Cambridge, MA-based Alnylam Pharmaceuticals is getting rid of about one-third of its workforce, as it looks to save cash for clinical trials that it hopes will prove the value of its RNA interference drug technology.

Alnylam (NASDAQ: ALNY) said today it’s cutting 33 percent of its staff, as it looks to concentrate its cash reserves on what it believes are its “highest value opportunities” in its pipeline of experimental RNAi drugs. The company didn’t disclose absolute numbers, but it said in its most recent quarterly report that it had 171 employees at the end of September, so if that number is still current, then 56 people are being let go, and about 115 people will remain at the company.

Alnylam has faced deep skepticism among investors in its RNAi platform, after scientists have struggled to effectively deliver the treatments into cells, and Big Pharma companies like Roche, Novartis, and Merck all scaled back their efforts in the field. But Alnylam, still relatively flush with cash from partnerships it struck years ago, has chosen to forge on by internally developing its own RNAi drugs for a group of liver diseases, where delivery is less of a challenge.

“As we effect our ongoing transformation from a platform company to a product company, now is the time to focus our near-term efforts and resources on what we believe to be our highest value opportunities,” said Alnylam CEO John Maraganore, in a statement.

Alnylam said the cuts are expected to save the company $20 million in cash this year. It ended 2011 with about $260 million of cash and investments in the bank, and said it plans next month to disclose its financial forecast for the coming year.

Alnylam has recently released some preliminary data from clinical trials of a couple RNAi programs that it says have emboldened it to push ahead and become a drug developer on its own. The first is for a rare liver disease called TTR amyloidosis, and the second is for high cholesterol, through hitting a biological target known as PCSK9. The company said today that as part of its restructuring, the TTR program, and another for hemophilia, are now its top two clinical priorities.

This isn’t the first time Alnylam has made layoffs. The company cut 25 to 30 percent of its workforce in September 2010 after Novartis ended a collaboration with the company.

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There was a whole lot of life sciences news over the past week. Here’s my roundup.

—Carlsbad-based Life Technologies (NASDAQ: LIFE) said it’s taking orders for a benchtop genome sequencer that can to decode an individual’s DNA within 24 hours and at a cost of roughly $1,000. The company priced its new Ion Proton Sequencer at $100,000 to $150,000, which also represents a dramatic reduction compared with the cost of existing DNA sequencers, and might even entice some practicing physicians to buy into the idea of personalized medicine. A cross-town rival, San Diego-based Illumina, also introduced an improved version of its gene-sequencing machine capable of same-day service, although Forbes’ Matthew Herper says Illumina’s HiSeq 2500 is priced at $740,000.

—A $1 million gift to the Tech Coast Angels from the family of slain TCA member and life sciences investor John G. Watson has enabled the angel group to establish a nonprofit foundation to support entrepreneurism in the San Diego region. A financial adviser, who awaits sentencing following his conviction two months ago, murdered Watson in his La Jolla town home. Watson’s sister, Gillian Ison, told the TCA, “John loved investing, innovation, and the entrepreneurial spirit that he discovered when he arrived in San Diego. We believe that a foundation supporting entrepreneurism is the best way to honor his memory and his life.”

—San Diego’s AnaptysBio said it has established strategic alliances with Novartis and an undisclosed pharmaceutical company. The company plans to use its proprietary technology to discover and develop new therapeutic antibodies with multiple cancer-related therapeutic targets. AnaptysBio said the two deals provide global rights to develop and commercialize a limited number of antibodies against each cancer target that AnaptysBio generates.

—In his BioBeat column, Luke previewed the five myths likely to make the rounds at this week’s JP Morgan Healthcare Conference in San Francisco. You could say that Luke inoculated readers from excessive optimism by writing, “Hope and hype are a couple essential ingredients in this business, and every year both are on display at this conference. Sometimes the wishful thinking can congeal into conventional wisdom.” Is that good, or what?

— Wylie Vale, a Salk Institute scientist, renowned expert on brain hormones, and founder of San Diego’s Neurocrine Biosciences (NASDAQ: NBIX), died on Jan. 3 while vacationing in … Next Page »

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Back in May, Xconomy wrote that two-year-old Foundation Medicine was making friends in high places, and today the Cambridge, MA-based startup did it yet again. Foundation announced that it has teamed with French pharmaceutical giant Sanofi (NYSE: SNY) to identify genetic biomarkers for oncology drug candidates, and potentially develop companion diagnostics that would help match the right patients with the right drugs.

This is Foundation‘s fifth major partnership to date. The company also has research alliances with Celgene (NASDAQ: CELG), Novartis (NYSE: NVS), and Johnson & Johnson (NYSE: JNJ), as well as a partnership it has not disclosed.

Foundation’s technology platform uses high-throughput DNA sequencing to analyze cancerous tissues for alterations in more than 200 genes. The company was incubated by Boston-based Third Rock Ventures, and its founding academic advisors came from the Broad Institute, the Dana Farber Cancer Institute, Harvard Medical School, and the Massachusetts Institute of Technology.

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Another six months have gone by, so it must be time for another deal for Forma Therapeutics.

Sure enough, Watertown, MA-based Forma is announcing today it has struck a partnership to discover new cancer drugs with Germany-based Boehringer Ingelheim. The deal provides $65 million to Forma in a combination of upfront cash and four years’ worth of steady R&D financing. Forma could end up getting as much as $750 million in milestone payments as the drug candidates advance through development in the Boehringer Ingelheim’s pipeline. Further financial details aren’t being disclosed.

The new arrangement with Boehringer Ingelheim means that Forma has diversified with a roster of seven different deep-pocketed organizations that are putting their resources into Forma and its 100-person drug discovery crew. Forma last made news in June when it agreed to collaborate with Genentech on an experimental drug program to interfere with cancer cell metabolism. This new partnership will seek to build on Forma’s efforts to make drugs against molecular targets that have long been considered “undruggable” because they focus on protein/protein interactions. These are complex 3-D structures that are often known to play critical roles in disease processes, but they don’t usually have an obvious binding pocket that a small-molecule chemical compound can latch onto.

The wager is that Forma, through its team of biologists, chemists, and computational modelers, has found some promising new angles of attack against some of the classic cancer targets and some new ones that have promise, says Forma CEO Steven Tregay.

Still sounding like the organic chemist he was trained to be, Tregay is quick to admit that this isn’t totally obvious or some kind of easy thing to do.

Steven Tregay

“Protein/protein interactions are tough, you really need a partner that will go in with you and commit for four years and give it the good old-fashioned college try,” Tregay says. “We found a terrific partner in BI.”

Forma, founded in 2007 with a core group of scientists from the Broad Institute of MIT and Harvard, has been able to pull together a drug discovery team at precisely the moment when most biotech companies are looking to save money by cutting back on early-stage R&D and concentrate on later-stage clinical development of drug candidates that were discovered years ago. Forma has only raised $33 million in venture capital, but found a way to float a sizable R&D operation by relying on support from a network of partners like Novartis, Cubist Pharmaceuticals, the Leukemia & Lymphoma Society, Eisai Pharmaceuticals, and Experimental Therapeutics Center of Singapore, as well as Genentech and now Boehringer Ingelheim.

By stitching together that support network, Forma has now got a drug discovery engine with the capability of running 30 different campaigns a year for high-throughput screening of new small-molecule drug candidates against targets of interest, Tregay says. That’s “about on par” with what many Big Pharma companies have for in-house capability of screening cancer drugs, he says.

While Forma has invested heavily in the early drug discovery efforts, that hasn’t left a whole lot of room for later-stage development capability. Although Forma plans to develop at least some of its own drug candidates in the future, it primarily operates … Next Page »

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Seattle-based Allozyne wasn’t able to go public this year, so it has fallen back on Plan B, tapping its existing venture capital backers one more time in a bid to create more value around its lead multiple sclerosis drug candidate.

Allozyne, which has spent about $50 million since its founding in 2005 and was down to its last $1.3 million in cash at the end of June, has raised an undisclosed amount of new venture capital from its existing investors, according to CEO Meenu Chhabra. The money from Arch Venture Partners, MPM Capital, and OVP Venture Partners will be used to help the company push ahead with a plan for 2012 to move its lead multiple sclerosis drug into the third and final phase of clinical trials normally required for FDA approval, Chhabra says.

“The syndicate is extremely excited that we are on a Phase III trajectory in 2012,” Chhabra says.

Allozyne remains a private, independent company after it pulled the plug on a six-month effort to merge with San Francisco-based Poniard Pharmaceuticals (NASDAQ: PARD), which was supposed to turn Allozyne into a public company. Selling the proposal to shareholders took longer than expected, and the deal ultimately fizzled because Poniard had fallen out of compliance with NASDAQ listing requirements that say a company must have a minimum market capitalization of $15 million. That was the whole point of the transaction—getting a NASDAQ listing in order to tap large funds that invest in public companies—so it no longer made sense to go through with the deal, Chhabra says.

Moving on, Allozyne turned to additional private financing, and continues to talk with partners and mull other options, like another reverse merger or a conventional initial public offering of shares, Chhabra says. The company has about 20 employees, and hasn’t made any staff cutbacks, she says.

Allozyne’s next strategic move depends heavily on an aggressive clinical development plan for its lead asset, AZ01. Allozyne is looking to leapfrog from Phase I trials all the way to Phase III—skipping the usual intermediate step, Chhabra says. The company believes that is possible because it isn’t blazing a completely new trail with a new molecular entity, but rather is taking an existing drug the FDA knows well—interferon-beta—and packaging it in a new way so it can be injected less frequently than the existing products on the market. Weston, MA-based Biogen Idec (NASDAQ: BIIB) has established this quicker-than-usual regulatory pathway with its own version of a long-lasting version of interferon-beta.

The Allozyne proposal, which it plans to make to the FDA at a meeting in early 2012, will be to enroll 700 patients who will be … Next Page »

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This was a great year for Seattle biotech if you measure success through sheer number of acquisitions. But if you prefer to measure the health of an innovation community by the number of exciting new startups it hatches, then this was most certainly a down year.

That’s the mixed bag of returns that I saw when looking back at the news of 2011 from the Seattle life sciences scene. This was the year of the acquisition for Calistoga Pharmaceuticals, Pathway Medical Technologies, Calypso Medical Technologies, SonoSite (NASDAQ: SONO), Amnis, Geospiza, and Pacific Biosciences Labs (the maker of the Clarisonic skin brush.)

While those companies got harvested, not a whole lot of new seeds got planted. The list of notable Seattle biotech startups this year includes Cardeas Pharma, Oncofactor, Blaze Bioscience, Aquedect Neuroscience and Cardiac Insight.

Who else made headlines in Seattle biotech in 2011? Seattle Genetics emerged. Dendreon crashed. Marina Biotech, Omeros, and AVI Biopharma all had years they’d like to forget. Cell Therapeutics somehow managed to stay in business. New leaders emerged at the global health nonprofits, as Alan Aderem moved in to run the Seattle Biomedical Research Institute, Stewart Parker took over at the Infectious Disease Research Institute, and Chris Elias created a vacancy at the top of PATH by leaving for a new gig at the Bill & Melinda Gates Foundation. The foundation’s head of global health, Tachi Yamada, left for a new venture capital gig, and was replaced by a former Novartis executive, Trevor Mundel.

Here’s a company-by-company rundown of the major events at Seattle biopharmaceutical and global health organizations we keep tabs on here at Xconomy. Tomorrow, I’ll follow up with the rundown of rundown of medical device, diagnostic, and others in fields like Bio-IT or Health IT.

Seattle Genetics (NASDAQ: SGEN). This was a transformative year for Seattle Genetics. The company broke through in August by winning FDA approval of its first product, a souped-up antibody for rare lymphomas. The drug validated a new target on the surface of cancer cells, CD30, and provided hard proof that Seattle Genetics’ proprietary chemistry can successfully link toxins to antibodies—a feat that has eluded scientists for 30 years. Big Pharma companies have beaten a path to Bothell to get licenses to the antibody-drug linking technology, and Seattle Genetics has exceeded Wall Street expectations in the early days of its drug rollout.

Dendreon (NASDAQ: DNDN). Dendreon was the star of local biotech in 2010, and this year it fell flat on its face. The company failed to live up to its first full year sales forecast with its immune-boosting drug for prostate cancer, and burned its shareholder base in the process. The company lost more than $3.5 billion in market valuation, and had to cut 500 jobs, largely because it sparked controversy and confusion by pricing its cancer drug too high—at $93,000 per patient. It remains to be seen this year whether Dendreon can pick up the pieces, as the disastrous screw-up of 2011 has created a gaping opportunity for emerging competitors like Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100.

Amgen (NASDAQ: AMGN). The Thousand Oaks, CA-based biotech company, which has significant R&D in Seattle, said at the end of the year that longtime CEO Kevin Sharer … Next Page »

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Japan-based Takeda Pharmaceuticals, which has its cancer drug development operations in Cambridge, MA, said today it is acquiring San Diego-based Intellikine to get ahold of the startup’s portfolio of cancer drugs.

Takeda said it has agreed to pay $190 million upfront, plus another $120 million in future milestone payments, to acquire privately held Intellikine. Through this deal, Takeda is getting its hands on a portfolio of small-molecule drugs that are made to block many of the different variations of a hot target in cancer biology-the PI3 kinase pathway.

This move inserts Millennium:The Takeda Oncology Company into one of the most competitive fields in the cancer drug business, pitting it against GlaxoSmithKline, Roche, Novartis, and Gilead Sciences, among others. Intellikine has long said it differentiates itself through its in-depth understanding of the four common variations of the PI3k pathway, and marrying that biology with a prolific chemistry team that created more than 1,500 different drug candidates to block those various targets. Two drug candidates in particular, dubbed INK218 and INK1117, were singled out in today’s statement by Takeda as having potential to be best-in-class compounds.

“As single agents or in different combinations with novel molecules within our robust pipeline, we anticipate that these assets will be able to deliver transforming therapies to cancer patients,” Millennium: Takeda’s CEO, Deborah Dunsire, said in a statement.

Intellikine, founded in September 2007 with a $12.5 million venture financing, grew out of science from the lab of Kevan Shokat at the University of California San Francisco. The company raised a $28 million Series B venture round in July 2009, from a syndicate that included Novartis Bioventures, Biogen Idec, FinTech Global Capital, and US Venture Partners, as well as previous investors Sofinnova Ventures, Abingworth Management, and CMEA Ventures. In July 2010, Intellikine pulled in another $13.5 million upfront through a collaboration with Cambridge, MA-based Infinity Pharmaceuticals (NASDAQ: INFI).

The Intellikine takeover marks the second time this year that a maker of PI3kinase inhibitors has been acquired. Back in February, Gilead Sciences acquired Seattle-based Calistoga Pharmaceuticals for $375 million upfront, plus another $225 million in potential milestone payments.

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Ariad Pharmaceuticals CEO Harvey Berger has been fielding questions from investors for months about how much toxicity his company’s experimental cancer drug might be causing to the pancreas. The final verdict isn’t in yet, but an interim analysis being released today suggests the drug is safer than most thought it would be.

The preliminary results come from a pivotal study known as PACE, which is projected to enroll 450 leukemia patients on ponatinib, a drug candidate from Cambridge, MA-based Ariad (NASDAQ: ARIA). A previous trial showed that about 12 percent of patients on the Ariad drug developed a serious adverse event known as pancreatitis, when they got doses that ranged as high as 60 milligrams once a day. But Ariad chose to lower the dose for the pivotal study to 45 milligrams once daily, and it has reduced the rate of pancreatitis to 15 cases out of 403 patients (3.7 percent), according to data being posted today on the American Society of Hematology (ASH) website. The findings are based on about two months of follow-up data, and more updated information will be presented at the ASH conference next month in San Diego.

“The most common question I get about this drug is safety with pancreatitis, and this data should put that issue completely to rest,” Berger says. He added that no patients dropped out of the study because of pancreatitis, and that the condition these patients have developed is mild and treatable with fluids.

“It’s completely a non-event,” he says.

Analysts will be combing through this data carefully today, because much of Ariad’s value is based on this drug, which is being positioned for FDA approval just behind its lead drug candidate for bone cancer. The second Ariad product is seeking to treat patients with chronic myeloid leukemia and acute lymphoblastic leukemia that overexpresses what’s known as the Philadelphia chromosome.

Harvey Berger

Novartis has two drugs in this category, including imatinib (Gleevec), the dominant player in the market with $3 billion in worldwide sales, and Bristol-Myers Squibb has a rival product dasatinib (Sprycel). But Ariad is betting that there will be room in the market for its molecule, too. The Ariad drug is designed to block a broader number of variations on the key biological target, BCR-ABL, than the existing drugs do. The hope is that should enable Ariad to treat patients who eventually relapse on the other therapies, and the 10-15 percent of patients who don’t respond at all to existing drugs because they have a mutation known as T315i.

By going after patients who resist existing treatments, and those with the T315i mutation, Ariad’s drug could generate more than $500 million a year in sales, according to JP Morgan analyst Cory Kasimov, in a note to clients on Nov. 1.

The remaining data on safety were consistent with other drugs in this class, Berger says. Researchers are reporting that 15 percent of patients had moderate-to-severe … Next Page »

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One or more notices of upcoming biopharma industry conferences arrive in my email every day. I give their agendas a quick glance before deleting them, as they’re seldom in areas I focus on. The vast majority of presenters are plucked from the ranks of top-tier Big Pharma; there’s a seminar from Pfizer, a speaker from Johnson & Johnson, a lecture from Novartis, a presentation from Merck.

On one level, this makes perfect sense. Why wouldn’t you expect to find representatives from the largest companies in the industry speaking about their work? Many of them certainly deserve to be there. However, I think it’s time for meeting organizers to clear out some of the stale air and introduce some fresher voices with new ideas.

I can’t speak for others, but when I go to meetings, I want to learn something new, gain a wider perspective, and do a little networking. As such, I want to hear the best and the brightest, the insightful stories, the innovative approaches that led to success. A little inspiration thrown in the mix never hurts either. Most of what I’ve learned from Big Pharma’s recent misadventures, however, is what not to do. Do you want to hear about critical issues in biopharma only from companies that have exhibited clear and convincing evidence of repeated failures in key segments of their business? Problems include large numbers of key patent expirations (with few replacement drugs lined up), massive fines for illegal marketing, a steady stream of manufacturing woes, unethical behavior by their CEOs and other leaders, over-promised and under-delivered sales numbers, quality control issues, and a litany of other failures that have caused the public to lose faith in the industry.

So why is it that you see meeting programs filled almost entirely with these presenters? The answer lies in having an understanding of who is putting on these forums. My sense is that the majority of biopharma meetings these days are organized by for-profit companies, with a lesser number of conferences set up by industry trade groups and scientific societies. The primary goal of these for-profit meetings is not to ensure that new and innovative ideas get presented; the principal objective is to fill their cash registers. And how do they facilitate doing that? By loading their agendas with speakers who will fly in for free, don’t ask for or need expense reimbursements, and are likely to bring along an Airbus full of coworkers. Perhaps even more importantly, their companies are also likely to book a large amount of exhibition space and to host various parts of the social program. I suspect that speakers are therefore chosen at many of these meetings not necessarily for the expertise they bring, but for the dollars their companies contribute and the seats they fill. Potential presenters that are not willing and able, either directly or indirectly, to subsidize the cost of the meeting are simply not invited. This practice needs to change.

Big Pharma currently finds itself in less-than-stellar circumstances with pipelines … Next Page »

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Only a couple stories in the past decade have given advocates of personalized cancer medicines much to brag about. There was Genentech’s Herceptin for a form of breast cancer in 1998, and Novartis’ Gleevec for chronic myeloid leukemia in 2001.

But just a few short weeks ago, in August, we saw a flurry of FDA approvals that I believe will go down as a turning point in the history of personalized medicine. Industry has paid lip service to this idea for years, but I’m starting to believe that many in pharma and biotech are getting real about changing their ways, and making drugs that are superbly effective in small niches of patients, rather than settling for mediocre advances for the masses.

Even with an explosion of knowledge in biology over the past 40 years, most of the new cancer drugs produce humbling results. Many drugs shrink tumors for one-fourth or one-third of patients, and nobody knows (or at least not enough have seriously bankrolled efforts to find out) how to pick which patients would fall into the lucky few. These drugs might extend lifespan a couple months, but there’s so much variability it can look like a roll of the dice—sometimes the drug could provide zippo benefit for you, or, it might extend your life a few years.

Two things, though, were certain. Patients would endure some significant side effects, and insurance companies would get some extremely high drug bills.

That’s why this past August was so important, and why people in biotech are still buzzing about what happened. Consider this string of FDA approvals, which the agency granted ahead of its usual legal deadlines, so it could get these life-saving therapies to patients sooner.

—On August 17, Roche’s and Daiichi Sankyo/Plexxikon’s vemurafenib (Zelboraf) was cleared for sale as a new treatment for a deadly form of melanoma that has spread through the body. This drug is tailored to treat about half of melanoma patients with a mutated form of a protein called BRAF. Clinical trials showed this treatment reduced the risk of death by 63 percent in this distinct genetic population, when compared to standard chemo. Researchers are still following patients to see how much longer people can expect to live with the new drug. Importantly, the treatment was approved with a companion diagnostic test that will help doctors determine whether patients should get the drug or not. The diagnostic test costs $150, and the drug will go for the premium price of $56,400 for a six-month course of therapy.

—On August 19, Seattle Genetics (NASDAQ: SGEN) won FDA approval for brentuximab vedotin (Adcetris) for patients with a couple of rare lymphomas—Hodgkin’s disease and anaplastic large cell lymphoma. This is a targeted drug that acts like a “smart bomb” by delivering a potent dose of chemotherapy directly to cancer cells that carry a signature marker known as CD30, while mostly avoiding healthy cells. The treatment was able to significantly shrink tumors for about 75 percent of patients with Hodgkin’s disease that had relapsed, and it produced an even better 86 percent response rate for very sick patients with anaplastic large cell lymphoma. Researchers are still following patients to see how long they are living, beyond the 2-3 year life expectancies they were given at the outset of the trial. Doctors can easily figure out which patients should get this drug based on their CD30 status, before they prescribe a product that is expected to cost about $108,000 per patient on average.

—On August 26, Pfizer showed that even though it made its fortune on mass-marketed blockbuster drugs like Viagra and Lipitor, a significant part of its future will depend on a so-called “nichebuster” in cancer. This one is called crizotinib (Xalkori), which is designed to treat about 3-5 percent of patients with non-small cell lung cancer that overexpresses a protein called ALK. The drug showed it was able to shrink tumors in a majority of patients—50 to 61 percent—and the spread of tumors was halted for close to a year. The responses have been so encouraging for this specific group of lung cancer patients that researchers, again, will have to follow patients for an extended time to get an accurate read on how long it will help patients live. Abbott Laboratories has agreed to sell the companion diagnostic test to determine a patient’s ALK status, so doctors can see which patients should get this $9,600-a-month treatment.

There’s a pattern here. These drugs are going after … Next Page »

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South San Francisco-based Portola Pharmaceuticals has formed a lucrative alliance today with Biogen Idec (NASDAQ: BIIB) to co-develop drugs for autoimmune diseases, seeking to stop the immune system from attacking healthy tissues like a virus.

Under the deal, Portola is granting Weston, MA-based Biogen Idec an exclusive worldwide license to co-develop oral pills that block a biological target called Syk. In return, Biogen Idec has agreed to pay Portola $45 million upfront, with $36 million coming in cash, and the rest from an agreement to buy a $9 million equity stake in the smaller company. Portola is also eligible for $508 million in future payments if the drug program reaches certain development and regulatory milestones, the companies said. Biogen will lead development and the commercial push for the oral Syk inhibitor program in two big markets—rheumatoid arthritis and lupus—while Portola will retain the lead development role for the drug in smaller markets.

Biogen and Portola have agreed to a 75/25 split of the worldwide costs and profits of the drug program.

“This program is an excellent strategic fit with our focus on immunology,” said Biogen Idec CEO George Scangos, in a statement. “Portola is a high-quality company with a great track record in small molecules, and we have crafted a collaboration that truly is a win for both companies. We will now focus on a thoughtful and aggressive program to fully explore the potential of Portola’s compounds against this very interesting target, with the goal of creating an effective, safe and convenient oral treatment for patients with debilitating autoimmune and inflammatory diseases.”

Biogen Idec is the world’s largest maker of drugs for multiple sclerosis, a neurodegenerative disease in which the immune system goes haywire and attacks the fatty coating around nerve fibers. Last year, it scrapped a number of programs in its pipeline, including cancer drugs, to focus more on what it considers this strength.

Portola’s lead drug candidate is still at the earliest phase of clinical development, with a code name of PRT062607. Portola has raised a ton of venture capital in its history, around $220 million as of July 2009. Its backers include Abingworth Management, Advanced Technology Ventures, AllianceBernstein, Alta Partners, Brookside Capital, CIDC Consulting, D.E. Shaw, Frazier Healthcare Ventures, Goldman Sachs, IBT Management Corp., MPM Capital, Prospect Venture Partners, Sutter Hill Ventures, Teachers’ Private Capital, T. Rowe Price, Apothecary Capital, Janus Capital and PAC-Link BioVentures.

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After spinning out a startup last year to develop next-generation vaccines, San Diego’s Synthetic Genomics says today it has joined forces with a Mexican investor to form Agradis, an agricultural biotech that will seek to commercialize its advances in plant breeding and genomics.

With $20 million in Series A financing, Agradis is intended to accelerate the advances Synthetic Genomics has made with bacteria and other microbes that provide nutrients and disease resistance for the root systems of plants. Alfonso Romo, the Mexican businessman and investor who was Synthetic Genomics’ initial lead investor, is a co-founder of the startup, along with J. Craig Venter, the genomics pioneer and chairman and CEO of Synthetic Genomics.

“We’ve been having these discussions for a very long time,” Venter told me this morning. “With the success in finding the microbes, we decided to put all the discussions together.”

Synthetic Genomics (SGI) has amassed a huge collection of these microbes and has been screening and characterizing their activity, Venter explains. The benefits can be conveyed to plants by simply coating the seed with the microbes, he says, and a number of field trials are underway in the United States.

“The reason we’re doing this as a spinout instead of keeping it at SGI [is that] with all the different areas that we’re working in, this allows the investors to invest just in the agricultural portion,” says Venter. “As you saw last year, we spun out the vaccine company. We have so much diversity because our technology works in so many spaces.”

Agradis investors include Plenus, Romo’s investment and operating company, Synthetic Genomics itself, and Draper Fisher Jurvetson, among others. Synthetic Genomics has focused mostly on developing algae-based biofuels and bio-based chemicals since the company was founded. It has been working with Exxon Mobile to make a biological substitute for petroleum-based crude oil, with BP on ways to use microbes to alter fuel processes, and with Novartis and others to advance the rapid development of new vaccines.

The goal for Agradis is twofold: to produce superior castor, sorghum, and other cash crops through genomic advances and to develop plant-associated microbes in ways that can protect and foster plant growth. The startup has licensed extensive germplasm collections, breeding programs, and plant cultivars from Plenus, and genomics expertise from Synthetic Genomics.

“The first part of this is using microbes to … Next Page »

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Foundation Medicine has added a couple more big names to its roster of investors and partners. The Cambridge, MA-based company, seeking to develop personalized cancer diagnostics based on new understanding of genomics, said today it has added Kleiner Perkins Caufield & Byers and Google Ventures to a Series A financing that now totals $33.5 million.

Boston’s Third Rock Ventures incubated the company and led the company’s original $25 million Series A round that was announced back in April 2010. Besides adding cash, Foundation is picking up more expertise for its board from Kleiner partner Brook Byers—a longtime champion of personalized medicine—and Google’s Krishna Yeshwant.

The new financing for Foundation Medicine comes on the heels of a busy year, in which the company has presented some preliminary data at medical meetings, hired a new CEO in GE Healthcare vet Michael Pellini, and struck partnerships with Celgene (NASDAQ: CELG) and Novartis. The idea for the company is to come up with a more comprehensive analysis of an individual cancer patient’s tumor to see what combinations of mutations might be driving the malignancy, and, therefore, which treatments might have the best chance of working for the individual. The effort is based on the tools of next-generation DNA sequencing, which has made it possible to sequence entire human genomes for less than $4,000.

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This week’s New England life sciences news was dominated by area drugmakers.

—Healthcare companies accounted for more than 75 percent of the $156.5 million brought in by Massachusetts startup companies in August, according to CB Insights FundingFlash. The overall monthly funding total has been shrinking since June, though.

–Cambridge, MA-based prostate cancer drug developer Tokai Pharmaceuticals wrapped up $23 million in Series D financing, bringing its total funding pot to $57 million. The new money comes from existing Tokai backers Novartis Venture Fund, Apple Tree Partners, and angel investors, and will go to Tokai’s drug galeterone (TOK-001), as it moves into the second of three phases of trials required for FDA approval.

—Eleven Biotherapeutics, a Cambridge-based developer of protein drugs, announced it was bringing on biotech veteran Abbie Celniker as its new CEO. Celniker, who has held roles at Novartis, Millennium Pharmaceuticals, Wyeth, Genentech, and most recently, Taligen Therapeutics, says she expects Eleven to enter its first clinical trial by the second half of 2012, for a drug candidate that’s being developed as a treatment for dry eye and other topical inflammatory conditions like allergies or pink eye (conjunctivitis).

—Cambridge-based Ariad Pharmaceuticals (NASDAQ: ARIA) moved into a human clinical trial with its third cancer drug, AP26113, a treatment for patients with solid tumors, particularly non-small cell lung cancer. The initial phase of the trial, which is designed to help Ariad determine dosage and tolerability of the drug, will involve 30 to 50 patients.

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There’s a running joke at Cambridge, MA-based Eleven Biotherapeutics. It shouldn’t be a surprise, since the company draws inspiration for its name from the 1984 rock mockumentary “This is Spinal Tap” in which one of the dim-witted members of the band cranks up the amplifier to 11, because that’s louder than 10.

At Eleven Biotherapeutics they aren’t trying to be dumb like the actors in the movie, but in true life-imitates-art fashion, they half started cracking wise about how every hire needs to be an “11″ and every new drug candidate needs to be an “11.” So now that Eleven has hired a new CEO and started talking publicly for the first time about its lead drug candidate, you can guess how they are rated internally.

I had one burning question for Eleven’s new CEO, Abbie Celniker, as she was getting started. Was she a fan of “This is Spinal Tap” before she interviewed for the job?

“I definitely was, it’s one of the criteria for getting hired,” she joked. “If you haven’t seen all of the Christopher Guest movies, I’m not sure you can get into this company.”

Kidding aside, a lot has happened at Eleven since I wrote about its big $35 million Series A financing in February 2010. The company, founded by Third Rock Ventures and Flagship Ventures, was led in its early days by Third Rock’s Mark Levin as CEO and fellow partner Cary Pfeffer, as chief business officer. Now that some of the early work is done, Levin and Pfeffer are handing over day-to-day leadership to Celniker and Chen Schor, a former vice president of business development at Israel-based Teva Pharmaceutical, who will be Eleven’s new chief business officer. Levin and Pfeffer will stay on the board.

Celniker is a well-known biotech veteran, with a track record in various leadership roles in R&D and business operations at Novartis, Millennium Pharmaceuticals, Wyeth, and Genentech. Most recently, she was the CEO of Cambridge, MA-based Taligen Therapeutics, which was acquired in January for $111 million by Cheshire, CT-based Alexion Pharmaceuticals.

The new challenge at Eleven will be to incorporate a number of technologies for designing various types of protein drugs that can have the precisely intended effect on a given biological target, Celniker says. There’s no single technology platform, but rather a variety of tools that Eleven uses to modify proteins to make them more soluble in the bloodstream, last longer, or get absorbed in an ideal way, Celniker says. The technology should make it possible to swap out certain regions of a protein drug’s structure that might be a liability. And by gathering more information about the biological target and how a given protein drug interacts with it, Eleven is hoping to boost its odds … Next Page »

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[Updated with Merck comment 1:25 pm ET, 9/16] Just about all the major pharmaceutical companies have their own venture capital funds to invest in biotech startups, and now one of the real biggies, Whitehouse Station, NJ-based Merck, has joined the club.

Merck (NYSE: MRK) has established the new Merck Research Venture Fund (MRVF) with $250 million to invest around the world, according to a report today by In Vivo, an industry publication. The new venture operation is led by Merck senior vice president David Nicholson. The company also has set up a separate Global Health Innovation Fund with another $250 million.

[Updated Merck comment.] “Presently, MRVF is making strategic LP investments in a small number of geographically diverse life-science venture firms. While we expect to make direct investments in biotech companies in the future, we are not yet doing so,” says Merck spokesman Ian McConnell.

Big Pharma companies, as everyone who follows the industry knows, are struggling like crazy to come up with innovative new products to replace aging blockbusters that are losing patent protection from generic competitors. That need has helped create an opening in recent years for Big Pharma VC firms to invest in biotech startups, particularly as traditional biotech VC firms have been stuck by the lack of an IPO market to provide a reward for their efforts. Pfizer, GlaxoSmithKline, Novartis, Eli Lilly, Roche, J&J, and AstraZeneca have all found themselves in position to fill some of the void in early-stage biotech investing the past few years.

According to In Vivo, the Merck Research Venture Fund will enable Merck to invest in early-stage startups, offer its scientists up as advisors to the smaller companies, and provide Merck’s dealmakers with an inside track in negotiations when it’s time for the small company to strike a co-development partnership.

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The writing was on the wall at Dendreon for weeks, but that didn’t make the bad news of layoffs any easier to stomach.

—Seattle-based Dendreon (NASDAQ: DNDN) said this past week that it is cutting 500 jobs, including about 100 locally, as it seeks to conserve cash in the wake of its sales and marketing stumble. Nothing much more to say other than this hurts those people, especially in a tough job market.

—The new head of global health over at the Bill & Melinda Gates Foundation was named this week, and it’s Trevor Mundel. He’s a former Novartis executive, so his pedigree is similar to that of his predecessor Tachi Yamada, who now works in venture capital with Frazier Healthcare Ventures.

—A couple of sizable financings crossed my desk this week. Seattle-based Theraclone Sciences, the company working to discover new antibody drugs, raised another $10.6 million. And across the lake, Bellevue, WA-based RF Surgical pulled in $12 million for its technology that’s supposed to help surgeons avoid leaving behind sponges inside patients.

—Remember Bothell, WA-based Liposonix, the developer of the ultrasound body sculpting machine? It has been pretty quiet in the three years since it was acquired by Scottsdale, AZ-based Medicis Pharmaceutical for $150 million. But now Liposonix has a new corporate parent in Hayward, CA-based Solta Medical, which paid $35 million in upfront cash and near-term milestones to see what it can do with this technology.

—Seattle-based VentiRx Pharmaceuticals is now just that, Seattle-based. The company said it is closing down its San Diego operations and consolidating its work here around an immune-boosting compound for cancer. Co-founder Rob Hershberg has moved up to the role of president, and remains the chief medical officer.

—This week in BioBeat I tried to show what biotech pros are missing by avoiding the daily conversation on Twitter. So far, at least one local CEO, PhaseRx’s Bob Overell, agreed to give it a shot, and you can follow his comments at @Robert_Overell on Twitter. If there’s more interest among our readers, I might be willing to help with a free Twitter tutorial at one of the local coffee shops. Ping me the old-fashioned way—ltimmerman@xconomy.com—if you’re interested.

—Seattle-based Oncothyreon (NASDAQ: ONTY) said this week that CEO Bob Kirkman is taking a temporary medical leave of absence, and will be replaced on an interim basis by chairman Christopher Henney. Kirkman is expected to return to work in the fourth quarter, a company spokeswoman says.

—Lastly, Bob Nelsen of Arch Venture Partners unloaded on the elected officials in Washington D.C. who voted in favor of a patent reform bill that he says will hurt the little guy inventors out there. There’s a really good thread of comments at the bottom of this post, which I’d encourage you to check if you haven’t already.

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The Bill & Melinda Gates Foundation has a new boss for its multi-billion dollar global health division. Trevor Mundel, the former global head of development for Novartis, the Switzerland-based pharmaceutical giant, will start at the Seattle-based foundation on December 1, according to a statement.

Mundel will oversee the foundation’s $14.7 billion global health grant portfolio that seeks to have an impact against a variety of scourges like HIV, tuberculosis, and malaria. Mundel replaces another Big Pharma veteran, Tachi Yamada, a former head of R&D at GlaxoSmithKline who spent five years overseeing the foundation’s global health work until he stepped down in June.

“We are very pleased that Dr. Mundel has agreed to lead our global health program,” said Bill Gates, co-chair of the foundation, in a statement. “He brings tremendous scientific and medical credentials, in the lab and in the clinic. We look forward to working with him to help improve the health of people in the world’s poorest countries.”

At Novartis, Mundel oversaw some 140 clinical projects, a budget of $3 billion, and more than 7,500 employees. He is also on the boards of the Genomic Institute of the Novartis Research Foundation, and the Novartis Venture Fund, the Gates Foundation said in its statement.

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OK, I had to ask: Did Ellen Rubin tell Amazon’s Jeff Bezos to piss off?

“No comment,” says Rubin, with a laugh.

We were talking about her startup, Burlington, MA-based CloudSwitch, getting bought by Verizon (NYSE: VZ) yesterday for an undisclosed sum—and being integrated into the New York City telecom giant’s Terremark division. It turns out CloudSwitch had received other acquisition offers earlier this year, Rubin says. Since the startup had developed its software, which bridges corporate computing systems and outside cloud services, to work with both Amazon and Terremark’s clouds, I had to wonder if Amazon (which also has a competing offering) might be a jilted suitor.

Without naming names, Rubin, the co-founder and vice president of products for CloudSwitch, says other potential acquirers would have folded her startup into a technology group, or turned CloudSwitch into a feature, or made it work only for proprietary clouds. Instead, the startup’s software will continue to support Amazon and other clouds in an open arrangement. “The opportunity with Verizon was just different,” Rubin says. “The companies that have bigger global reach are the [telecommunications] service providers.”

CloudSwitch’s entire 30-person team is joining Verizon’s Terremark IT services subsidiary, a 2,500-person organization with offices and data centers stretching from Florida, Texas, and California to Brazil, England, and Turkey. The Burlington office will remain intact and will probably expand, the companies say. Verizon isn’t saying anything specific yet about new hires or headcount, but it clearly values CloudSwitch for its software expertise and leadership, and views the firm as a beachhead for software talent in Boston.

“The goal is to grow this and make this a hub,” says Chris Gesell, Terremark’s chief innovation and strategy officer. “Terremark is a growth engine for Verizon.” Gesell says that from his perspective, CloudSwitch has the “simplest to use, most mature, and most elegant” technology out there among many competitors.

Yet the deal would have been unlikely until recently. In January, Verizon acquired Terremark for $1.4 billion, signaling its big move into cloud-based services. As Rubin and others put it, Verizon is not just a phone company anymore—now it’s trying hard to be about software and services for businesses.

But did CloudSwitch sell too early? After all, this is a three-year-old startup with only … Next Page »

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Foundation Medicine, a Cambridge, MA-based cancer diagnostics startup, has raised $10 million of a targeted $20.5 million round of equity funding, from one investor, and SEC filing reveals. Last year Foundation announced it had raised the first part of a $25 million Series A financing led by Third Rock Ventures. Earlier this year the startup added former Clarient president Michael Pellini as its new CEO and announced deals with Celgene and Novartis.

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