—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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News of FDA drug approvals shone the spotlight on some New England biotechs this week.

—Waltham, MA-based Alkermes (NASDAQ: ALKS) and San Diego-based Amylin Pharmaceuticals(NASDAQ: AMLN) won FDA approval for their injectable diabetes drug exenatide once-weekly (Bydureon). This was their third time seeking clearance for the drug, which uses technology from Alkermes to last long enough in the bloodstream to turn it into a once-weekly injection

—Additionally, the FDA cleared a drug developed by Lexington, MA-based Curis and its partner Genentech as treatment for a common form of skin cancer called basal cell carcinoma. The drug, vismodegib (Erivedge), is the first approved product for Curis.

—They say good news comes in threes. Cambridge-based Vertex Pharmaceuticals also got a faster-than-expected FDA OK to start selling its drug ivacaftor (Kalydeco) as a treatment for a rare form of cystic fibrosis. That’s the second drug approval for Vertex (NASDAQ: VRTX), which also sells a treatment for hepatitis C. Bonnie Ramsey, one of the key people involved in developing the drug, talked to my colleague Luke about the implications of the approval.

—But there was some bad news, too: A week after reporting data that its pancreatic cancer treatment saridegib (IPI-926) showed some success in a small study, Infinity Pharmaceuticals (NASDAQ: INFI) halted a bigger, mid-stage clinical trial of the drug when it showed patients were living longer in the placebo group. The Cambridge, MA-based company’s shares fell more than 30 percent after the news last Friday.

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Bonnie Ramsey said three years ago that a cystic fibrosis drug from Vertex Pharmaceuticals was a huge medical advance in the making, and would end up being an achievement on par with putting a man on the moon, at least for her patients.

Yesterday, she says, was the day it truly felt like she was part of a team that reached the moon-shot goal. The good news came when the FDA approved Vertex’s ivacaftor (Kalydeco) as the first drug of its kind to work by treating an underlying genetic defect for cystic fibrosis.

“It’s a really big day,” says Ramsey, a leading CF physician/scientist at Seattle Children’s Hospital and the University of Washington. “Even though it’s for a small subpopulation, the treatment paradigm has completely changed. It’s no longer about just treating the symptoms, it’s about treating the genetic defect. That’s a real game-changer.”

The drug from Cambridge, MA-based Vertex (NASDAQ: VRTX) is now FDA approved for patients age six and older who have what’s known as a Class 3 gene mutation called G551D. This mutation is found in about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis. The disease, the result of various mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs, and poor absorption of nutrients. It means patients have to endure hours a day of treatment their entire lives, and the median life expectancy is about 39 years. Doctors currently treat the symptoms of the disease, through things like inhalable antibiotics, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

Bonnie Ramsey of Seattle Children's Hospital

Ramsey has had an instrumental role in developing this drug since its infancy. As the executive director of the Cystic Fibrosis Foundation’s Therapeutic Development Network, back in 2000 she began collaborating with the drug’s original developer, San Diego-based Aurora Biosciences (later acquired by Vertex.)

Ramsey was the lead investigator of a pivotal study of 161 patients, known as Strive, which yielded results in February that laid the foundation for yesterday’s FDA approval. The study showed that patients age 12 and older on the twice-daily pill from Vertex had about a 10.6 percent absolute improvement in their ability to force out air from their lungs in one second—compared with a placebo. The effect held up over the full 48-week course of the study. Researchers also saw significant improvements in being able to gain weight, while also reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, and upper respiratory tract infections, researchers said, although more patients dropped out of the placebo group than the drug group. A second study verified the effect in younger patients, age six and above.

What excites scientists is that the drug has a compelling foundation in biology. It is designed to … Next Page »

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[Updated: 1:25 pm] Vertex Pharmaceuticals is now officially more than just a one-hit wonder.

The Cambridge, MA-based biotech company (NASDAQ: VRTX), best known for its hepatitis C drug, has won clearance from the FDA to start selling a new twice-daily pill called ivacaftor (Kalydeco) for a rare form of cystic fibrosis. The FDA said today the Vertex drug can now be used for patients age six and older who have a gene mutation called G551D. About 1,200 patients in the U.S., or roughly 4 percent of the total population of 30,000 cystic fibrosis patients, have the mutation.

The approval came faster than expected, as Vertex turned in its application in October, and the FDA had a deadline of April 18 to complete its review. The company plans to start shipping the drug to pharmacies this week, the company said.

“Kalydeco is an excellent example of the promise of personalized medicine—targeted drugs that treat patients with a specific genetic makeup,” said FDA Commissioner Margaret Hamburg, in a statement. “The unique and mutually beneficial partnership that led to the approval of Kalydeco serves as a great model for what companies and patient groups can achieve if they collaborate on drug development.”

The new cystic fibrosis drug has been highly anticipated for years, and the application to the FDA is based on clinical trial results that arrived in February. The study of 161 patients found that patients on the Vertex drug had about a 10 percent absolute improvement in their ability to force out air from their lungs in one second—a common measure of success in treating lung disease—compared with those on a placebo. The effect lasted over the entire 48-week course of the study. Researchers also saw significant improvements in reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, upper respiratory tract infections, nasal congestion, rash, and dizziness, although more patients on the placebo group dropped out of the study early because of side effects, Vertex said.

While the 10 percent absolute improvement in breathing ability for people with a deadly lung disease might not sound like much, it is a big step forward for the disease. Cystic fibrosis, the result of mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs. That effectively suffocates people over time, and often ends up killing people in their late 30s or early 40s. Doctors currently treat the symptoms of the disease, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

[Updated pricing information] Based on the small patient population that has the G551D mutation, and the significant benefit the drug provides to them, Vertex set the price at $294,000 per patient per year, Nancy Wysenski, Vertex’s chief commercial officer, told analysts today on a conference call. The company estimates that about 60 percent of eligible patients have private health insurance, while the rest are covered by government insurance, Wysenski says. As is common for companies selling high-priced medications, Vertex has established programs to help get the drug to patients who can’t afford it. Vertex said it will provide free medicine to uninsured families with household incomes of less than $150,000 a year, and it will provide assistance in making co-payments for those with insurance.

“We have a strong commitment to help patients 6 and older get Kalydeco,” Wysenski said on the conference call.

The drug was developed as part of a 13-year long collaboration with the Cystic Fibrosis Foundation, which put more than $70 million into the development program, along with Vertex, and the drug’s original developer that was acquired by Vertex-San Diego-based Aurora Biosciences. Because of its support, the Cystic Fibrosis Foundation will collect a royalty on Kalydeco sales that will start in the “high-single digit” percentage of sales, and escalate to “just below the teen level” as the drug reaches undisclosed sales milestones, according to Vertex finance chief Ian Smith.

Vertex has a number of plans ongoing to expand the use of Kalydeco beyond this initial small group of patients in the U.S. The company has applied for approval in the European Union, and hopes to receive clearance there to start selling in the third quarter. It is also running a trial of the drug in patients under the age of six; as a treatment for certain other gating mutations of the CFTR gene; and in combination with other medicines that seek to correct additional mutations.

Based on the price and number of patients in the U.S., Vertex can expect peak U.S. sales from the G551D patient population of about $550 million, said analyst Mark Schoenebaum of ISI Group, in a note to clients.

Vertex shares climbed 6 percent t0 $36.90 at 1:45 pm Eastern.

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It was a busy news week in the New England life sciences scene, with acquisitions, clinical data, and partnership deals.

—Thanks to a new co-promotion deal, Genzyme will begin marketing a diagnostic test for thyroid cancer developed by South San Francisco-based Veracyte. Genzyme, the Cambridge, MA-based unit of Sanofi (NYSE: SNY) makes a common drug for treating the disease.

—Cambridge-based Infinity Pharmaceuticals (NASDAQ: INFI) presented data from a 16-patient study indicating saridegib, its experimental once-daily pill, could potentially shrink tumors and help people live longer when combined with chemotherapy.

—Millennium, also of Cambridge, nabbed FDA clearance to begin selling a version of the multiple myeloma drug bortezomib (Velcade) that can be injected just under the skin, as well as intravenously. It’s significant because the under-the-skin drug seems to be more tolerable, reducing the drug’s side effect of nerve damage in the fingers and toes.

—Xconomy national biotech editor Luke Timmerman wrote about how Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) and its South San Francisco-based partner Alios Biopharma are positioning themselves to defend their share of the hot growing market for hepatitis C treatments.

—And my colleague Arlene wrote about the family-run business that is Woburn, MA-based Courtagen Life Sciences. Three brothers fill the roles of CEO, president, and chief scientific officer, while their dad chairs the board. Read about more about how it all came together.

—Bedford, MA-based Avila Therapeutics, a maker of so-called covalent drugs for treating cancer, was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million upfront. Potentially $575 million more could come to Avila through milestones. The startup’s venture investors included Polaris Venture Partners, Atlas Venture, Abingworth Management, and Advent Venture Partners. Check out investors’ and friends’ reactions to the deal across the Web here.

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The unsolicited $5.7 billion offer that Roche made for Illumina will no doubt dominate San Diego’s biotech news for weeks to come. We have it and more.

—Switzerland’s Roche offered $5.7 billion, or $44.50 a share, for San Diego-based Illumina (NASDAQ: ILMN in a hostile bid disclosed yesterday. Roche’s bid to stake a claim in genetic diagnostics by acquiring the market-leading maker of DNA sequencing instruments would be the Swiss pharma giant’s biggest deal since its $46.8 billion buyout of Genentech almost two years ago. Roche is the world’s biggest maker of cancer drugs, which suggests its quest for Illumina represents a significant move to base cancer treatments on each patient’s genome.

—Venture capital investors sank $4.73 billion into 446 biotechs nationwide in 2011, according to the MoneyTree report from the National Venture Capital Association, PwC, and Thomson Reuters. But as Luke pointed out in his BioBeat column, there is an alarming drop in support for early stage life sciences startups. Only 153 biotech and medical device startups got their first round of financing in 2011, the lowest amount of seed investment activity in 15 years.

—At an Xconomy dinner discussion, former Amira Pharmaceuticals CEO Bob Baltera said insufficient access to capital is the biggest driver for decision-makers on both sides of biotech-pharma partnerships. So what are some other key factors? We asked some of San Diego’s life sciences leaders to explore the question in an “on the record” dinner discussion late last year.

—San Diego’s Sequenom (NASDAQ: SQNM) completed its secondary public offering, raising roughly $62 million in gross proceeds (before underwriting costs) in the sale of 14.95 million shares, including additional allotments granted to underwriters. Sequenom said it plans to use the net proceeds for … Next Page »

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Vertex Pharmaceuticals went from king of the hill in the treatment of hepatitis C to yesterday’s news in about six wild months. But while many on Wall Street say Vertex’s big drug will soon become obsolete, Vertex and its small partner in South San Francisco have quietly put themselves in position to defend a big share of this future multi-billion dollar market.

Cambridge, MA-based Vertex (NASDAQ: VRTX), which has significant operations in San Diego, is running a series of small clinical trials this year that will mix and match combinations of antiviral medicines against hepatitis C. These trials will help determine whether Vertex and its partner, South San Francisco-based Alios Biopharma, have hit upon a combination of drugs that can raise the cure rate, and reduce side effects, for millions of patients with this liver-damaging virus.

While Vertex’s new drug has been a huge step forward in the past year, the ultimate way to fight the fast-mutating virus, many scientists believe, will be by putting together a cocktail of antivirals that attack hepatitis C from multiple angles like with HIV.

“There isn’t one magic pill that will solve the problem,” says Vertex CEO-to-be Jeff Leiden. “It’s clear the HCV space will evolve into different combination treatments for different patients. It’s not yet clear what the best combination is going to be. What you want is to have the component parts in your company so you can put them together.”

Vertex's Jeff Leiden

The hepatitis C world saw dramatic upheaval in the past year as researchers learned more about antivirals in development. Vertex won FDA approval in May for its new protease inhibitor, telaprevir (Incivek), which doubled the cure rate to about 80 percent for new patients when given in tandem with standard pegylated interferon alpha and ribavirin. About 25,000 people rushed in to get treated with the new combo regimen in its first seven months on the market, generating hundreds of millions in cash flow per quarter for Vertex, and pushing it into the black.

Exciting as it all was for physicians, patients, and Vertex shareholders, the company was soon upstaged. Researchers have long been looking for a way to get rid of the injectable interferon part of the regimen, which causes nasty flu-like symptoms that people must endure for months. To go beyond combo therapies (like the one from Vertex and another from Merck that include injectable interferon), the next step is to hit the hepatitis C virus with not just protease inhibitors, but also drugs from other classes—nucleotide polymerase inhibitors, and non-nucleotide polymerase inhibitors.

Princeton, NJ-based Pharmasset (NASDAQ: VRUS) stole the show last November at the American Association for the Study of Liver Disease when it said its nucleotide polymerase inhibitor cured all 40 patients with certain hepatitis C genotypes in a small study—a result that led to its $11 billion acquisition by Foster City, CA-based Gilead Sciences (NASDAQ: GILD). A few weeks later, another maker of drugs in that class, Alpharetta, GA-based Inhibitex (NASDAQ: INHX), got bought by Bristol-Myers Squibb for $2.5 billion. Separately, Bristol-Myers Squibb released some more promising clinical results from its own pipeline just last week.

Those developments got everyone talking about a new paradigm in hepatitis C, which many on Wall Street believe will leave Vertex in the dust. Jason Kantor, an analyst with RBC Capital Markets in San Francisco, said in a Dec. 19 note to clients that “the consensus view is that Vertex’s HCV franchise will essentially go to zero beyond 2015.” Vertex stock has dropped almost 40 percent in the past year, down from its 52-week high of $58.87 to $35.86 at yesterday’s close.

While Leiden has spent much time talking with investors about Vertex’s other drugs in development—particularly one expected to hit the market this year for cystic fibrosis—he says the company isn’t about to surrender in the hepatitis C market. He has a plan intended to allow Vertex to compete beyond 2015, when the first all-oral, interferon-free regimens are expected to could come along and replace today’s standard of care.

Sometime before the end of March, Vertex expects to see results from an early-stage study of an all-oral combo regimen of telaprevir (a non-nucleotide polymerase inhibitor called VX-222 that it acquired from a Canadian company in 2009) and the usual ribavirin. If Vertex can cure about 75 percent to 80 percent of patients with this cocktail, and reduce side effects by eliminating interferon, Leiden says the company would be ready to go to pivotal clinical trials this year with its own all-oral combination.

“If we can do that, it will be a very exciting result. If you take that regimen into pivotal trials, now we’re talking about 2014 to finish those trials,” Leiden says.

And that isn’t the only combo Vertex has in mind. Within weeks … Next Page »

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A decade ago, when newspaper and magazine editors prepared their rundown of the year’s most important news stories, they really were just choosing the articles that they thought had the most impact. That was old media.

Today, everything is measured and anything can be quantified—at least on the Internet. In cyberspace, people vote with their clicks, and my list of the top 10 stories of 2011 is based on the stories posted on the Xconomy San Diego website (from Jan. 3 through Dec. 23) that attracted the most traffic. That’s new media.

And a new year is beckoning, so it’s out with the old and in with the new.

Believe it or not, some stories published before 2011 still pulled in a lot of interest over the past year. For example, one of the top stories of 2011 was a post I wrote two years earlier about the pervasive skepticism voiced by biofuels industry leaders during the 2009 Algae Biomass Summit in San Diego. It also is noteworthy, although perhaps no surprise, that a 2009 post I wrote about the first human trial of San Diego-based Histogen’s hair regrowth treatment continues to attract readers who are Googling for news about baldness and hair restoration.

The No. 1 story of 2011, however, was surprising—at least to me. It was a commentary about the dramatic changes underway in new treatments for hepatitis C by San Diego Xconomist Steve Worland, the CEO of San Diego-based Anadys Pharmaceuticals. Worland alludes to the spate of new product introductions by Merck and Vertex, and predicts an increasing number of direct acting, cocktail-type antiviral drugs. It’s a hot topic, although Wall Street’s interest might have been piqued as analysts and traders searched to understand why Roche acquired Anadys for $230 million about five weeks after we published Worland’s op-ed.

It’s also worth noting that these high-traffic stories tend to occur in … Next Page »

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—After naming former Boston Scientific executive Fred Colen as CEO last month, San Diego’s BeneChill raised nearly $15 million in a round that’s targeting a total of $25.6 million, according to a recent regulatory filing. BeneChill, founded in 2004, has been developing therapeutic hypothermia medical products. The company’s European headquarters is in Lausanne, Switzerland, and BeneChill has European approval to sell its intra-nasal cooling system—which induces therapeutic hypothermia immediately following cardiac arrest.

—San Diego’s Sotera Wireless has been busy getting its ducks in a row. After applying for FDA approval of its vital signs wireless patient care monitoring technology in August, Sotera raised $12.2 million last week in Series D financing. Sotera said it also signed a commercial partnership agreement with Kansas City, MO-based Cerner, the giant health IT systems provider. If all goes as planned, funding from the current financing round will be used to support the launch of Sotera’s “ViSi Mobile System” in early 2012.

—Melinda Richter, the founder and CEO of San Francisco-based Prescience International sat down with me to discuss her plans for the life sciences incubator going in at Johnson & Johnson’s pharmaceutical R&D facility in San Diego. The J&J facility, known as the Janssen Labs at San Diego, will host 18 to 20 early stage startups. Richter, who will manage the facility under a contract with Janssen, said she wants to dramatically lower the costs for starting a life sciences company.

—Optimer Pharmaceuticals (NASDAQ: OPTR) said it won approval to start selling its new antibiotic, fidaxomicin (Dificlir) in Europe as a new treatment for C. difficile infections of the gut. Japan’s Astellas Pharmaceuticals has the rights to … Next Page »

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New England saw a flurry of life sciences news this week, from venture firms, new startups, and established biotechs.

—Boston-based Avila Therapeutics presented data at the American Society of Hematology from early human trials of its lead cancer drug, AVL-292, which is on track to enter more extensive Phase 2 trials next year. This compound, a so-called covalent drug that bonds tightly to disease-causing proteins to shut down their activity over time, is targeting cancers such as chronic lymphocytic leukemia.

—Alnylam Pharmaceuticals (NASDAQ: ALNY) could be onto something in the field of RNA interference, a technology that has fallen out of favor in the industry, my colleague Luke wrote. The Cambridge, MA-based biotech reported at a scientific meeting last month that one of its experimental RNAi drugs was able to shut down production of a protein that causes a rare and deadly disease called TTR amyloidosis.

—ImmusanT, a new startup working on therapies for celiac disease, inked a $20 million Series A financing from Vatera Healthcare Partners. The Cambridge-based company is developing a vaccine and a diagnostic and monitoring test for the condition, which renders the protein gluten toxic in the body.

—Newton, MA-based AesRx kicked off human trials of its lead drug Aes-103, a treatment for sickle cell disease. A partnership formed with the National Institutes of Health helped the company get this far, after it struggled to raise venture funding.

—Boston-based Ember Therapeutics raised $34 million from Third Rock Ventures to develop drugs that fight obesity by burning off … Next Page »

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[Update: 10:40 am ET] Vertex Pharmaceuticals is getting a new CEO, as it faces tough new competition with its flagship hepatitis C drug and prepares to roll out a second new medicine for cystic fibrosis.

Cambridge, MA-based Vertex (NASDAQ: VRTX) said today that Jeff Leiden, a member of the company’s board and a managing director at Clarus Ventures in Boston, will replace Matt Emmens as president and CEO on Feb. 1. Emmens plans to remain a full-time executive chairman until May, when Vertex says he will retire from a full-time role at the company, but remain a member of the company’s board.

[Update with Emmens's age] Emmens, 60, is the former Merck executive who took over from founder Josh Boger as CEO in May 2009, as the company was finishing up clinical trials and preparing for the commercial push of a groundbreaking new therapy for hepatitis C, telaprevir (Incivek). The drug was cleared by the FDA in May, and although analysts expect it to be a billion-dollar seller, it quickly surpassed Wall Street sales expectations in its first couple quarters, allowing Vertex to report its first product-driven quarterly profit in its 22-year history.

But the hepatitis C landscape has changed in just the past couple months, as Gilead Sciences moved to acquire a competing drugmaker for $11 billion, and Vertex’s stock has plunged amid fears that it will soon be upstaged in the marketplace.

Shares jumped as high as $58 a share earlier this year, then plummeted all the way to $30.54 at yesterday’s close, leaving Vertex with a market valuation of $6.3 billion. Most of the value is based on the prospects for Incivek, although Vertex also has an application in to the FDA to start selling a new cystic fibrosis drug, ivacaftor (Kalydeco). That drug is getting a faster-than-usual six-month regulatory review, which the FDA sometimes grants to groundbreaking new medicines. The FDA deadline to finish its review is April 18.

“Under Matt’s leadership, Vertex established itself as a company capable not only of discovering important new medicines, but of successfully bringing those medicines to patients,” Leiden said in a statement. “As a member of the Vertex Board, I have been extremely impressed with the company’s ability to retain its clear focus on both groundbreaking science and improving the lives of people with serious diseases. It will be a privilege to lead Vertex at this exciting time and to further build the organization as we prepare for the global launch of our second new therapy, advance our diverse pipeline and build value for shareholders in the years ahead.”

Leiden, 56, is the former president and chief operating officer of Abbott Laboratories, where he gained experience in the highly competitive rheumatoid arthritis drug market with adalimumab (Humira).

Emmens, in a company statement, added: “I am proud of the accomplishments we have made during my almost three years at Vertex and believe the company is well-positioned to bring forward additional innovative new medicines. Jeff brings significant and broad leadership experience to Vertex, and I am confident that his understanding of the company, combined with his unique blend of scientific, commercial and financial expertise, will help Vertex deliver on its goals in the future.”

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

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

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

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

Regulus Therapeutics CEO Kleanthis Xanthopoulos

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

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

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

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New England area biotechs had news this week on stock price, clinical data, new financings, and more.

—AMAG Pharmaceuticals of Lexington, MA, saw its stock shoot up 18 percent to $16.21 on Monday after announcing its CEO Brian Pereira’s departure and its plans for reducing operating expenses. AMAG (NASDAQ: AMAG) has struggled in transitioning from a diagnostic-imaging product maker to a drug developer, with its shareholders recently voting down a plan to merge with Allos Therapeutics (NASDAQ: ALTH).

—An early analysis of a pivotal study of Cambridge, MA-based Ariad Pharmaceutical’s experimental drug ponatinib showed the treatment may be safer than it was originally thought to be. A previous trial of the drug showed that about 12 percent of patients developed an adverse event known as pancreatitis, but Ariad (NASDAQ: ARIA) lowered the dose for the second trial and the rate of pancreatitis decreased to 3.7 percent of patients.

—Lebabon, NH-based PharmaSecure inked a $3.9 million investment late last month to put towards its technology for more cheaply preventing the sale of counterfeit drugs in markets like India. The money came from Innovation Endeavors—the fund led by former Google CEO Eric Schmidt—as well as Gray Ghost Ventures, Healthtech Capital, and TEEC Angel Fund.

—Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) saw its stock drop 17 percent over two days after other biotechs developing rival hepatitis C drugs shared promising data at the American Association for the Study of Liver Disease (AASLD) annual meeting in San Francisco this week.

—Rhythm Pharmaceuticals, a Boston startup developing experimental obesity and diabetes treatments, hired Keith Gottesdiener, a veteran of the pharmaceutical giant Merck, as its new CEO.

—Dusa Pharmaceuticals plans to begin Phase 2 clinical testing later this month of its drug-device combination for preventing the recurrence of pre-cancerous skin growths known as actinic keratoses (AK). The company has sold the treatment, Levulan Kerastick, as a method for removing existing growths, but dermatologists have reported success preventing their recurrence by applying the product for longer than initially directed. Wilmington, Ma-based Dusa (NASDAQ: DUSA) is seeking FDA approval to market the product for that purpose.

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Cambridge, MA-based Vertex Pharmaceuticals has seen its stock take a whopping 17 percent hit in the past two days at a scientific meeting, as investors have had time to think about the implications of new clinical trial data from a couple of competitors in the hepatitis C field.

Vertex (NASDAQ: VRTX) saw its stock tumble from $36.63 at Friday’s close to $30.41 at today’s close—a 17 percent drop over two days of trading—as investors absorbed a flurry of news stories at the annual meeting of the American Association for the Study of Liver Disease (AASLD) in San Francisco. Vertex’s decline coincided with a boost in the stocks of of Alpharetta, GA-based Inhibitex (NASDAQ: INHX) and Princeton, NJ-based Pharmasset (NASDAQ: VRUS).

Vertex has been the reigning king of hepatitis C for the past year. Its protease inhibitor drug telaprevir (Incivek) was FDA approved as a new treatment that boosts cure rates to almost 80 percent, while shortening the time people need to take interferon and ribavirin, a standard combination that causes significant side effects. The company has handily beaten Wall Street sales estimates for its first couple quarters on the market, and turned profitable, while fending off competition from a protease inhibitor from Merck (NYSE: MRK). But researchers are pushing hard now to fight hepatitis C with a combination of new antiviral medicines, much like how HIV is controlled, and Vertex’s existing drug could end up being less important over time than other treatments.

Pharmasset, which is developing a nucleotide polymerase inhibitor, saw its stock climb at the meeting when it said its drug had cured all 40 patients in a clinical trial. Importantly, the Pharmasset drug produced cures whether patients got interferon or not—and although the number of patients was small, it would be a big advantage if Pharmasset’s drug could eliminate the need for interferon. The company is still at least a couple years away from challenging Vertex on the market, but analysts see this new drug and potentially another one from Inhibitex as becoming potent new options that might be able to reach a goal that has so far eluded Vertex—the elimination of interferon, and the flu-like symptoms it causes, from the standard treatment regimen for hepatitis.

Thomas Russo, an analyst with Robert W. Baird, downgraded Vertex to “neutral” today after going over the results from the liver meeting. One of the bullet points in his note today was headlined “AASLD event reveals Vertex itself uncertain, lacking convincing strategy to defend position 2014+.”

Russo said he applauded Vertex management for “sincere, credible” comments about how Pharmasset may have changed the hepatitis C paradigm, but he isn’t sure Vertex can fend off the challenge through its own internal development, or through an acquisition.

“We remain positive on cystic fibrosis catalysts in the first half of 2012, but investors first need confidence in the HCV floor, and we’ve lost conviction this stock can “thread the needle” in an environment of new uncertainty (and resignation?) coming from the company itself,” Russo wrote.

Besides the nucleotide inhibitors in the works, other pharma companies are developing so-called non-nucleoside inhibitors as a third class of antiviral medicine that could go into combinations. Roche recently agreed to acquire San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS) for $230 million to get its “non-nuc,” while Abbott Laboratories is also pursuing a drug in that category.

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Groupon raked in so much cash through its initial public offering last week that it could buy the entire class of life sciences companies that have gone public in 2011.

For those of you who aren’t following the Groupon melodrama, the Chicago-based online daily deals site raised $700 million last week in its IPO after overcoming serious questions about its accounting practices. Groupon shrugged that off and saw its stock (NASDAQ: GRPN) boom 31 percent on the first day of trading. TV news commentators cheered, just like when social networking site LinkedIn (NYSE: LKND) went public in May.

The biotech IPO market, by comparison, has been about as exciting as the average Seattle Mariners game was this year.

Not everybody thought it would be this dull. Heading into 2011, market prognosticator Steve Burrill predicted there would be at least 25 biotech IPOs this year in the U.S. The final tally will be nowhere close to that. Renaissance Capital of Greenwich, CT, says there have been 13 healthcare IPOs this year, compared with 37 from the tech industry. Even by reaching for the loosest definition possible of the “life sciences” industry, there have been 16 life sciences IPOs so far this year, as tallied in August by The Burrill Report. But if you get rid of specialty chemical/biofuel companies, and you whittle out a Tibetan medicine company and a health IT player, that brings the group down to 10 true life sciences IPOs by my count. Six are drug developers, leaving a couple of medical device companies, a diagnostics company, and an instrument maker.

Here’s a quick rundown of the life sciences IPO class of 2011 that I put together. Three have gained value this year, two are basically treading water, and five have declined. The grand total of IPO money that went to these 10 companies is a paltry $640 million—less than a single online daily deals site raised last week. Just as worrisome, I’m almost certain that when scientific eyes look at this list, they glaze over with boredom.

It’s a sad state of affairs today that some daily deals website, which produces nothing of lasting value and will probably end up the poster child of another tech bubble gone bad, can generate so much attention and actual money.

Don’t get me wrong, I don’t think investors should just start taking fliers on unproven biotech companies. The vast majority of people who try that would surely get burned, like I’m guessing most people will get burned by Groupon.

This dynamic isn’t going to change anytime soon. The biotech VC world is in crisis, pharma companies are cutting their R&D capabilities, and the federal government is contemplating budget cuts that would put a dent in basic academic research. Hardly anybody, other than a few focused philanthropies, seems to be stepping up to invest in the risky, messy business of biomedical discovery that keeps the whole industry moving forward. Certainly IPO investors have made clear the past few years they want no part of that kind of risk.

Ironically, this same abundance of caution is coming during the same year of some major biotech home runs. There has been a string of outstanding innovation this year in life sciences from … Next Page »

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It was a meaty New England life sciences week, with clinical advances, new funding, CEO hires, and acquisitions headlines.

—Sanofi hired David Meeker as the new CEO of its Cambridge, MA-based Genzyme unit. Meeker, who got started at the company in 1994, will move into his new role on November 1 and will lead the rare diseases and multiple sclerosis divisions. Other Genzyme units have already been integrated into Sanofi’s global operations.

—My colleague Arlene took a closer look at Cambridge-based Rhythm Pharmaceuticals, a startup developing diabetes and obesity drugs. Rhythm is navigating a crowded but struggling drug space with licensed compounds from the French biotech company Ipsen.

—Lexington, MA-based Cubist Pharmaceuticals (NASDAQ: CBST) will acquire Adolor for $4.25 per share in cash ($190 million total), plus milestones for Adolor’s experimental drug for treating chronic opioid-induced constipation, ADL5945. That pushes the total value of the deal to $415 million. The transaction was made possible, Cubist says, when pharma giant GlaxoSmithKline (NYSE: GSK) dropped out of a co-promotion deal with Adolor (NASDAQ: ADLR) after their drug for accelerating healing after bowel surgery ran into safety issues and was only cleared for in-hospital use.

—Weston, MA-based Biogen Idec (NASDAQ: BIIB) met its goals in a second clinical trial of its first pill for multiple sclerosis. In the study, Biogen’s pill reduced MS flareups by 44 percent when patients took it twice a day, and by 51 percent when they took it three times a day. The company’s stock shot up 7.6 percent to $115.07 per share at 10:06 Eastern time after the news. Biogen also announced it would pay $45 million upfront to South San Francisco-based Portola Pharmaceuticals to collaborate on autoimmune disease drugs.

—Atreaon, a new Newton, MA-based biotech company, raised $8 million of a potential $20 million equity round, according to an SEC filing. And Watertown, MA-based Arsenal Medical, a developer of biomaterial-based treatments, said it was spinning out a new company called 480 Biomedical. It also announced it had raised $3 million and 480 had raised $15 million, from return Arsenal investors return investors Polaris Venture Partners, North Bridge Venture Partners, and Intersouth Partners. The new spinout will focus on developing scaffold and delivery technology for treating a form of peripheral vascular disease known as SFA occlusive disease.

—Cambridge-based BIND Biosciences and Watertown-based Selecta Biosciences each received $25 million from Rusnano, a $10 billion Russian federation fund focused on nanotechnology startups. Each company, which will establish Moscow subsidiaries, also took in another $22.25 million from new and existing investors.

—Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) announced revenues of $659 million for the quarter ended September 30, its first ever profitable quarter from its own product sales. (Vertex turned a profit once before due to a one-time milestone payment.) The $221 million ($1.02 a share) profit last quarter was drive in part by Vertex’s new FDA-approved drug telaprevir (Incivek) for patients with hepatitis C that was cleared by the FDA in May.

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Vertex Pharmaceuticals has tallied up an amazing amount of red ink in its 22-year history, but now it can say that all those long R&D years have created a profitable business.

The Cambridge, MA-based biotech company (NASDAQ: VRTX) said today that it generated $659 million in total revenues, and turned a profit of $221 million ($1.02 a share) in the third quarter that ended Sept. 30. Once before, the company had a quarterly profit in the 1990s from a one-time milestone payment, but this is the first time in Vertex’s history that it has generated a quarterly profit from its own product sales, says company spokeswoman Megan Pace. Vertex reached this point after ringing up an accumulated $3.8 billion deficit through mid-2011, according to its most recent quarterly report.

The emerging financial strength at Vertex is being driven by its new FDA-approved drug telaprevir (Incivek) for patients with hepatitis C. The product, first cleared for sale in the U.S. in May, has been creating a new wave of demand among patients which has been consistently underestimated by Wall Street. Vertex tallied $74.5 million in product sales in the previous quarter, and now has ramped up Incivek sales to $420 million in the period that ended on Sept. 30.

An estimated 3 million people in the U.S. are thought to have chronic hepatitis C infections, and about 170 million worldwide are believed to have the condition. Many patients have elected to go untreated before Vertex’s drug came along, because the prior drugs caused flu-like symptoms that last for almost a year, while offering a cure rate of less than 40 percent. Vertex’s drug has changed the situation, because when given in combination with standard pegylated interferon-alpha and ribavirin, it has cured about 80 percent of patients with this liver-damaging disease, and enabled patients to cut the treatment time in half. The drug costs about $49,200 for a full 12-week course of therapy.

Investors, many of whom have been burned by excessive hype around other biotech drug introductions, had much more tepid forecasts, especially since Vertex is competing with a new drug from Merck from the same class of protease inhibitors. Analysts only forecasted Vertex to generate $31.5 million of sales in the drug’s debut quarter, and about $300 million to $400 million in the period ended Sept. 30, according to reports from TheStreet.com.

“More than 17,000 people with hepatitis C have started treatment with Incivek since its approval in May, underscoring the strength of the launch,” said Nancy Wysenski, Vertex’s chief commercial officer, in a statement. “We are focused on further broadening the number of doctors using Incivek and are continuing to work with the hepatitis C community to increase awareness and screening and to help ensure patients are able to get the support they need.”

The financial performance enabled Vertex to bolster its cash reserves to $658.7 million as of Sept. 30, compared with $593.5 million on June 30, even while it was spending much bigger money on marketing. And, the company is looking to add a second revenue stream to its financial statements next year. This month, it filed an application with the FDA for clearance to sell ivacaftor (Kalydeco, aka VX-770) as a new treatment for cystic fibrosis, a deadly lung disease. That product could generate $700 million in annual revenue over time, according to analyst Tom Russo of Robert W. Baird.

Vertex didn’t provide any update for investors on its forecasts for quarterly sales, and profits.

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Our exciting partnership with the folks at WGBH continues. Check out this morning’s Xconomy report—a roundup of business, technology, and life sciences news that airs every Friday at 7:49am on 89.7 FM.

Today’s news: Wilmington, MA-based Security Innovation is involved in a transportation safety project that will test a wireless collision avoidance system for cars. Third Rock Ventures put $35 million behind Sage Therapeutics. Vertex Pharmaceuticals is seeking FDA approval for a drug that offers a new way to treat cystic fibrosis. And two Boston-area tech companies are being bought out by West Coast giants.

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This week New England’s life sciences community saw a couple of cool new companies emerge and a few potentially important new treatments reach key milestones.

—Boston-based Third Rock Ventures launched its newest startup with $35 million to develop a new class of drugs for brain disorders such as schizophrenia and depression. Sage Therapeutics’ approach is to fine-tune key receptors in the brain, rather than turning them completely on or off.

—Another Third Rock company, Cambridge, MA-based Foundation Medicine, added Kleiner Perkins Caufield & Byers and Google Ventures to a Series A financing that now totals $33.5 million. Foundation aims to develop personalized cancer diagnostics based on new understanding of genomics.

—Lexington, MA-based Agenus (NASDAQ: AGEN) celebrated the news that an experimental vaccine incorporating its immune-boosting technology provided significant protection against malaria in a study of young African children. Agenus partner GlaxoSmithKline (NYSE: GSK), which is developing the vaccine, reported the results in the New England Journal of Medicine.

—Cambridge-based Arteaus Therapeutics emerged from stealth mode, announcing an $18 million funding round and plans to develop a migraine drug with technology licensed from Eli Lilly (NYSE: LLY). Cambridge-based Atlas Venture and New York-based OrbiMed Advisors provided the backing for the startup.

—Vertex Pharmaceuticals (NASDAQ: VRTX), also of Cambridge, filed an application with the FDA for a new type of drug for cystic fibrosis. The drug, ivacaftor (Kalydeco, aka VX-770), is designed to treat patients with a mutation called G551D—they represent about 4 percent of the 30,000 or so people in the U.S. who have cystic fibrosis.

—Cambridge-based Catabasis Pharmaceuticals began its first human trial of its lead drug, a treatment for Type 2 diabetes. The drug, CAT-1004, which combines two well-known types of anti-inflammatory compounds, could be an important add-on to standard treatments for the disease.

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Cambridge, MA-based Vertex Pharmaceuticals is looking to be more than another one-hit biotech wonder. The company, best known for its drug for hepatitis C introduced earlier this year, is now vying for FDA approval of a second treatment that it hopes will shake up the way physicians treat cystic fibrosis, a deadly genetic disease.

Vertex (NASDAQ: VRTX) said today it has turned in its new drug application to the FDA for clearance to sell ivacaftor (Kalydeco, aka VX-770) as a new treatment for a rare form of cystic fibrosis in the U.S. The drug, pronounced kuh-LYE-deh-koh, is designed to treat about 4 percent of the 30,000 or so people in the U.S. with cystic fibrosis who have a mutation of a gene known as G551D. The company is seeking a six-month expedited regulatory review, instead of the usual 10-month review. The FDA sometimes provides faster reviews for groundbreaking new medicines.

The new cystic fibrosis drug has been highly anticipated for years, and the application to the FDA is based heavily on clinical trial results that arrived in February. The study of 161 patients found that patients on the Vertex drug had about a 10 percent absolute improvement in their ability to force out air from their lungs in one second—a common measure of success in treating lung disease-compared with those on a placebo. The effect lasted over the entire 48-week course of the study. Side effects included headache, upper respiratory tract infections, nasal congestion, rash, and dizziness, although more patients on the placebo group dropped out of the study early because of side effects, Vertex said.

While the 10 percent absolute improvement in breathing ability for people with a deadly lung disease might not sound like much, the result is a big step forward for the disease. Cystic fibrosis, the result of a genetic mutation, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs. That effectively suffocates people over time, and often ends up killing people in their late 30s or early 40s. Doctors currently treat the symptoms of the disease, but Vertex’s drug could become the first FDA-approved therapy that works by altering an underlying disease-related protein.

The drug was developed as part of a 13-year long collaboration with the Cystic Fibrosis Foundation, which put more than $70 million into the development program, along with Vertex, and the drug’s original developer that was acquired by Vertex—San Diego-based Aurora Biosciences.

The new CF drug will surely be expensive, given its impact for a small group of patients with a deadly disease. Vertex, like all drug companies, isn’t saying what the price will be until approval. But, naturally, there’s a fair amount of speculation about what the market will pay for such a drug. Thomas Russo, an analyst with Robert W. Baird, quoted a physician in a June research report who said the clinical results for the drug were the best she has seen in 23 years of treating CF. Russo estimates the drug will cost about $150,000 a year, and will generate about $700 million a year in annual revenues over time.

“We are quite comfortable that our model is very conservative and that VRTX’s CF franchise is still a story about potentially very sizable upside,” Russo wrote in the June 16 note.

Vertex said it plans to turn in its application for European Union approval of the new CF compound by the end of this month.

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