Fate Therapeutics has been quiet during a down time for the stem cell business, but now it’s making news by luring a big name into its inner management circle.

Bill Rastetter, the CEO of Idec Pharmaceuticals during its long journey to develop the blockbuster lymphoma drug rituximab (Rituxan), has agreed to become the chairman and interim CEO at San Diego-based Fate Therapeutics. Besides being CEO of Fate, Rastetter will remain busy wearing his other hats as a partner at Venrock Associates (an investor in Fate), and through his work as chairman of Illumina (NASDAQ: ILMN), Neurocrine Biosciences (NASDAQ: NBIX), and Receptos.

But the new job at Fate, Rastetter says, will be “my major time commitment.” Fate’s executive chairman, John Mendlein, will now become the vice chairman of the board, and will oversee “scientific excellence” at the company as the chairman of the scientific advisory board, Rastetter says. Mendlein is also executive chairman and CEO of San Diego-based aTyr Pharma. Mendlein replaced Fate’s previous CEO, Paul Grayson, who left the company in February.

“We snagged an industry legend to take Fate that much closer to patient reality,” Mendlein said via e-mail. “Bill has done what few have done before – start and create a biotech to deliver one of the most important medicines today.”

Stem cells have excited scientists for years because of their ability to morph into virtually any type of cell in the body, raising the potential for regenerative medicines against a wide variety of today’s untreatable diseases. Still, no pharmaceutical company has brought forward an FDA-approved medicine based on embryonic stem cells, and drug companies haven’t shelled out big bucks to form alliances with startups working on these types of therapies, or to use the technology to improve the drug discovery process. Last month, a bellwether of the field, Menlo Park, CA-based Geron (NASDAQ: GERN) said it was getting out of the stem cell business altogether so it could focus on cancer drug development.

None of that seemed to deter Rastetter.

“Fate reminds me a lot of Idec back in the early antibody days,” Rastetter says. “I’ve always been very intrigued by new technologies deployed at the right time. I think stem cells are here to stay, and now is the time to invest in them. I’m very excited about the scientific and commercial opportunity here. There’s a passion and cohesion here with the team. I feel energized when I sit down with these guys.”

Bill Rastetter

Fate was founded in 2007 to capitalize on leading-edge stem cell science at Harvard University, Stanford University, the University of Washington, and The Scripps Research Institute. It has raised more than $50 million in venture capital from a group of VCs that includes Arch Venture Partners, Polaris Venture Partners, OVP Venture Partners, and Venrock, as well as Takeda Ventures, Astellas Venture Management, Genzyme Ventures, and one more unnamed company.

Fate announced the addition of Rastetter a day after it released some preliminary clinical trial results from its lead drug candidate, Prohema, formerly known as FT-1050. Instead of injecting embryonic stem cells into the body and hoping they will morph properly into a desired cell type, this program is designed to be much less risky, by operating in a controlled lab environment. The company uses a small molecule to treat umbilical cord blood in a laboratory, in order to coax it to produce more blood-forming stem cells that can then be transplanted into leukemia and lymphoma patients. Many patients with those blood cancers get intense chemotherapy or radiation that wipes out both their cancer and their blood cells, so researchers are constantly looking for safe and effective ways to reconstitute a patient’s bone marrow and immune system.

The data is from a small study, although it suggests … Next Page »

Comments | Reprints | Share:          

How does a 110-year-old medical device company end up on the cutting edge of regenerative medicine? The answer: A little innovation and a lot of persistence.

That formula paid off this week for Holliston, MA-based Harvard Bioscience (NASDAQ: HBIO). On Monday, the company announced that a product it makes called the InBreath Bioreactor was featured in an article in the prestigious peer-reviewed medical journal The Lancet. The article described the world’s first implantation of a synthetic trachea, which was made in the bioreactor using the patient’s own stem cells. The next day, Harvard Bioscience announced that the second synthetic trachea—also made with the InBreath—had been successfully implanted. “This is a big breakthrough at a time when there is not enough supply of donor organs,” says Harvard Bioscience’s president David Green.

For most of its long history, Harvard Bioscience has been known as a solid but relatively sleepy maker of scientific instruments, such as pumps and glassware used by drug researchers. The company markets 16 different brands, and last year it posted $19 million in profits on $108 million in sales.

In 2008, Green says, Harvard Bioscience started working with Massachusetts General Hospital on technology that can be used to grow lungs outside of the human body. Around that time, Green read a paper in The Lancet describing how physicians in Italy transplanted into a patient a new trachea that they constructed partially from donated tissues and partially from cells taken from the patient.

Green wanted to expand Harvard Bioscience’s presence in regenerative medicine, so he e-mailed the lead author of that paper, an Italian physician named Paolo Macchiarini, and expressed an interest in licensing the technology used to grow the trachea. The licensing agreement was sewed up in August 2009, and Harvard Bioscience got to work refining the technology.

The tracheas used in the two surgeries announced this week, both of which were performed by Macchiarini, were made slightly differently. The first patient—36-year-old Andemariam Beyene, who was suffering from inoperable tracheal cancer—received a tracheal scaffold made from … Next Page »

Comments | Reprints | Share:          

Ever since nephrologist Robert Brenner joined Burlington, MA-based AlloCure in 2010, he’s been eager to find out how the company’s experimental stem-cell treatment for acute kidney injury would perform in people. Last week, he got his first hint of the answer—and it was a positive one.

On Nov. 12, AlloCure presented results from a Phase 1 study of its treatment at Kidney Week 2011, the annual meeting of the American Society of Nephrology, held in Philadelphia. There were 16 patients in the trial, and it was mostly designed to test the safety of the cells, which are found in adult bone marrow. But AlloCure also used the trial as an opportunity to measure efficacy, by comparing how the patients fared after the treatment to so-called historical controls—people who had suffered from acute kidney injury (AKI) in the past but not been given the cell treatment.

The risk of acute kidney injury, also known as AKI or acute renal failure, is particularly high in patients undergoing coronary bypass surgery or heart-valve surgery. All 16 patients in the trial who received AlloCure’s stem cell treatment, called AC607, were undergoing heart surgery and deemed to be at high risk of developing AKI. But only two of them developed AKI, amounting to 12.5 percent of the total patient universe. By contrast, 29.7 percent of the historical controls developed AKI.

AlloCure also looked at length of stay in the hospital, as well as readmission rates. Patients who got AC607 had a mean length-of-stay of 6.5 days, versus the non-treated patients, … Next Page »

Comments (1) | Reprints | Share:          

[Update: 3:35 pm PT] Geron, for better or worse, has been the poster child for embryonic stem cell therapies for a decade. And now with a new CEO at the helm, that’s all in the past.

Menlo Park, CA-based Geron (NASDAQ: GERN) said today it is getting out of the business of developing stem cell therapies so that it can concentrate more on developing cancer drugs. As part of the decision, Geron is cutting 66 jobs, or about 38 percent of its workforce. It will now look to unload its stem cell therapies onto partners.

The decision was made to conserve cash, the company said. Geron had $180.3 million in cash and investments in the bank at the end of September, and it had a net loss of about $65 million in the first nine months of the year, according to its most recent quarterly report. Shares of the company dropped about 12 percent in after-hours trading, to $1.93, after the announcement.

“In the current environment of capital scarcity and uncertain economic conditions, we intend to focus our resources,” said Geron CEO John “Chip” Scarlett, in a statement.

Geron has seen some major changes this year, and getting out of stem cells is the biggest. Longtime CEO Thomas Okarma left the company in February, a few months after Geron’s long-delayed stem cell therapy for spinal cord injuries entered its first clinical trial. In May, Geron secured $25 million from the California Institute for Regenerative Medicine (CIRM), which was supposed to provide matching support to help Geron finance clinical trials of its experimental stem cell therapy.

But that deal came a few months before Scarlett was brought in at the end of September to be the new CEO. Geron now says it will focus its resources on imetelstat, its telomerase inhibitor for cancer, along with GRN1005, another cancer drug. The company said it plans to stop enrolling new patients in the clinical trial of stem cells for spinal cord injury, although it said it will continue to gather data on all the patients who have already enrolled.

[Updated comment from analyst] “Geron’s new CEO John Scarlett did not take long to make his presence felt,” said Cory Kasimov, an analyst with JP Morgan, in a note to clients. “After a little less than two months at the helm, he’s turning Geron into a more focused company. As enticing as the upside could have been for the stem cell therapies (and it’s undoubtedly what Geron is best known for), it was impractical for a public company of this size to commit so many resources to both cell therapy and oncology (which likely carries more near-term tangible value).”

Comments | Reprints | Share:          

We saw stories about New England life sciences companies in a range of stages this week: kicking off, shutting down, and growing.

—Cambridge, MA-based biotech Tolerx will be shutting down its operations, after raising a total of more than $150 million from backers like HealthCare Ventures, Skyline Ventures, and Sprout Group. The company’s diabetes drug otelixizumab missed its goals in a pivotal clinical trial earlier this year. Tolerx will be handing the drug over to its partner GlaxoSmithKline and has already begun liquidating its assets through auctions.

—My colleague Arlene took a closer look at Cambridge-based Agios Pharmaceuticals, which just added another $20 million on top of the $130 million already committed in a collaboration deal it had in place with New Jersey-based Celgene (NASDAQ: CELG). The two companies are working to develop cancer metabolism drugs that starve tumors of the enzymes needed to grow.

—Courtagen Life Sciences, formerly called Avantra Biosciences, raised $8 million in new funding.The developer of protein biomarkers for disease detection raised a $7 million round of financing last year.

—Boston-based OvaScience came out of stealth mode, unveiling its technique (licensed from Harvard Medical School and Massachusetts General Hospital) for improving in vitro fertilization. The company, co-founded and funded by Sirtris Pharmaceuticals veterans Michelle Dipp and Christoph Westphal, aims to improve the quality of eggs using a type of stem cell found in ovaries.

Comments | Reprints | Share:          

The Seattle biotech community got an energetic new leader this week, but there was also some more grim news about budget cuts coming at one of the biggest local life sciences employers.

—Amgen (NASDAQ: AMGN), the Thousand Oaks, CA-based biotech giant, is looking to “improve focus” and “re-allocate resources” in its $2.9 billion R&D budget, according to a company spokeswoman. The company will have more to say in its quarterly earnings report on Oct. 24. Sounds like there will be some long days of grim speculation for the people at Amgen’s Seattle R&D operation.

—Seattle-based NanoString Technologies rolled out the next-generation version of its genetic analysis instrument at a big scientific conference in Montreal. The new tool is supposed to be able to churn out 50 percent more data, and it’s paired with a more flexible software program. The Broad Institute of Harvard and MIT, one of the world’s leading centers for genomics research, has signed on as the first customer for the Version 2.0 tool from NanoString.

—For the first time, I made an early morning call to Iceland for a story. This was to talk with Kari Stefansson, the prominent geneticist and CEO of deCODE Genetics. The company made the news this week by announcing by announcing a partnership with Pfizer to look for new lupus drug targets. The Seattle angle here is that Arch Venture Partners and its indefatigable managing director Bob Nelsen helped rescue deCODE from bankruptcy in 2010 in a wager that deCODE could thrive in the era of ultra-fast, ultra-cheap gene sequencing.

—Seattle-based Qliance Medical Management, the company that provides direct primary care services on a monthly subscription basis, said this week it has done some management shuffling. Co-founder Erika Bliss, a primary care physician, is stepping up to become president and CEO, while co-founder Norm Wu is stepping aside to serve as a “strategic advisor” working on partnerships. Qliance probably has the investment syndicate with the highest television Q-rating in town—Jeff Bezos, Drew Carey, Michael Dell, and Nick Hanauer are among its backers.

—This week in BioBeat, I offered up a list of five things that the pharmaceutical industry could (and should) do to help the FDA reform itself and restore public confidence in the agency. There are some good comments piling up at the bottom of this story, and you’re always welcome to add your own two cents there.

—Thong Le, the well-wired venture investor at WRF Capital, is going to take on a higher profile in the community next month when he becomes chairman of the Washington Biotechnology & Biomedical Association. Le is replacing Tom Clement, the founder of Pathway Medical Technologies, who is now working to get a couple new startups off the ground—Aqueduct Neurosciences and Cardiac Insight.

—Drew McUsic, a University of Washington graduate student in bioengineering, offered up his view of the opportunity for biotech startups in the world of stem cell R&D. This post was based on a WBBA event in which officials from Geron and Fate Therapeutics offered their view from the trenches.

—Lastly, we had a guest post for the biotech crowd inspired by the life of Steve Jobs, the Apple co-founder who died last week at 56. Christopher Bowe, a healthcare analyst with Informa, sees some lessons in Jobs’ life that might be healthy for a life sciences industry that’s starving for some really exciting new innovations.

Comments | Reprints | Share:          

Stem cells hold the promise of ushering in a new era of regenerative medicine, as scientists and engineers have made significant progress in directing these powerful cells towards use in drug screening models and replacements for failing tissues. More recently, scientists have developed even more efficient and alternative methods for reprogramming cells into their desired state.

But as panelists at the recent Washington Biotechnology & Biomedical Association (WBBA) symposium on the “Today and Tomorrow” of stem cells in regenerative medicine emphasized, the stem cell promise is an exciting but risky wager that seems extreme even by biotech standards. It is easy, even for those familiar with the field, to understate the incredible challenges imperiling the transition of stem cell therapies to the clinic. Yet against all odds, two companies have pursued clinical trials and many more are fast at their heels. What gives? And what distinguishes this challenge from the commercialization of more traditional biotech approaches?

First, take the FDA. According to Joseph Gold, the senior director of neurobiology and cell therapies research at Menlo Park, CA-based Geron Corp. (NASDAQ: GERN) and a panelist at the WBBA event, the U.S. regulatory body was not really “conversant” in embryonic stem cell-derived therapies before Geron submitted its 20,000-page proposal for beginning clinical trials among patients with spinal cord injuries. This application to start trials was the largest of its kind ever presented. To date, there has only been one other company to seek FDA clearance to study an embryonic stem cell therapy in humans: Advanced Cell Technology (OTCBB: ACTC). Clearly playing a world role in the oversight of a constantly evolving landscape in biomedical technology, the FDA must understand and demonstrate competence in effectively regulating stem cell treatments for present and future companies to have a prayer of getting them to market. But Joe Gold argues that Geron’s and ACT’s application processes have improved, and in fact given birth to, the FDA’s ability to regulate stem cells as a new type of therapy.

Then comes funding, scaleup and manufacturing: requirements for any biotech but which may in the context of stem cell therapies point to a unique reliance on startups in pushing the field forward. Although preclinical stem cell research is well funded by the National Institutes of Health, federal dollars don’t support the costs of current good manufacturing practice (cGMP) manufacturing and clinical trials. And on the other end of the spectrum, Big Pharma appears hesitant to move forward with internal cell therapy programs because, like venture capitalists, they remain underwhelmingly convinced of the commercialization potential of such an infant scientific development. Pfizer, Bayer, Merck, and others have expressed interest and developed programs for partnering with cell therapy collaborators in academia and early-stage industry, but are not about to go it alone. This parallels the unfavorability of innovation within large pharmaceutical companies increasingly even in the space they know best-pharmaceuticals-where in the modern framework it’s preferable to acquire the next Viagra from what will likely be a small company. The small company environment can catalyze the initial phases of cell therapy translation better than anywhere else, partly because the level of infrastructure is right for tackling the nontrivial scale-up and manufacturing of cGMP cells, a proof-of concept endeavor that is impossible in the university discovery setting, but which, once demonstrated, can be augmented with acquisition by Big Pharma. The current state of affairs suggests, then, that the rate-limiting step for pushing stem cell treatments into mainstream use will be capital investment at the startup phase.

So why, in the midst of an extended recession and with hurdles raised higher on all fronts than those for new pharmaceuticals, is the field (albeit slowly) advancing? Even with a clear translational path, investors in some cases remain reluctant while conditions are favorable enough in others to get the ball rolling. What is happening? One possibility is that we are looking at the cusp of translation, which has happened time and again in biotech and which often gives rise to a similar teeter-tottering of a new wave of medical therapies over the edge into the clinic. John Mendlein, the executive chairman of Fate Therapeutics and also a panelist at the WBBA event, posited an apt reminiscence of the challenges facing the implementation of monoclonal antibodies as pharmaceuticals 20 years ago. Roadblocks stifling the technology, manufacturing, funding, and regulation scared every facet of the industry at the outset. The promise of the field prevailed, and what was a process became a profit. That’s what biotech is all about, and maybe this time is no different.

Comments | Reprints | Share:          

Geron has found a new CEO as it moves ahead in the new world of clinical trials with embryonic stem cells.

Menlo Park, CA-based Geron (NASDAQ: GERN) said that biotech veteran John “Chip” Scarlett has been named the company’s new CEO and member of the board. Scarlett, an endocrinologist by training, is best known for selling the last two companies he ran (South San Francisco-based Proteolix and Brisbane, CA-based Tercica) for more than $1 billion combined when all the milestones are added up. Scarlett replaces interim CEO David Greenwood, who will stay as president and finance chief through a transition period to the end of 2011, Geron said.

“Throughout my career, I’ve been privileged to lead organizations and companies with products of great scientific and medical promise as they have transitioned to high value companies,” Scarlett said in a company statement today. “I look forward to applying the lessons learned from those experiences at Geron.”

Longtime CEO Thomas Okarma left the company in February. The company made big news last October when its long-delayed human embryonic stem cell therapy, GRNOPC1, began its first clinical trial in patients with spinal cord injuries. Geron is also developing three different cancer treatments in clinical trials.

Shares of Geron climbed 3.2 percent to $2.23 at 1:11 pm Eastern following the news.

Comments | Reprints | Share:          

No particular group, right or left or somewhere else, is immune from the sense that change is accelerating at an ever faster pace with each passing year. The experience of too-rapid change, whether trivial or profound, is a characteristic of modernity. Information technologies are perhaps the sentinel sources and examples of what Alvin Toffler called “future shock” in 1970, right around the time that a young Bill Gates programmed a GE computer his school purchased using proceeds from a rummage sale. Information scientists cite Moore’s law, the idea that computing capacity doubles every two years.

We’ve all experienced the anxiety, frustration, and even resentment that accompanies the introduction of a new version of a software product on which we depend, or the realization that people younger than ourselves have adopted a new technology that makes the pace and style of their lives seem very different from our own.

Reservations about rapid technological change are widely shared regardless of political party or philosophy. In America the tension between approval of science and worry about the rapid changes it can bring bubbles up in special ways when moral or cultural choices seem to be involved. We’ve seen this tension play out time and again in our seemingly endless controversies about the teaching of evolution, reproductive rights, the moral status of the human embryo, the origins of the universe, and nearly all the issues of science that relate to human values.

Sensitivities about science are understandable. People rightly feel that high stakes are involved when science pushes familiar boundaries, and most of all when it seems that our customary and largely workable moral framework is being challenged. Americans seem especially touchy about such challenges. Ours is in many ways a deeply conservative country where the vast majority (generally around ninety percent) consistently report that they believe in God. The prominence of faith among Americans becomes even more striking when compared with modern western Europe, the historic source of America’s core Enlightenment values of rationality and science. There, the proportion of believers is around fifty percent. Americans admire science but also treasure traditional values, which are in some ways threatened more by science than any other institution; our attitudes tend to assemble at the extremes. In this sense, America is both the principal product and the main stage for the ongoing drama of the Enlightenment. Here are these universal values of truth, freedom, and equality founded on reason rather than the authority of a church or sovereign rulers. But is reason enough, or does it threaten those very values?

The ever-quickening pace of discovery in biology is an especially volatile source of “wedge” issues in our politics because it puts into question our familiar values about life itself. These questions are particularly clear when human dignity seems to be threatened, as critics … Next Page »

Comments (2) | Reprints | Share:          

iPierian, the South San Francisco-based developer of stem cell technology co-founded by top scientists at Harvard University, said today it has hired a new CEO. Nancy Stagliano, the co-founder and former CEO of South San Francisco-based CytomX Therapeutics, has taken the top job at iPierian, while interim CEO Peter Van Vlasselaer has moved aside to become the executive chairman of the board.

The company has been quiet since May, when Xconomy broke the news that the iPierian’s board terminated CEO Mike Venuti and most of the senior management team. A few weeks later, board chairman Corey Goodman resigned in the wake of the company’s shift in strategy. Today’s statement from iPierian says that Van Vlasselaer, the interim CEO, has prioritized the company’s efforts over the past several months toward using its stem cell technology to help discover drugs for neurodegenerative disorders like Alzheimer’s, amyotrophic lateral sclerosis (ALS), and spinal muscular atrophy.

The company’s technology is used to coax ordinary adult cells into a stem-cell like state in which they have the potential to differentiate into some other desired cell, like a human neuron. The cells are known as induced pluripotent stem cells (iPSCs).

“Neurodegenerative diseases represent a significant unmet medical need. Unfortunately there are few experimental models that provide a robust understanding of the mechanistic biology behind neurodegeneration. The promise of making an impact in this therapeutic area using iPierian’s iPSC drug discovery platform makes this opportunity a very special one for me,” Stagliano said in a statement.

Nancy Stagliano

iPierian has raised more than $50 million from some of the biggest names in Big Pharma and venture capital, including Kleiner Perkins Caufield & Byers, Highland Capital Partners, MPM Capital, Google Ventures, GlaxoSmithKline’s SR One, and Biogen Idec New Ventures. The company was formed in July 2009 by the merger of South San Francisco-based iZumi Bio, with Pierian, a company co-founded by top scientists at the Harvard Stem Cell Institute.

Comments (2) | Reprints | Share:          

Thane Kreiner, in the prime of his professional life at 50, could be doing pretty much whatever he wants in Silicon Valley’s biotech industry. But about a year ago, he took a job that offered him a big cut in salary, no stock options, and no performance bonuses.

The lure? The chance to help build businesses in the developing world with the potential to make a difference for 1 billion people.

“When I applied for this job, I went to the provost and said, ‘Look, I won’t give you new theories on how to change the world. I actually want to do it,” Kreiner says.

Kreiner has been pursuing this bold goal over the past year as the executive director of the Center for Science, Technology & Society at Santa Clara University, about 40 miles south of San Francisco. The signature program he’s been working on there, in its ninth year, recruits entrepreneurs from the developing world for an 8-month mentoring program to help them figure out how to turn an already good tech-based small business into a great big one. Ideally, Santa Clara wants to help amplify ideas for things like rural electrification or clean water, which could help hundreds of millions of people lift themselves out of poverty.

Plenty of people have caught the bug for social entrepreneurship, but few people come at this emerging field with a background like Kreiner’s. He’s got a Ph.D in neuroscience from Stanford University, plus a Stanford MBA. He spent almost 15 years rising through the ranks at Santa Clara, CA-based Affymetrix (NASDAQ: AFFX), the gene-chip pioneer. The last few years, he co-founded or served as CEO of four different leading-edge biotech startups, including San Francisco-based Second Genome, Seattle-based Presage Biosciences, and South San Francisco-based iPierian. With his network of contacts in the venture world, he easily could have done the next hot thing in stem cells, personalized medicine, cancer diagnostics, you name it.

Corey Goodman, the prominent biotech entrepreneur and longtime friend and mentor of Kreiner, said he’s keeping an eye on Kreiner’s new nonprofit endeavor. “It is a very important program, and Thane is the perfect person to lead it. He has the passion and ability to make it a success,” Goodman says.

The program at Santa Clara University goes back to 1997, and its signature program, the “Global Social Benefit Incubator” got its start in 2003, before many universities had sought to tap into the growing interest in social entrepreneurship, Kreiner says. The idea of the incubator is essentially to identify entrepreneurs with proven technologies, and proven business models, who need some mentorship to scale up their companies to make a bigger difference, Kreiner says. The program matches up about 20 of these entrepreneurs from around the world with Silicon Valley VCs and entrepreneurs who help the startups define their value proposition, define target market segments, etc., over the course of an 8-month program. The program culminates in a 2-week boot camp in August every year, in which the entrepreneurs make their pitch for additional capital in front of an audience of 300 people, and a panel of judges that provide “American Idol” style instant feedback.

Results, like in many socially minded nonprofits, can be pretty squishy and subjective, unlike the hard reality of an audited for-profit income statement. Still, the program has racked up … Next Page »

Comments (2) | Reprints | Share:          

If you dared to flip the channel to CNBC any time during the past week, it would have been hard to stay calm. The market was whipsawing all over the place, up one minute, down the next. Fear of government defaults and the potential for another recession were topics of endless debate. Fund managers were said to be antsy to unload any security riskier than a T-bill or gold—which means biotech was fast becoming especially unfashionable.

All the fearful talk may have been good for TV ratings and Internet page views. The wave of selling is definitely worrisome for any company that dares to do something risky like create innovative new life science products, such as cancer drugs. But all this talk is hardly a sign of any long-term catastrophe.

The last time I can remember this much fear coursing through the markets was September 2008, when the Lehman Brothers bankruptcy triggered government bailouts to stave off a global run on the bank. Most comments I heard and read last week said what’s happening today isn’t as frightening as that scenario. There are undoubtedly major problems today, like the rising cost of healthcare and the long-term threat that poses to governments around the world. Healthcare investors with any vision at all have to be worried about what might be done to clamp down on costs (and future profit margins) of pharmaceutical, medical device, and diagnostics companies.

Setting aside all those concerns for a moment, I thought it would be instructive to check on how biotech investors reacted during that scary time of September 2008, compared with what we’ve seen the last two weeks. So I looked at the two-week period starting with the close on Sept. 12, 2008 (the last day of trading before the Lehman bankruptcy), and the two-week period starting with the close on Aug. 1, 2011 (the last full day before President Obama signed the bill to raise the debt ceiling, averting what could have been a U.S. government default).

Here’s what I found:

Indexes                                       Sept 12-26, 2008                           August 1-12, 2011

Nasdaq Biotech Index (NBI)               -0.2%                                               -8.6%

Amex Biotech Index (BTK)                 -0.6%                                              -15.1%

Nasdaq Composite Index                   -3.5%                                                -8.6%

Surprisingly, even though most analysts agree the global financial system isn’t in as much trouble now as it was in 2008, biotech indexes, and the broader Nasdaq Composite Index, are getting hit even harder now.

Sure, lots of things have changed … Next Page »

Comments (5) | Reprints | Share:          

On July 14, Advanced Cell Technology (ACT)—a long-struggling developer of therapies derived from human embryonic stem cells—started its first human trials, by treating two patients suffering from blinding eye diseases. The company’s chief scientific officer, Robert Lanza, was still on a high when reached by phone in his Marlborough, MA, office a few days later. “It’s vindication,” he says. “In the early days, we were called murderers. We almost went under a few times. This was not easy.”

That may be an understatement. Ever since human embryonic stem cells were first isolated 13 years ago, ACT (OTCBB: ACTC) has been laboring to capitalize on the cells’ talent for transforming themselves into any tissue in the body. Over the years, Lanza and his colleagues have been blamed for everything from overconfidence to unethical science—the latter coming from conservative politicians who wanted to ban such research because the cells are derived from unborn embryos. But ACT charged ahead, raising money from hedge funds and other risk-hungry investors, and concentrating on using embryonic stem cells to regenerate retinal pigment epithelial (RPE) cells, which form a tissue that protects the eye’s photoreceptors.

ACT was cleared by the FDA to test its RPE cells in two separate trials: one in patients suffering from Stargardt’s macular dystrophy and the other in those with dry age-related macular degeneration (AMD). Stargardt’s affects young people, and AMD strikes the elderly, but they are both marked by the degeneration of the RPE cell layer. And both are leading causes of blindness. ACT was the second company cleared by the FDA to test an embryonic stem cell-derived therapy, the first being Geron (NASDAQ: GERN), the Menlo Park, CA-based company that’s testing its cells in patients with spinal cord injuries.

ACT’s first two patients were treated at the David Geffen School of Medicine at UCLA, and are now being watched for six weeks to ensure the cells don’t cause any dangerous side effects. Lanza explains that each trial will include 12 patients, and the doses will escalate over time. If no adverse events are observed in the first set of patients—who will receive the smallest dose of 50,000 RPE cells—the next set of patients will receive 100,000 cells. Then they’ll be observed, and so on, until the highest dose of 200,000 cells is reached.

Lanza says he was both intimidated and impressed by the FDA’s thorough review of ACT’s trial regimen. “They know as much as I do about embryonic stem cells,” he says. “They put us through … Next Page »

Comments (6) | Reprints | Share:          

This week, all eyes in Seattle biotech are on Seattle Genetics. If you don’t know why, here’s a chance to catch up. If nothing else, this will provide plenty of fodder for conversation at today’s WBBA Summer Social, which I plan to attend this afternoon.

—Seattle Genetics (NASDAQ: SGEN) is making its case today in front of an FDA advisory panel that’s reviewing the company’s lead drug candidate, brentuximab vedotin (Adcetris). If the FDA ends up clearing this drug for sale in the U.S., it will not only be Seattle Genetics’ first marketable product after 14 years in business, it also has a chance to be a trailblazer in a new category of therapy, as the world’s first commercially viable “smart bomb” for cancer. The FDA staff review, in documents posted online Thursday, was benign to say the least. I plan to listen to the proceedings via webcast, and report on the FDA panel’s vote and commentary later today.

—Seattle-based Allozyne is seeking to go public through the backdoor route, a reverse merger with a shell of a public company—Poniard Pharmaceuticals (NASDAQ: PARD). CEO Meenu Chhabra talked about all the steps that she’s taking to generate interest in Allozyne on Wall Street, and how this is different from the traditional IPO route.

—Not all the news this week from Seattle Genetics was of the happy variety. Zishen Fan, the brother of a former Seattle Genetics employee, pleaded guilty to federal charges that he traded on inside information about the company in order to pocket more than $700,000 in profits. Fan could face as much as 20 years in prison, according to a statement from the U.S. Attorney’s Office for Western Washington.

—The Fred Hutchinson Cancer Research Center said this week it has secured a $20 million grant from the National Institutes of Health to investigate a new HIV prevention strategy, along with collaborators at the University of Washington, and Richmond, CA-based Sangamo Biosciences (NASDAQ: SGMO), among others.

—The biotech industry today is facing lots of problems, and one them is a lack of guts. That’s the position I took in this week’s BioBeat column. So far, I can say the response has been overwhelmingly positive to this column—apparently biotechies still have thick skins, which I consider a good thing.

—Fate Therapeutics, the San Diego-based company that was co-founded by University of Washington stem cell researcher Randy Moon, disclosed that it has cut back on its small-molecule discovery work and laid off a handful of employees, to concentrate on developing biotech drugs. John Mendlein, the executive chairman, explained the moves in this Xconomy exclusive report.

—Lastly, we had a couple of guest editorials of interest to the local life sciences scene. Stewart Parker, now the CEO of the Infectious Disease Research Institute, offered up some insights into what she saw during her time as a commercialization consultant at the WBBA. And Melinda Moree, the CEO of BIO Ventures for Global Health, provided a fascinating case study on how biotech and global health organizations can work together in really productive ways.

Comments (2) | Reprints | Share:          

Fate Therapeutics, the high-profile stem cell startup in San Diego, has made some limited job cuts in recent months and changed strategy to focus on biotech drugs—instead of conventional small molecules—to coax stem cells into becoming a useful therapies.

The company, founded by leading scientists at Harvard University, Stanford University, and the University of Washington, has reduced its staff to about 25 people as it eliminated jobs of a “handful” of small molecule chemists, according to executive chairman John Mendlein. That’s down from about 40 employees a year ago, according to a Fate spokeswoman at the time, although Mendlein says the company headcount was only about 31 at its highest, because some people have been indirectly supported through company-sponsored research grants. Fate’s internal cuts, which came in February, were partially offset by hiring some new people with skills in making biologic molecules, Mendlein says. By dropping the small molecule work, Fate shelved two drug development programs that sought to alter a cell-growth pathway known as hedgehog. The strategic changes all came around the time when CEO Paul Grayson left the company.

“It’s a reshaping from a headcount perspective,” Mendlein says. “We want to emphasize biologics more than small molecules.” He added that Fate may still form partnerships with Big Pharma companies that want to work on small molecules, but the biologics work is considered the higher priority within Fate at the moment. “Biologics are not redundant with what other people are working on. Biologics are proprietary,” Mendlein says.

Fate’s strategic moves are closely watched in the stem cell field, as the company has generated lots of attention since its founding in 2007. It has raised more than $50 million from top venture capitalists and Big Pharma investors seeking to take advantage of stem cell biology to develop new therapies, or to use the new knowledge to enhance drug development. Fate made big news in October 2009 when one of its scientific founders, Sheng Ding, showed in Nature Methods that he could induce ordinary adult cells into a stem-cell-like “pluripotent” state through a combination of cheap, efficient small molecule chemical compounds. The discovery, the company said at the time, was thought to be a key to advancing the field by paving the way for a low-cost, efficient “industrialized” process for making cells with potential to differentiate into other cells.

So far, Fate hasn’t yet secured any lucrative partnerships with Big Pharma companies looking to incorporate its methods for making pluripotent cells for drug development, or to co-develop regenerative medicines. Fate has a secured a distribution partnership with Franklin Lakes, NJ-based Becton Dickinson (NYSE: BDX) in which Becton could end up distributing chemical reagents or Fate’s induced pluripotent stem cells for research.

There is a scientific reason for the shift to biologics, Mendlein says. Conventional small molecule compounds have an advantage in that they can be cheaply and easily synthesized in a lab, but they often bind with lots of similar protein targets rather than exclusively nail just one target of interest. Biologic drugs, made through genetic engineering techniques, can be expensive to make, but they can be designed to hit a specific target, he says.

“We think there’s an opportunity to create small molecules that modulate cell fate,” Mendlein says. “However, small molecule chemistry potentially creates additional complications in interpreting data. They often have off-target effects, and they have a distribution pattern that’s more broad across more tissues. We want to ask more specific questions, which you can with biologics. We can design biologics to manipulate the fate of cells for therapeutic benefit.” He adds that … Next Page »

Comments | Reprints | Share:          

Two of the leaders at iPierian, the high-profile stem cell startup in South San Francisco co-founded by scientists at the Harvard Stem Cell Institute, have left the company in the wake of its strategic shift this spring, Xconomy has learned.

Corey Goodman, the prominent neuroscientist and biotech executive, has resigned his position as chairman of the board at iPierian, according to sources familiar with the situation. Doug Melton, a star scientist at the Harvard Stem Cell Institute and a co-founder of iPierian, has also left his role as a scientific advisor to the company, sources say. iPierian CEO Peter Van Vlasselaer and director Beth Seidenberg of Kleiner Perkins Caufield & Byers didn’t respond to requests for comment, but both Goodman and Melton’s biographies have been removed from iPierian’s website. Neither Goodman nor Melton commented yesterday afternoon.

The departures are the latest chapter in the ongoing shakeup at iPierian, which Xconomy first reported on a month ago. iPierian’s former CEO, Mike Venuti, was terminated by the board in late April, and the company’s heads of finance, business development, and legal/intellectual property were all dismissed within days. Numerous institutions have a stake in this turnover at the top, since iPierian has raised more than $50 million from some of the biggest names in Big Pharma and venture capital, including Kleiner Perkins, Highland Capital Partners, MPM Capital, Google Ventures, GlaxoSmithKline’s SR One, and Biogen Idec New Ventures.

The company was put together in July 2009, when Pierian, a company co-founded by world-renowned stem cell researchers at the Harvard Stem Cell Institute, was merged with iZumi Bio, a San Francisco startup. iZumi Bio focused on reprogramming adult cells to become “pluripotent,” so they could have the potential, like that of a stem cell, to morph into most any cell type in the body. The business plan, until Venuti was terminated, was based on using the induced pluripotent stem cells as a tool for screening new drug candidates, and offering the technology to Big Pharma companies through partnerships.

Corey Goodman

iPierian was in position to execute its first partnership at the time of Venuti’s termination, but the board decided to change its plan—by reducing the number of scientific programs it is pursuing, and lowering its cash burn rate to position itself for an acquisition, former iPierian CEO John Walker said in an interview last month.

Goodman, a member of the National Academy of Sciences, is well-known for his past roles as a neuroscientist on the Stanford University and UC Berkeley faculty and as an entrepreneur who co-founded Exelixis and Renovis before becoming an executive heading up a biotech drug unit within Pfizer. He now serves on the boards of several companies, and is involved in San Francisco-based venBio, an investment firm.

Melton is known for developing a number of different stem cell lines, through private financing, that have been made available to scientists around the world. His lab’s research has focused on coaxing stem cells to become insulin-producing pancreatic beta cells, with an eye toward strategies to someday treat diabetes. He’s a member of the Howard Hughes Medical Institute, and serves as co-director of the Harvard Stem Cell Institute.

Comments (1) | Reprints | Share:          

Henri Termeer, the former CEO of Cambridge, MA-based Genzyme, has joined the board of Verastem, a startup seeking to develop treatments against cancer stem cells. Verastem, co-founded by MIT biologists Robert Weinberg and Eric Lander, raised $16 million last November, in a round that included Longwood Founders Fund, Bessemer Venture Partners, Cardinal Partners, and MPM Capital. “We believe that Henri’s extensive experience and expertise, gained from building Genzyme into a leading global biotechnology company, will serve as an invaluable asset for Verastem,” said chairman Christoph Westphal, in a statement.

Comments | Reprints | Share:          

On the fourth floor of the TechTown science and research park in Detroit, the words “Great Lakes Stem Cell Commercialization Center” practically startle a vistor with their large, dark green lettering sprawled across a white wall.

“Yeah, we’re changing the name,” James Eliason, the center’s director, tells me.

“Really?” I ask. “Why?”

“Well, for one thing, it’s way too long,” chuckles Eliason. “Commercialization” takes up a lot of wall space. So the center plans to replace “Commercialization” with “Innovation.”

I suspect it’s not merely a cosmetic change. Commercialization implies companies are converting their technologies into revenue while innovation indicates companies are still creating those technologies. Despite years of research, money, and hype, the stem cell industry still falls squarely in the latter category.

Perhaps no one knows this better than Eliason, a professor at Wayne State University and CEO of MitoStem, a university-bred startup trying to develop pluripotent cells (which scientists can coax into any other type of cell) from sources other than human embryos.

Just three years ago, Michigan seemed on the verge of a stem cell revolution. In 2008, voters approved an amendement to the state constitution allowing taxpayers to fund research into embryonic stem cells.

A year later, WSU announced the creation of the Stem Cell Commercialization Center at TechTown. University officials envisioned the center incubating stem cell startups not only from Michigan but from around the world. And in 2010, Detroit hosted the annual World Stem Cell Summit.

Since then, the hype over stem cells has given way to economic, scientific and political realities.

Last month, University of Michigan star stem cell researcher Sean Morrison bolted the state to lead a new pediatric research initiative at the University of Texas Southwestern Medical School, but not before slamming groups that oppose the technology.

“There are a small number of faith-based special interest groups that are attacking relentlessly,” Morrison recently told AnnArbor.com. “Relentlessly looking for ways to block these forms of medical research most people in the country feel should be supported. They’re well-enough organized and sophisticated and have deep-enough pockets. What that means is we are constantly under attack.”

Despite initial enthusiasm a decade ago, investors are now wary of stem cell startups, preferring to see if companies like Geron and Advanced Cell Technologies succeed with their clinical trials, Eliason says.

Until then, “investors are not going to invest,” he says. “This is not like information technology. This is not like making [a smart phone application] that gets you eight times return on investment.”

The TechTown facility has progressed slowly. In February 2009, WSU boldly claimed the lab would be completed in six months and house five biotech startups spun out of the university.

Not quite.

Today, the center is still being built but seems mostly completed. Eliason is trying to raise the $3 million it will take to purchase equipment and ramp up operations.

“Our major thing is money,” he says.

But Eliason remains committed to the vision. With venture capital tight, Eliason says the facility can help researchers and startups from U-M, WSU, and Michigan State University develop their technologies so they better position themselves for funding whey they are ready.

He wants to emulate the model of Asterland. The company, which occupies the same floor in TechTown, acts as a logistics manager for drug companies, supplying them with human tissue to test their therapies.

“We can provide to researchers what they need the most” by way of services, equipment and raw materials, Eliason says. “There’s a lot of research that needs to be worked out. We can help speed up the process.”

In addition to MitoStem, the center will soon house a biotech startup founded by Martin Bluth, the new director of translational research for WSU School of Medicine’s pathology department.

Bluth says he likes what the center and university have to offer his company.

“I never had such a welcoming infrastructure as this,” Bluth says. “It’s quite remarkable.”

Comments (2) | Reprints | Share:          

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

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

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

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

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

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

Comments (9) | Reprints | Share:          

The board of iPierian, the South San Francisco-based stem cell company with high-profile scientific founders from Harvard University and prominent financial backers that include GlaxoSmithKline, Kleiner Perkins Caufield & Byers, Google Ventures, and Biogen Idec, has terminated several members of the company’s senior executive team as part of a shift in strategy, Xconomy has learned.

Michael Venuti, who was named CEO of Ipierian in July 2010, was fired by the board in late April of this year, and the company’s top executives in charge of finance, business development, and legal/intellectual property were dismissed within days, according to John Walker, Venuti’s predecessor as CEO of iPierian, and two other sources with knowledge of the situation. The chief technical officer, Berta Strulovici, left in the weeks prior to the departures of the other executives, sources said. iPierian hasn’t publicly announced the departures, but it has updated its corporate website, which says the new CEO is Peter Van Vlasselaer, the former CEO of Palo Alto, CA-based Arresto Biosciences. Van Vlasselaer is the only person listed under “Leadership Team” on the company’s website.

Two members of the iPierian board, Corey Goodman and Beth Seidenberg, declined to comment on the moves. Venuti didn’t respond to a request for comment, and neither did Van Vlasselaer or George Daley, a co-founder of the company at the Harvard Stem Cell Institute.

iPierian has been one of the nation’s highest profile stem cell startups of the past few years. The company in its current form was put together in July 2009, when Pierian, a company co-founded by three world-renowned stem cell researchers at the Harvard Stem Cell Institute, was merged with iZumi Bio, a San Francisco startup that focused on reprogramming adult cells to become “pluripotent,” so they could have the vast potential, like that of a stem cell, to morph into most any cell type in the body.

The new combined company, which I profiled in these pages last June, has a high-profile set of venture backers that have poured more than $50 million into the company. The crew of backers includes Kleiner Perkins Caufield & Byers, Highland Capital Partners, MPM Capital, Google Ventures, GlaxoSmithKline’s SR One, FinTech Global Capital, Mitsubishi UFJ Capital, Mission Bay Capital, Atel Ventures, and Biogen Idec New Ventures. iPierian’s last financing came as a Series B round worth $28 million, which Xconomy reported in September.

iPierian’s business strategy has long been to develop technology for using “induced pluripotent stem cells” as a tool for screening new drug candidates; it would then license the technology to Big Pharma companies. In my profile last June, then-CEO Walker said iPierian had created 200 different “lines” of induced pluripotent stem cells from patients with neurodegenerative diseases like Spinal Muscular Atrophy, Huntington’s, Parkinson’s, and Alzheimer’s, and from people with Type 2 diabetes. The company was comparing those cells with cells from healthy relatives to better home in on what might be going awry in the patients with the ailments, and which drugs might have the best chance to change the course of their disease in clinical trials.

iPierian hasn’t yet found a Big Pharma partner to provide cash and validation for this strategy, but Venuti was in position to execute on the plan at the point he was fired, Walker said … Next Page »

Comments (1) | Reprints | Share: