he puts it, “maintaining the planet in a way that will continue to support human life.” One part of that vision, for which he plans to devote half of his time, will be about improving K-8 science education. Done right, it could help foster a new generation of more scientifically literate citizens who will help support those initiatives.

One of Hartwell’s peers, Leroy Hood of the Institute for Systems Biology in Seattle, said he expects big things from Hartwell’s new mission. Hartwell, he says, “approaches the … Next Page »

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[Updated: 9:53 am Pacific, 8/17/10] Two Seattle-area biotech companies vying for a place among the nation’s elite developers of RNA-based drugs are now battling in court over names that make them sound like they’re in the yachting business.

Mirina Corporation, a startup founded in August 2008 inside Seattle’s venture-backed Accelerator, filed a trademark infringement lawsuit today against the recently-renamed Bothell, WA-based Marina Biotech (NASDAQ: MRNAD). The complaint, which asks Marina to stop using its new name and logo, was filed in the U.S. District Court of Western Washington, in Seattle.

This dust-up could’ve been seen coming a mile away. Mirina (pronounced Muh-REE-nuh, just like a place you dock boats) has been seeking to make an impact the past two years in the bleeding-edge world of microRNA therapeutics. It has had some early success, winning a second round of about $3.9 million in an April financing that included Versant Ventures. The company’s concept is to inhibit specific stretches of RNA that regulate how entire networks of proteins are expressed, which is thought to be a promising strategy against complex diseases like diabetes, cancer, and inflammation. This niche within biotech is populated by a lot of companies that apparently like to borrow the scientific shorthand “mir” in their names, including Boulder, CO-based Miragen Therapeutics and Austin, TX-based Mirna Therapeutics.

While those names are similar enough to make things confusing, Mirina was apparently pushed over the edge sometime after July 22. That’s when Bothell, WA-based MDRNA said it had completed an acquisition of another company and decided to re-name itself Marina Biotech. This is the same company that was once called Nastech Pharmaceutical, and re-named itself MDRNA two years ago when it gave up on nasal-spray drugs, and switched its focus to drugs that specifically interfere with certain stretches of RNA. This company, founded in 1983, has accumulated a deficit of more than $263 million according to its most recent quarterly report, and had a market valuation of about $60 million, based on today’s closing stock price. [Corrected: 9:53 am Pacific, 8/17/10. A previous version said Marina's market cap was $32 million, based on an outdated figure from Yahoo Finance that didn't factor in Marina's acquisition of Cequent.]

[Updated: 7:03 pm Pacific, with comment from Accelerator] Carl Weissman, the CEO of Accelerator, where Mirina is housed, said the most recent name change by Marina is bound to cause confusion. “We requested that they change their name. They refused. You will have to ask them to explain their reasoning. This is an outcome that Mirina does not and did not want, but we feel they have left us no choice.”

Peter Garcia, the chief financial officer of Marina Biotech, said the following: “Marina Biotech respects the intellectual property rights of others as we expect others to respect ours. After careful review, we believe that we do not infringe any trademark rights of Mirina Corporation.”

In the legal complaint, Mirina argues that it has been damaged by the confusion created by the new name “Marina Biotech.” The startup Mirina has been promoting itself to investors, partners, and potential employees with its name for about two years, and now considers its name and logo “valuable assets of the company,” the firm says in its legal complaint.

So when something called Marina emerges with a very similar name, it “deceives, and is likely to deceive, others into believing that Defendant’s services are sponsored by, approved by, or affiliated with Mirina, which they are not,” the complaint reads.

Mirina argues that it told the former MDRNA that it would be creating a conflict if it changed its name to Marina, but the older company went ahead with the name change anyway. Even in just a few weeks since the newly rebranded Marina Biotech revealed its name, Mirina said it has gotten mistaken correspondence intended for the older company.

For what it’s worth, this isn’t really the first time Accelerator has been irritated by a trademark issue. Back in August 2008, Weissman talked about his annoyance at the tendency of various startup incubators around the country to refer to themselves as “accelerators” in a generic sense, like how people refer to a generic tissue as a “Kleenex.” Weissman trademarked the term Accelerator Corporation in 2003 when the venture-backed biotech startup engine was founded.

What do you make of this legal scuffle? Which Mirina or Marina do you think is more likely to prevail? What’s the best way to resolve this dispute? Ideas, suggestions, comments are welcome in the comment space below.

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The people at Seattle-based Accelerator spend their days doing oh-so-serious stuff, like trying to redefine the state of the art in biotechnology.

Yesterday it was time to goof off.

I joined in the Accelerator mini-golf tournament at the Interbay Golf Center. It’s the fourth year of the outing for Accelerator, the venture-backed biotech startup incubator founded in 2003, which brings together employees, members of portfolio companies, and their families. They make it fun. Personally, I enjoyed seeing people who are developing cool things like microRNA drugs, or broadly neutralizing antibodies for HIV, try to hit a golf ball while balancing a cup of water on top of their head.

Rules, if you want to call them that, were explained by Accelerator president David Schubert, the tournament’s judge, jury, and executioner. Teams were selected by drawing names from a hat. This was a best-ball tournament: team with the lowest score wins.

Judge Schubert wore a somber-looking black robe as he dictated his tongue-in-cheek guidelines. The important thing, he stressed, was essentially not so much whether you win or lose, but how you play the game.

“Cheating is encouraged,” Schubert said, deadpan. “Getting caught is discouraged.”

The competition here was for luxurious prizes like a Slim Jim meat stick, or a chance to wear the champion’s green jacket, like the one they give the guy who wins the Masters tournament in professional golf.

Between some clutch swings of my own (not really), I snapped a few photos of the festivities. You can click on the thumbnails to see a larger image. I also couldn’t resist putting on my sports reporter hat (yes, I once covered sports). I just had to do a mock post-game interview with Accelerator CEO Carl Weissman.

Xconomy: How do you think your team performed today, Coach? Any surprises out there?

Carl Weissman: The number of unethical people in this business is really shocking to me. There are people who will do whatever it takes to violate the etiquette of mini-golf. It did surprise me.

X: Were you disappointed?

CW: It’s very disappointing. I think I will have to re-evaluate many of our Accelerator investments.

X: Thanks, Coach. Better luck next year.

And here are a few more photos from Accelerator’s Jessica Burback.

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Febit, a provider of life sciences research products and services, has cut 60 percent of its work force at its headquarters in Heidelberg, Germany, and U.S. office in Lexington, MA, according to a press release. The cuts come as result of the company’s shift away from DNA sequencing services and increased focus on providing tests that find microRNA biomarkers in blood for such uses as drug research and diagnostics development. The company has reduced its staff from 90-100 workers to 30 employees worldwide, said company spokeswoman Martina Schwarzkopf. She said most of the cuts were made in Germany, where the firm has the majority of its staff.

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Regulus Therapeutics has found its second big ally from Big Pharma. The Carlsbad, CA-based company has forged what it calls its most lucrative partnership yet to discover, develop, and someday co-market microRNA drugs with Paris-based pharma giant Sanofi-Aventis (NYSE: SNY).

Regulus, formed in 2008 by Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY]) and Carlsbad’s Isis Pharmaceuticals (NASDAQ: ISIS), will receive a $25 million upfront payment from Sanofi, a $10 million future equity investment, and support for R&D expenses over the next three years with an option to add two more years. Regulus stands to collect as much as $750 million in milestone payments over time if it reaches all the goals of the alliance, making the deal potentially bigger than the roughly $600 million one Regulus struck with GlaxoSmithKline in April 2008.

“This new alliance is indicative of the interest at pharmaceutical companies in new approaches for innovative medicines that have the potential to transform disease,” said Alnylam CEO John Maraganore, in a conference call this morning.

“We believe the future of Regulus is very bright,” said Isis CEO Stanley Crooke.

MicroRNA was only discovered in humans about a decade ago, but has emerged as one of the hottest concepts in biology. The idea behind Regulus and other microRNA-based efforts is to create drugs that can inhibit these specific stretches of RNA, which regulate how entire networks of proteins are expressed. By hitting switches that control protein networks, scientists hope to have success against complex diseases like diabetes, cancer, and inflammation that involve a symphony of multiple genes and proteins. Hitting these networks may have more power against these complex conditions than more traditional approaches that tend to rely on specifically inhibiting a single gene or protein, scientists say.

Exciting as it has all been for scientists, Regulus hasn’t yet brought any drug candidates into clinical trials. Regulus has said it hopes to start its first clinical trial in the second half of 2011. Regulus is racing against a number of competitors have also sprouted up to take advantage of the concept, including Denmark-based Santaris Pharma, Seattle-based Mirina, Boulder, CO-based Miragen Therapeutics, and Austin, TX-based Mirna Therapeutics.

But at this point, Regulus appears to have secured the broadest support from Big Pharma partners. GlaxoSmithKline has actually formed two partnerships with Regulus, the second of which came back in February. The second deal calls for the companies to work together on a microRNA-blocking drug for hepatitis C, while the original deal called for Regulus to work on four inflammatory disease candidates.

The new deal with Sanofi will originally focus on four different targets for fibrosis, including Regulus’ lead program against microRNA-21. Sanofi is also getting an option to expand its use of the technology, which could generate another $50 million to Regulus if it’s exercised. Regulus stands to collect royalties on sales if any of the drug candidates become products, while Sanofi is responsible for 100 percent of the development and commercialization costs of the drugs, Regulus said in a statement.

Regulus has secured about $60 million in cash through its various partnerships and financings, which is enough to operate its business for several years, Regulus CEO Kleanthis Xanthopoulos said on the conference call.

Both Isis and Alnylam will receive $1.8 million payments from Regulus, or about a 7.5 percent cut of Regulus’ $25 million upfront payment. The parent companies, in a separate statement, said they are entitled to a similar percentage on future milestone payments that Regulus could earn from the Sanofi deal.

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