NanoString Technologies, the maker of a machine that lets scientists digitally analyze how genes are turned on or off in a tissue sample, just won a glowing endorsement from one of the biggest names in biology—Eric Lander of the Broad Institute of MIT and Harvard.

The Seattle-based company has nailed down a three-year research collaboration with the Cambridge, MA-based Broad Institute to look at how networks of hundreds of genes work in concert to form immune defenses against foreign invaders. Financial terms aren’t being disclosed, but NanoString has sold the Broad a couple discounted nCounter machines that normally retail at $235,000 apiece, and will provide proprietary reagent chemicals to operate them, according to acting CEO Wayne Burns. In return, NanoString gets certain intellectual property rights from the collaboration, advice on how to improve its tool, and some golden word of mouth.

NanoString, a private company founded in 2004 with technology from the Institute for Systems Biology in Seattle, has been building stronger ties to the Broad over the past year as people there have started using one of the first commercially available machines, Burns says. The mounting enthusiasm at the institute was instrumental in helping NanoString nail down a $30 million venture capital round in June. The round was led by Clarus Ventures, which has an office just a couple blocks from the Broad. Word has spread to the point that 15 researchers at the Broad are now involved in 20 separate collaborations to see whether the NanoString technology can yield biological insights that couldn’t realistically be attained with competing instruments, Burns says.

“NanoString offers the ability to look at hundreds of genetic markers across many samples at relatively low cost and with high sensitivity. They have developed exciting technology with potential applications to a wide range of scientific problems,” said Lander, the director of the Broad Institute, in a NanoString statement. “We look forward to working together to explore new ways of using of this technology.”

That kind of endorsement is sure to carry weight in the biomedical research community, and can’t hurt a fledging company trying to increase sales. “If you’re in the industry you know exactly who Eric Lander is, the reputation he has, as well as that of the Broad. We have the best of the best endorsing our technology,” Burns says.

For those who are new to the NanoString story, the idea is to allow researchers to look at a large number of genes, with digital precision, to see the extent to which they are turned on or off in a given sample. It’s the sort of technology that’s supposed to help researchers do …Next Page »

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Just when I thought venture deals, especially for software and tech companies, had headed south for the winter (or longer), the Northwest erupted with a slew of financings in the past week.

—But first, some serious biotech. Kirkland, WA-based OVP Venture Partners led a $30 million Series B round for Fate Therapeutics, a San Diego-based stem cell company with ties to the University of Washington, as Luke reported. Existing investors Arch Venture Partners, Polaris Venture Partners, and Venrock Associates also participated in the funding, as well as three strategic corporate investors—Astellas Venture Management and Genzyme Ventures were named.

—Seattle-based DocuSign, a maker of software to automate and control the process of electronic signatures, received a strategic investment from Second Century Ventures, the VC fund of the National Association of Realtors. The funding amount was undisclosed, but the money will be used to accelerate and extend DocuSign’s efforts with real estate customers.

—Beaverton, OR-based Avnera pulled in an $8 million equity round from undisclosed investors, according to a regulatory filing. The company’s previous investors include Bessemer Venture Partners, Redpoint Ventures, Jafco Ventures, Intel Capital, and DAG Ventures. Avnera was founded in 2004, and designs novel chips for wireless audio applications.

—Seattle stealth startup Doxo raised $5.25 million in equity financing, according to a regulatory filing and media reports. The investors were not disclosed, but David Feinleib of Mohr Davidow Ventures was listed on the SEC form as a director.

—Bellevue, WA-based Enroute Systems, a developer of software that helps companies manage their parcel-shipping logistics, closed a Series A funding round worth $810,000 from Keiretsu Forum, Zino Society, Puget Sound Venture Club, and angel investors. Next up, Enroute is looking …Next Page »

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Fate Therapeutics, the San Diego-based company on a quest to develop techniques that make stem cell research practical for the pharmaceutical industry, has raised $30 million in a Series B round of venture financing.

Kirkland, WA-based OVP Venture Partners led the deal, which included the three venture firms that co-founded the company two years ago—Arch Venture Partners, Polaris Venture Partners, and Venrock Associates. This time, Fate also drew investment from three strategic corporate investors, two of whom are being named—Astellas Venture Management, and Genzyme Ventures. The company has now raised a total of about $50 million since inception, according to Scott Wolchko, Fate’s chief financial officer.

The round is the latest step forward for Fate, which was founded by a band of high-profile scientists from Harvard University, the University of Washington, Stanford University, and The Scripps Research Institute. Fate generated some scientific buzz last month when one of its co-founders, Sheng Ding of Scripps, found a way to use three conventional small-molecule compounds to coax adult human cells into an embryonic-like state. That’s important not only because it circumvents the ethical controversy around destroying embryos for research, but it also paves the way for “industrialized” stem cells. The Ding lab’s method is twice as fast and 200 times more efficient than previous techniques of creating induced pluripotent stem cells—with potential to turn into any type of cell. The Fate method also sidesteps the use of viruses and genetic modification of cells that has been one of the main disadvantages of the prior methods—and a big reason why pharma has steered clear.

Fate’s hope is to keep building enough momentum for its stem cell production technology that it will become a useful tool for creating models of disease in the lab, and for toxicology testing to see which drug candidates have the best odds of success. Further in the future, it hopes to create regenerative medicines to replace damaged tissues in the body.

While that capability is getting built up, and Fate is seeking pharmaceutical partners to help pay the bills, the company is also pushing ahead with its own proprietary drug candidate in clinical trials. The drug, FT-1050—a conventional small-molecule chemical compound that isn’t nearly as risky as an injectable cell therapy—is designed to help improve the effectiveness of adult stem cell transplants for blood cancers like leukemias and lymphomas.

“This is a company that has performed exactly as planned,” says Carl Weissman, managing director with OVP, who is taking a board seat in connection with the financing. “This management team is rounding out into a very sharp and effective group. It made sense for us to double down.”

OVP invested a small amount in Fate’s Series A round, and by betting bigger this time …Next Page »

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Beverly, MA-based Hamilton Thorne, which makes laser equipment used in stem-cell research labs and fertility clinics, has raised $2.2 million in a private stock placement and debt conversion deal, according to an announcement released last week. A the same time, the company, which recently completed a merger with Ottawa, Ontario-based Calotto Capital, will soon be listed on the TSX Venture Exchange, a Canadian stock exchanged headquartered in Calgary, Alberta. Meg Spencer, Hamilton Thorne’s CEO, said in a press release that joining the TSX will give the company—which had previously raised about $13 million in venture backing from Brook Venture Partners and StarLake Capital—access to “a larger pool of capital to further advance our commercialization strategy.”

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Who are the innovators who will help keep the San Diego region’s life sciences sector vibrant in the years to come? Which of the emerging ideas here will help transform the way we treat and prevent disease around the world? And how is the San Diego region poised to work with leaders from other hubs to stay on the leading edge of science and business?

These are some of the questions we plan to explore at the next Xconomy Forum we’re organizing in San Diego for the afternoon of December 14: “Tomorrow’s Biotech—Innovators and Innovations.” I’m thrilled to announce today that Xconomy has assembled a world-class group of life scientists and entrepreneurs to discuss where this is all headed.

The keynote speakers include David Baltimore, the Nobel Laureate and Caltech biology professor, and John Maraganore, the CEO of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY), a leader in the emerging field of RNA interference treatments. Both have strong ties to the San Diego biotech scene as members of the board of directors at Carlsbad, CA-based Regulus Therapeutics. We will also hear presentations from three venture-backed startups in San Diego with the potential to shake up their respective fields of medicine—Fate Therapeutics in stem cells, Regulus in the microRNA field, and Intellikine, which is pursuing one of the hottest targets in cancer biology.

The third and final component of the program will feature a panel discussion with some of the brightest young scientific entrepreneurs at San Diego’s research centers. They are Sheng Ding, a professor of chemistry at The Scripps Research Institute; Trey Ideker, the chief of genetics at the UCSD School of Medicine; and Peter Kuhn, an associate professor of cell biology at Scripps. All have their eyes on new ways of bringing their research to commercial reality. This panel will be moderated by a veteran biotech entrepreneur and venture capitalist, David Kabakoff, executive-in-residence at Sofinnova Ventures in San Diego.

The event will take place from 2 pm-6:30 pm on December 14 at Calit2’s Atkinson Hall, on the UC San Diego campus. You can find more information about how to register by clicking here. There will be time for networking before and after the event. I will personally be coming down from Seattle for the forum, and I look forward to seeing many of you there.

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It may be that TEDMED founder Richard Saul Wurman is the Brett Favre of emcees, or perhaps he’s like Al Pacino in Godfather III, who proclaims in exasperation, “Just when I thought I was out—they pull me back in!”

But after a five-year hiatus, TEDMED has returned this week (opening last night at San Diego’s Hotel del Coronado), and Wurman, who is both the TEDMED chairman emeritus and lead master of ceremonies, stepped back onstage for what must be a familiar role. He is the folksy glue that brings the sometimes-esoteric show back to Earth as leading thinkers in medicine, health care, and life sciences deliver 15- to 20-minute talks about their work and big ideas.

So, for example, after J. Craig Venter, a leader in genomic sequencing and synthetic biology, ended his presentation last night, Wurman took the stage and reassured the crowd by saying, “I’ve heard Craig speak a number of times. And I don’t understand it all…”

The four-day TEDMED symposium, which costs $4,000 per person to attend (and is sold out), follows a format similar to the first conference in Technology, Entertainment, and Design (TED) that Wurman established in 1984. Chris Anderson acquired rights to that TED business in 2001 and Boston entrepreneur (and Xconomist) Marc Hodosh got rights earlier this year to TEDMED and its focus on health care. Wurman told us he had agreed to help Hodosh out this year, and between sessions he often helped the audience by identifying themes they would likely see emerging in presentations to come.

“Maps are also patterns, and patterns are the threads that run through this conference,” Wurman said. “They are the constructive tissue that holds ideas together.” Those emerging ideas include:

—J. Craig Venter, the co-founder and CEO of San Diego-based Synthetic Genomics, said about 21 million genes have been discovered since the first genome was sequenced in 1995—“and over 20 million have been taken from the deck of my sailboat.” (Venter’s sailboat, the Sorcerer II, embarked from San Diego in March on an expedition to collect and sequence marine organisms.) Venter also outlined synthetic biology research that aims to transplant a chromosome from one cell into another cell—and turn it into a different species. Venter says, “I think it’s possible we’ll have the first species powered by a synthetic chromosome by the end of this year, although that’s something I’ve been saying now for two years.”

—Anthony Atala, a urologist and director of the Wake Forest Institute for Regenerative Medicine, showed how researchers are using “smart biomaterials” to patch damaged organs and grow new heart valves, blood vessels, liver, muscle, skin, ears, and even fingers. Still, Atala said, “90 percent of patients on transplantation waiting lists are waiting for kidneys.” He also noted that the organs with lots of blood vessels—the heart, liver, and kidney—are the hardest to grow.

—Bill Davenhall, who leads the health and human services marketing team at ESRI, the Redlands, CA, company that specializes in geographic information systems, argued for the creation of new programs and training in “geo-medicine”—and for ensuring that GIS data can be included in electronic health records. He demonstrated his point with a map that shows geographical areas in mid-Atlantic and Midwestern states where heart attacks occur far more frequently than other parts of the country. Davenhall, who said he suffered a heart attack in 2001, associates environmental factors in the places where he has lived with the higher incidence rate. He grew up with high levels of sulfur dioxide in Scranton, PA, before moving to Louisville, KY, with high levels of chloropene and benzene. He now lives east of Los Angeles in Redlands, CA, which has high levels of airborne particulates, carbon dioxide, and ozone. He told the audience, “Doctors never ask me about my place history. But if I wanted to have a heart attack, I’ve lived in the right places.”

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This week we were jamming on our big event on the 20-year outlook for Seattle’s life sciences hub, but we still found a way to squeeze in a lot of news and features.

—Biotech pioneer Chris Henney offered an insightful and entertaining talk about how to invest in biotech at a recent speech before the CFA Society of Seattle. I included his six tips on how to spot a winning biotech in last week’s roundup, but that piece didn’t include the sequel on the five red flags investors should watch out for. The In Vivo Blog did a fun follow up on this story, too.

—If Seattle wants to grow as a biotech hub over the next 20 years, it could use a few more bars, and less university red tape. That’s according to Stephen Friend, the Rosetta Inpharmatics founder who’s now trying to ignite an open source movement for biology, in comments he made at the Xconomy event Monday evening on the 20-year outlook for Seattle life sciences. I summed up some of the other great insights I heard from his fellow panelists Ben Shapiro and Steve Gillis, and also posted a big photo gallery here that captured the energy in the room.

—Kirkland, WA-based Pathway Medical Technologies is one of the big success stories of the past year in the local medical device community, but even it has had to endure a few lessons from the school of hard knocks. CEO Paul Buckman offered a candid look at how the company is adjusting to the new reality of the medical device business.

—Amgen (NASDAQ: AMGN), the giant biotech company with 900 employees in Seattle, said its experimental drug for osteoporosis, denosumab (Prolia), was delayed by FDA requests for more information. That didn’t seem like much of a big deal at first glance because the FDA didn’t ask for any new clinical trials, and it has been missing a lot of deadlines lately. But then Amgen said yesterday in its earnings release that the FDA is asking for more clinical trials to demonstrate safety of denosumab for cancer patients. Ouch.

—Sonosite, the Bothell, WA-based maker of portable ultrasound machines, got a lift this week when it settled all of its patent litigation with General Electric over ultrasound devices that weigh less than 10 pounds. Sonosite (NASDAQ: SONO) will get $21 million upfront and an undisclosed royalty on sales of GE’s portable ultrasound machines until 2016.

—Seattle-based Calistoga Pharmaceuticals released some preliminary, but encouraging, results over the weekend from a small leukemia trial. The company’s experimental drug was able to shrink tumors for 29 percent of patients in the trial, but based on some secondary findings, the company thinks it might be able to do much better than that in combination with other treatments, or with longer follow-up.

—San Diego-based Fate Therapeutics, the company co-founded by a group of top stem cell scientists that includes Randall Moon of the University of Washington, announced over the weekend that it has taken a big step toward “industrialized” production of stem cells for drug discovery. The advance for inducing adult cells into a pluripotent, stem-cell like state, came from the lab of Fate co-founder Sheng Ding, a professor at The Scripps Research Institute in San Diego.

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One of the scientific co-founders of San Diego-based Fate Therapeutics, along with his team at The Scripps Research Institute, is reporting a major advance that will make it faster, cheaper, and potentially practical on an industrial scale to turn adult cells into stem cells that can morph into any type of cell in the human body.

Sheng Ding and his colleagues at Scripps have found a combination of three conventional small-molecule chemical compounds that can coax adult human cells into an embryonic-like state. The new technique is about twice as fast as existing methods, and produces 200 times more cells per batch. The research in how to efficiently make these so-called “induced pluripotent stem cells” was sponsored by Fate, and is being published online today in the journal Nature Methods.

The technology, which is exclusively licensed to Fate through its sponsored research agreement with Scripps, is a big feather in the cap for the startup company as it seeks to strike deals with pharmaceutical and biotech companies that are looking get into the stem cell game. Fate has been a leader in the field since its founding two years ago by a group of top stem cell scientists from Harvard University, the University of Washington, Stanford University, and Scripps. One of those co-founders was Ding, a young scientist who got his first faculty post in 2003 at Scripps.

“This is the first example in human cells of how reprogramming speed can be accelerated. I believe that the field will quickly adopt this method, accelerating [induced pluripotent stem cell] research significantly,” Ding said in a statement from Scripps.

The latest advance builds on the discoveries of Shinya Yamanaka of Kyoto University and James Thomson of the University of Wisconsin, who showed for the first time two years ago that scientists could transform adult human cells into a pluripotent state, like that of cells in an early embryo. That was important because it was a way to circumvent the political and ethical controversy over destroying embryos in order to harvest their stem cells for research.

Pioneering as that work was, it was nowhere near ready for prime-time use in the biotech and pharmaceutical industries. Yamanaka and Thomson used viruses to insert multiple copies of four genes into adult cells. Two of the genes are known to cause cancer. Given that risk, it’s almost impossible to imagine regulators ever allowing cells with that kind of genetic modification to be injected into people who want to, say, regenerate new pancreas cells to treat their diabetes. The other big problem with the original method was that it took four weeks from start to finish, and only worked in about one out of every 10,000 cells.

Today’s announcement is the second big stem cell paper this year from the Ding lab. In May, the Ding lab reported that it had essentially gotten around …Next Page »

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Seattle-based Omeros is on the docket to go public next week, and will attempt to become the first pure-play biotechnology company to take the plunge since February 2008, according to Renaissance Capital, an IPO analysis firm.

Omeros, which is developing an anti-inflammatory treatment to help people recover from arthroscopic knee surgery, has set a goal of selling 6.8 million shares of common stock at a price range of $10 to $12 apiece, as we reported here a couple weeks ago. Deutsche Bank and Wedbush PacGrow Life Sciences are the lead underwriters of the prospective deal, which could raise as much as $81.8 million for the company, if it can gin up demand for shares at the high end of its range.

If Omeros can pull this off, and end up trading under the ticker “OMER,” it will be the first true biotech company to do an IPO since Sunrise, FL-based Bioheart (OTC BB: BHRT) did it in February 2008. That comparison has to give any biotech investor the creeps, since BioHeart, a stem cell company, only traded a year on the NASDAQ and has seen its stock crash from an opening of $5.25 to $1.80 as of today on the bulletin board.

Biotech-related IPOs have looked a little better lately. Last month, Nashville, TN-based Cumberland Pharmaceuticals (NASDAQ: CPIX), a specialty pharma company, went public at $17 and has traded down to $15.84 as of mid-day trading today. This week, a former unit of Bayer in Research Triangle Park, NC, that makes plasma-derived protein therapies, Talecris Biotherapeutics (NASDAQ: TLCR), raised $950 million by selling shares at $19 apiece. Its stock is now up over $22.

Omeros clearly needs the cash from an IPO to pursue its goals, according to its updated prospectus. It has been around since 1994, and has spent $108.8 million of investors’ money through June 30. The company’s cash reserves dwindled from $20 million at the start of the year, to about $10.4 million at the last reported date, June 30. Assuming it can rake in the new IPO money, Omeros should have enough cash to operate at least through September 2011, according to the prospectus. But without that money, Omeros will need to “significantly modify our operational plans for us to continue as a going concern,” the company stated.

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Dendreon watchers got all hyped up in anticipation of the company’s analyst day in New York, but there really wasn’t much in the way of news. So I dug up some other stuff for your reading enjoyment.

—The biggest piece of news out of Seattle-based Dendreon’s analyst day was that the company says it plans to file its application by mid-November to seek approval from the FDA to start selling Provenge in the U.S. Dendreon (NASDAQ: DNDN) had already said this was coming in the fourth quarter, so this added specificity is nice, but not exactly big breaking news. But the company is still hiring quite a bit, which you can read about how much here in case you missed it.

—Dendreon’s former CEO Christopher Henney has moved on to other endeavors, one of which involves being the chairman of AVI Biopharma (NASDAQ: AVII). So it shouldn’t have been a big surprise when this developer of RNA-based therapies recently moved headquarters from Portland, OR to Bothell, WA, under Henney’s watch. I checked out the company’s new digs in person with AVI Biopharma CEO Les Hudson, who’s enjoying his new surroundings, even while he’s trying to find out how to run the building’s HVAC system.

—ZymoGenetics (NASDAQ: ZGEN) released some bad news first thing Monday morning in an SEC filing, in which it said its partner, Merck KGaA, pulled the plug on a couple of trials for an experimental drug for multiple sclerosis called atacicept. This is just the latest in a string of setbacks for this drug, which was once the shining star in the Zymo pipeline.

—Charlotte Hubbert, a Kauffman Fellow at Seattle-based Accelerator, wrote a downright funny and insightful guest editorial for the Xconomist Forum on her journey from academic science to the supposed “dark side” of biotech and venture capital. I can only imagine what her parents think about the remark she made about hosiery.

—Fate Therapeutics, the La Jolla, CA-based company that counts Xconomist and University of Washington stem cell scientist Randall Moon as one of its big-name co-founders, has been on a growth spurt over the past year, as I discovered on an in-depth tour of the company’s labs.

—Redmond, WA-based Spiration, the maker of a minimally invasive device for treating chronic lung diseases, raised another $7 million in debt financing to keep supporting its work to commercialize the device in Europe and complete a pivotal trial in the U.S.

—Larry Corey, a scientist at the Fred Hutchinson Cancer Research Center and world leader in the quest to develop an HIV vaccine (he’s also an Xconomist), weighed in this week with an editorial about why he’s encouraged by findings of a clinical trial of a vaccine that protected about one out of every three people tested.

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Sequenom had the big story for San Diego’s life sciences community this week. We have the latest developments about that, as well as other biotech news.

—Sequenom (NASDAQ: SQNM) now faces a long rebuilding process after the San Diego medical diagnostic company ousted president and CEO Harry Stylli and a senior vice president of research and development over mishandled data in the development of a prenatal test for Down Syndrome. Five others also left the company after a five-month internal investigation invalidated studies that said Sequenom’s test, which uses a simple blood draw from pregnant women, was 100 percent accurate at detecting Down’s in a developing fetus. Now those tests will have to be re-done.

—A legal dispute over genetic-sequencing technologies and products is beginning to look more like a free-for-all. Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) has filed a patent suit against San Diego rival Illumina (NASDAQ: ILMN) which is already engaged in similar litigation with Affymetrix (NASDAQ: [[ticker:AFFX) of Santa Clara, CA.

—San Diego-based Zogenix has collected $36 million in a $51 million equity financing round intended to fund the company’s January launch of its needle-free system for delivering a pain drug for migraines. Zogenix says its delivery system releases a quick increase in pressure to penetrate the skin and then injects liquid medicines—without needles.

—Fate Therapeutics CEO Paul Grayson says the San Diego biotech startup is in advanced talks about partnerships with several large pharmaceutical companies about partnerships. Luke says the fast-growing company is using genetically engineered proteins and small molecule compounds to nudge ordinary adult cells into becoming pluripotent stem cells, which have the potential to turn into any cell type.

—Juliet Singh knows how to rub it in. Singh, who oversaw efforts to Irvine, CA-based Allergan (NYSE: AGN) to get FDA approval for botulinum toxin (Botox), is now the CEO of Transdel Pharmaceuticals, a La Jolla, CA-based company. Transdel intends to develop ketoprofen, a common pain reliever used in pills, into a topical cream.

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Want to know how fast Fate Therapeutics is growing? When I toured the La Jolla, CA, company’s labs to get an update last week, one young scientist stood up from his desk, looked me in the eye, offered a firm handshake, and said “Welcome aboard.”

I understood why a visiting journalist in a button-down shirt and jeans might be mistaken as another new employee. Fate, the stem cell company founded by a band of leading scientists from Harvard University, the University of Washington, Stanford University, and The Scripps Research Institute, has grown from 10 employees a year ago to 34 as of last week. Now the biotech startup next to Xconomy’s San Diego office is getting ready to move to a new facility nearby that triples its current capacity.

This is a sign of some important steps forward Fate has taken over the past few months. Fate isn’t commenting on whether it has plans to raise any more more venture capital, according to CEO Paul Grayson, but it is in advanced talks with several large pharmaceutical companies about partnerships. No big partners have been named yet, but if Fate can close on one or more such deals, it would build on the $25 million it has raised to support technology that induces adult cells into a stem-cell like state so they can morph into other cell types, according to chief financial officer Scott Wolchko.

Fate unveiled a business collaborative to support this technology, called Catalyst, in April with Boston-based Stemgent, which also has operations in San Diego. The companies are using genetically engineered proteins and small molecule compounds to nudge ordinary adult cells into a more valuable form known as an “induced pluripotent stem cell” that has the potential to turn into any cell type. Fate has been working to show that this method can be done consistently, at high speed, and without altering cellular DNA as other methods have, says company spokeswoman Jessica Yingling.

Fate’s technique brings together research from MIT and Whitehead Institute biologist Rudolf Jaenisch and Scripps scientist Sheng Ding. The company hopes it can be useful in a number of ways. For starters, it will seek to grow new cells in the lab dish to see what goes wrong with them, through what it calls disease modeling. These cells can also be used for drug discovery.

This technology is still very much in its early days, and plenty needs to be done before Fate can say it has really industrialized a new model for drug experimentation.

“As Rudy Jaenisch has said, you can wait for it all to be figured out and miss the boat, or you can work on it now and help shape it,” Yingling says. She adds, “We’re talking to everyone.”

There are some fascinating scientific questions being asked as Fate seeks to industrialize …Next Page »

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If you had told me last year that today I would be running the offices of Accelerator Corporation—at least for one morning while everyone is out of town—I would have probably sniffed in disdain, tossed my hair, and shuffled back to my post-doc lab bench, a free donut in one hand (magic vendor food) and a stack of cell culture dishes in the other. What you would not have seen is my furious Googling efforts to figure out what the heck your futuristic apparition was talking about. Accelerator wha? Venture capital who? Ah, Biotech. I don’t know about that. Like when Nancy Reagan admonished me to stay off drugs in junior high, my scientific training in academia had left me with the same feelings about Biotech. I felt an illicit curiosity about this dangerous thing stamped as “Business.”

Heresy of the highest order, I inherited the prejudice that biotech and Big Pharma were outposts for sell-outs or worse yet, the incompetents in science. Want your Ph.D. thesis committee to fail you? Mention your interest in business. In late night conversations, hushed tones over cold pizza, (next to the ultra centrifuge in the basement autoclave room), I speculated about what biotech might be like. “They make money? They drive cars younger than they are? How illicit! How exciting!” I had the naïve view that biotech and the business of science were havens for everyone who didn’t want to be an academic. I have discovered I was dead wrong. The scientists of biotech are adrenaline junkies who are just as brilliant and zany as any academician.

Since I’m writing this, one can assume that I did indeed finish my post-doctoral training and switched into business. During the worst financial crisis in 80 years. To the riskiest game on the block (venture capital). Like my desire to study stem cells during the Bush Administration, we’ll just file this one under “it seemed like a good idea at the time.”

In February of this year, I started my new vocation as the intern at Seattle-based Accelerator, a venture-backed incubator for biotech startups. For the record, Accelerator has no internship program. It reviews hundreds of business plans every year, and has a track record of forming three of the most promising companies in Seattle biotech of the past five years—VLST, Allozyne, and Theraclone Sciences—who have gone on to raise more than $100 million combined.

There is clue one: I am as lucky as Charlie Bucket and the Golden Ticket. In my six months at Accelerator, I have seen more scientists like me interested in transitioning to business than I ever thought possible. And I have learned that it is a very difficult transition to make, both in practice and in intellect.

Fast forward back to today. This morning I have answered the phones and doors, taken all shipments for three companies, dropped a transferred call twice on a very forgiving CEO, attempted to find the keys to a rental car in Pennsylvania, built a spreadsheet with all therapeutic antibodies originated in phage display, made three appointments to network for an upcoming trip to Tokyo, scouted technology on two university websites, edited an investment presentation, considered the effect of “Lehman Shock” on global investment liquidity, and prepared to meet a man …Next Page »

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Ascent Therapeutics is advancing several of its proprietary “pepducin” drugs through early testing, with a lead candidate emerging as a potential rival to Genzyme’s drug plerixafor (Mozobil) for patients with certain types of blood cancer. Cambridge, MA-based Ascent is touting some of its early research at a biotechnology conference in Zurich, Switzerland this week in hopes of attracting new pharmaceutical partners.

Rick Jones, CEO of Ascent, spoke with me from the Sachs Biotechnology in Europe Conference in Zurich yesterday about the startup’s research progress. Among other developments, the firm is saying that its drug was at least as effective as Genzyme’s plerixafor in spurring the movement of stem cells out of the bone marrow in animal tests. The potential drug could be used like plerixafor for patients with such blood cancers as non-Hodgkin’s lymphoma and multiple myeloma who need blood-forming stem cell transplants.

Ascent has enough cash in the bank from its $19 million Series A round to support its operations for about a year, Jones said. That’s not a long time in biotech, since it often takes a decade or longer to develop and garner approval for a new drug. The CEO wants to form two or more partnerships with large pharma companies not only to advance his company’s research funding and scope, but also to win more confidence from venture backers and attract future rounds of financing. Meantime, Jones is hoping that Swiss drug giant Novartis opts to exercise an option it has purchased from Ascent to gain certain rights to the drug candidates for undisclosed uses.

“With the current environment we just can’t go out and ask for $20 million or $30 million to get ourselves into the clinic without having some other proof that we’ve succeeded in building up this platform,” Jones said. “And the venture capitalists are basically telling me that what they’d like to see is another couple of [pharma] companies buy into the platform.”

In a sense, Ascent is fortunate to have closed its first round of venture capital—from blue chip VC outfits including …Next Page »

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CellCyte Genetics, the Bothell, WA-based company that once said it was on the verge of entering clinical trials with a stem cell compound to repair the heart, has been charged with violating federal securities laws by making false statements to investors.

Today in U.S. District Court in Seattle, the company, its former CEO, and former chief scientist were charged with misleading investors that the company had successful stem cell technology headed for clinical trials, when it hadn’t received FDA clearance to do so. The SEC issued a statement today describing its legal actions against CellCyte, and two former executives, CEO Gary Reys and chief scientist Ronald Berninger. The Seattle Times reported on the SEC action earlier today.

“CellCyte and its senior officers knew that it would take years of research to determine whether the stem cell discovery could be developed into a viable product,” said Marc Fagel, director of the SEC’s San Francisco Regional Office, in a statement. “In their rush to cash in on the promise of stem cell research, they concealed the true facts from investors.”

CellCyte was briefly one of the Seattle region’s most valuable biotech companies in 2007, when its shares reached $7.50 and its market capitalization topped out at more than $450 million. The Seattle Times’ Angel Gonzalez reported in late 2007 that the spike in CellCyte’s value was driven by penny-stock promoters using mailings and spam faxes. The Times also reported that Reys exaggerated his credentials in regulatory filings—and the SEC formally began investigating later. By December 2008, when it was worth pennies a share, CellCyte reported that it had run out of cash and “substantially curtailed all activities.” In May, the company said it had tentatively agreed to a settlement with the SEC.

The SEC added more clarity in today’s statement. It said that CellCyte and Berninger agreed to a settlement, without admitting or denying the SEC’s allegations, in which they agreed to a permanent injunction. Berninger also agreed to pay a $50,000 fine and to be banned from serving as an officer or director of a public company for five years. The SEC, in separate legal action, is charging Reys with violating anti-fraud provisions. The SEC is seeking an injunction, a monetary penalty, and an order barring Reys from serving as an officer or director of a public company.

Despite all the legal troubles, CellCyte is still available for trading over-the-counter (OTC BB: CCYG). It was worth five cents a share at today’s close.

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Cambridge, MA-based biotech Genzyme (NASDAQ:GENZ) reports that the firm has won European marketing approval for plerixafor (Mozobil) for injection in patients with two types of blood cancers—lymphoma and multiple myeloma—who need blood-forming stem cell transplants. The European Commission granted approval of plerixafor to be used in combination with granulocyte-colony stimulating factor (G-CSF) to boost the mobilization of stem cells in blood cancer patients, according to Genzyme. Plerixafor was cleared for sales in the U.S. last December.

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Center stage in Seattle life sciences moved to the waterfront this week, as 250 global movers and shakers in science, global health, and the pharmaceutical business gathered for the Pacific Health Summit.

—The Pacific Health Summit, an invitation-only event of global health stars, in its fifth year, focused this year on multidrug resistant tuberculosis, as I wrote in this preview story. Big names from global health came to brainstorm, including Margaret Chan of the World Health Organization, Anthony Fauci of the National Institutes of Health, and Chris Viehbacher, the CEO of Sanofi-Aventis, the world’s largest vaccine maker. Seattle’s Infectious Disease Research Institute is one of the players in this field, too, through work supported by Eli Lilly.

—Every good conference like the Pacific Health Summit needs power players competing for media attention. This year, we had two pieces of international news. Johnson & Johnson announced a deal to co-develop a new drug with the nonprofit TB Alliance; the deal could lead to the first new drug against tuberculosis in more than 40 years. Sanofi-Aventis also broke some news by announcing it will donate 100 million doses of flu vaccine to the WHO, to help poor countries cope with the swine flu pandemic.

—I profiled Beat Biotherapeutics, a Bellevue, WA-based company that envisions a way of generating stem cells that could perform the function of a cardiac pacemaker, or maybe someday even regenerate heart muscle that’s been damaged by heart attack. This company is built on years of research by UW stem cell scientists Chuck Murry and Michael Laflamme, and is married to bioengineering techniques from Buddy Ratner’s lab at the UW.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX) never captured much of the market for sophisticated gene chips used in modern biotech labs, which is now dominated by Santa Clara, CA-based Affymetrix and San Diego-based Illumina. But now CombiMatrix hopes to carve out an emerging niche by marketing its DNA microarray instruments as a diagnostics service to physicians, who are looking for accurate ways to diagnose the aggressiveness of an individual patient’s form of cancer, and to use genetic screening to catch malignancies earlier.

—MDRNA (NASDAQ: MRNA), the Bothell, WA-based developer of RNA interference drugs, has been working hard to clean up its balance sheet the last few months. It faced a cash crisis earlier in the year, and then raised $7.25 million from Novartis, another $10.5 million from investors, and used some of the proceeds this week to pay off its $5.5 million debt to GE Capital.

—Seattle’s Infectious Disease Research Institute said it is offering up its immune-stimulating compounds known as adjuvants to the world’s major vaccine makers. With the right partnerships in place, these adjuvants have potential to greatly amplify the world’s supply of flu vaccine, says IDRI founder Steve Reed. This may come in especially handy if the swine flu pandemic takes a severe turn for the worse.

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Mario Capecchi performs open-heart surgery in third-grade classrooms. He revels in answering the questions he gets as he reveals the wonders of the pumping heart to the children.

Of course, the surgery is performed on a mouse, but it’s hard to imagine a better way to get kids asking questions about biology than by closing their textbooks, and showing them what it really looks like at close range.

I met Capecchi, a Nobel laureate in medicine from the University of Utah, while he was in town to give a keynote speech at a fundraiser for the Northwest Association for Biomedical Research, a Seattle nonprofit that supports K-12 science education. Capecchi won the Nobel in 2007 for his work on developing “knockout mice” a now-standard lab technique in which scientists delete a certain gene in order to pinpoint the role it may play in causing disease. He came to speak in Seattle at the invitation of one of his former graduate students, Kim Folger Bruce of Seattle Children’s Hospital, who played a key supporting role in this discovery.

Besides making groundbreaking discoveries, part of the job of being a scientist involves explaining the work to people at all levels of education to encourage greater public awareness of science, Capecchi says. That includes young people, who may choose to become the next generation of scientists themselves.

One big reason why Capecchi feels responsibility to encourage students comes from his own personal background. As a child during World War II, he lived alone on the streets of Italy while his mother was in a concentration camp, and suffered much privation, before eventually reuniting with his mother after the war and moving to the U.S. when he was nine. His telling students to overcome obstacles in their studies clearly come from the heart. “I’ve had sort of a weird background,” he says.

Third-graders aren’t really in a position to understand the significance of things like knockout mice, but Capecchi said he likes talking to young children about science. “At that stage they’re very curious. Most of our education system destroys that inquisitiveness.” Science should be taught in a way to encourage curiosity over strict memorizing because flexibility is so crucial in science where techniques and paradigms can change rapidly, Capecchi says. Even those who don’t become scientists should learn it, he said, as so much science is supported by the public, but major science funding agencies like the National Institute of Health are often very conservative in where they give grant money. “The public in a sense is fearful of science. We have to break that down,” he says.

He compared the current controversy over stem cell research and how much should be done to the furor over so-called test tube babies in the 1970s. Millions of Americans are born with help from fertility clinics now, and there’s not much concern over the issue anymore, partly because the public has a better understanding of the topic. Better science education would help the public understand the promise of stem cell research, while also being careful to have respect for “legitimate ethical issues” people have with the line of research.

Capecchi recommends scientists should be ready to set up their own lab in their 20s, instead of paying their dues until their 40s as is common in the U.S. This is a balancing act because young people need to push themselves hard to attain that status in their 20s, and they shouldn’t push so hard that they burn out, he says.

Capecchi encourages scientists working in his own lab to be independent, even though sometimes research takes longer that way. What matters is that at the end they are still curious and still ask questions, even if getting funding for the research may be difficult. It’s the kind of message even third-graders understand. “Always dream big,” Capecchi says.

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Stem cell researchers have a lot of big dreams, and one is to someday regenerate damaged hearts. That is still many years away from becoming a commercial reality, if ever, but a few University of Washington scientists have formed a new company that hopes to make cells that can replace pacemakers, and someday rebuild damaged heart tissue that people are left with after heart attacks.

The company, Bellevue, WA-based Beat BioTherapeutics, is the brainchild of Chuck Murry and Michael Laflamme, a pair of UW stem cell researchers, and UW bioengineering professor Buddy Ratner. It has roots in about a decade of research, with $20 million of funding from the National Institutes of Health, Ratner says. No venture capitalists have chipped in to carry this work forward through the early phases of development, although the fledgling company has found another way forward through a partnership with the Bellevue, WA-based Hope Heart Institute, that will provide it with services and support, says CEO Stephen Quinn.

The basic concept of BeatBio, as it’s known for short, is a marriage of stem cell biology and biomedical engineering. Murry and Laflamme’s work has at least partly paved the way for the company to reprogram adult skin cells, to give them vast potential to become other types of cells, like those of the heart. BeatBio specifically wants to direct these cells to become cardiac pacemaker cells, and also cardiomyocytes, the cells that make up heart ventricles. Importantly, scientists have shown the cells can be kept proliferating over time in live animals, Ratner says.

Then comes the engineering part. Normally, when these proliferating cells are injected into the heart, they squirt right out before they can rebuild tissue, Ratner says. BeatBio plans to deliver them via catheter, with a type of bioengineered scaffolding material mounted on the tip. BeatBio hopes that doctors will be able to thread the catheter into the right place in the heart, implant the cells, and use the scaffold as a shield that will keep them in place and alive long enough so they can embed in the heart tissue. Eventually, the new proliferating heart cells will draw support from blood vessels, and thrive on their own, Ratner says.

The market for products that control heart rhythm is worth $10 billion a year, and about 1 million patients worldwide get implanted pacemakers each year, according to Minneapolis-based Medtronic, a leading maker of pacemakers. BeatBio says the market opportunity could be even bigger for an effective new treatment for congestive heart failure. That’s a condition in which the heart enlarges and loses its pumping power, usually after a heart attack causes buildup of scar tissue. About 5.7 million Americans have heart failure, and 670,000 new cases are diagnosed each year, according to the American Heart Association. Plenty of pharmaceutical companies have tried and failed to tap this huge market, but BeatBio insists it sees potential.

“Somebody’s got to be crazy enough to take stem cell therapies to the market,” Quinn says.

So many things could go wrong with this plan, it’s hard to even know where to start. …Next Page »

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San Diego-based Novocell has nailed down a second important patent on a valuable type of cell derived from human embryonic stem cells, which could end up forcing a lot of researchers to license technology from the company on Torrey Pines Mesa.

The company is announcing today it has secured a U.S. patent that protects its invention for a method of using endoderm cells for research when derived from human embryonic stem cells. A couple of months earlier, Novocell nailed down protection for a composition of matter patent on endoderm cells, a type of cell with wide-ranging potential. Endoderm cells can become pancreatic cells for use in diabetes therapies, or be turned into other tissues that make up the lungs, intestines, liver, thymus, and thyroid.

“This meets a long-standing need of major pharmaceuticals for human cells,” said Novocell CEO John West, in a statement.

Patents are a sensitive subject in the field of stem cell research—just ask the Wisconsin Alumni Research Foundation, which has taken heat for what some scientists consider onerous licensing terms for the right to use human embryonic stem cells developed at the University of Wisconsin. Yet exactly how Novocell’s patents might translate into revenue for the company, which is still at the earliest stages of research and development of new therapies, is hard to tell. It stands to reason that collecting licensing fees on patents like these would be part of its revenue model, since Novocell is still at least a couple years away from the valuation-building stages of bringing its first stem cell therapy for diabetes into human clinical trials.

West, who joined as CEO just a month ago, told me in an interview shortly after he started that the strength of the company’s intellectual property is one of the things that attracted him to Novocell. He definitely gave it a close look, especially since he’s someone who could probably have his pick of a lot of jobs, after he sold his last company, Solexa, a maker of gene sequencing machines, to San Diego-based Illumina for more than $600 million in 2007.

“It’s similar to Solexa, in that it has very promising scientific breadth, and now the question is how you take it commercial,” West says. There are still big hurdles …Next Page »

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