Snapette was supposed to be an unusual way for Sarah Paiji to spend the summer between her two years at Harvard Business School. It was a mobile app idea she started working on last winter with Harvard alum Jinhee Ahn Kim, aimed at enabling women to better share and find fashion products in brick-and-mortar stores.

Then, two days before school was set to wrap up that first year, a Twitter interaction with the colorful Silicon Valley investor Dave McClure more or less changed all that, Paiji says. She tweeted an infographic about local shopping, which McClure then retweeted. He also directed his Twitter followers to sign up for the Snapette fashion app. The resulting traffic clued Paiji in to the fact that McClure was someone important in the startup world.

At the suggestion of friends, Paiji reached out to McClure, who runs the 500 Startups seed fund and accelerator in Mountain View, CA, to share some more information on her company. “He liked the idea but said he doesn’t know anything about fashion,” she says. So McClure passed Snapette along to his 500 Startups partner Christine Tsai and Jess Lee, founder of fashion tech startup Polyvore, to take a look at the company. Snapette got the OK, the 500 Startups fund invested an initial $50,000, and Snapette left its digs at Boston’s MassChallenge program to join McClure’s accelerator—three weeks after it had already started.

Now, Paiji is working full-time on Snapette and has no foreseeable plans to return to business school. The 500 Startups demo day in August put Snapette in front of 700 investors.”If they’re interested, it’s hard to say you’re going to back to school and will do this on the side,” says Paiji.

“It was very thematic of the whole journey: unexpected,” she says.

(And this isn’t the first startup I’ve written about whose Twitter interactions with McClure ultimately led to inking an investment from him. The other one would be Cambridge, MA-founded and now San Francisco-based Baydin.)

Snapette officially launched its app in late August in conjunction with demo day, and Kim and Paiji finished up the year at Dogpatch Labs in Palo Alto, CA. The company also continued to be a part of the MassChallenge program remotely, Paiji says.

Just last month, it made the move to New York City (to Dogpatch Labs, again) to be near the “high shopping density of boutiques and users,” says Paiji, who I caught up with in Boston this week.

There’s plenty of buzz around social, local, mobile, and even fashion tech startups. So what makes Snapette different? Most of the plug-ins and apps and platforms aimed at better tailoring shopping to consumer preferences exist in the online world. Not so much for the physical world. “Our idea was, we would love to help women find great products in stores using crowdsourcing,” Paiji says.

Snapette’s iPhone and iPad interface provides a stream of product pictures that have been uploaded by the user community, with information on the brand, price, and store that carries it. Users can search streams near them, and get directions to the store selling the products nearby. They can also interact with and follow others in the Snapette community, share products to other social media outlets, and view a stream of what products are hot and trending based on likes and comments on Snapette.

“It feels like Pinterest for the real world,” says Paiji. (The comparison had to be drawn.)

Snapette has since expanded beyond this crowdsourced content, and is explicitly partnering with brands and boutiques looking … Next Page »

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Two of the scientific founders of a couple of Seattle’s best-funded biotech startups have come together in a new company that aims to create a valuable antibody drug candidates while burning through the least amount of venture capital possible.

The new Seattle-based company, called V-Gene, is being started by combining a couple of technologies developed by Johnny Stine and Steve Wiley. Stine is the founder of Theraclone Sciences (formerly Spaltudaq), and Wiley is the co-founder of VLST, a pair of companies founded at Accelerator. The new startup has gotten a term sheet for an initial $1.2 million in financing from an undisclosed venture investor, Stine says, and although the deal isn’t signed yet, he expects that round to close before the end of March.

V-Gene is setting out to develop two or three antibody drug candidates for infectious diseases and cancer, and put them into preclinical testing in the next 12-18 months, Stine says. If V-Gene can deliver on those milestones, it should be in position to raise a second round of financing. At that point, Stine says, he’ll go back full-time to the lab bench at his other company, North Coast Biologics, which he says is being positioned so t0 spin out multiple antibody drug development startups.

The new company is being structured in a different way, now that Stine and Wiley say they’ve been around the block in the venture business. They turned down a $40 million venture offer from a couple of large VC firms to instead go for a smaller $1.2 million deal, which enables them to keep a much larger (30 percent) equity ownership stake. On the lean budget, V-Gene can get to a value-creating milestone after a relatively fast 12-18 months. If that goal is reached, a bigger venture syndicate could advance the drugs in development, and the founders would leave. Stine, who has been outspoken about his desire to bring biotech back to its “garage” roots, says he wants to stay in control this time and keep focused on doing what he does best—discovering antibodies at the earliest stage.

“Since we know the rules now, we can play the game according to our rules,” Stine says. “We can rapidly get in some money, rapidly create antibodies, get some quick validation, raise a Series B, and then we can wave goodbye to the company. I have no plans to keep working beyond the Series A financing. I’ll come back here (to North Coast) and do this process again. We think we have an antibody incubator.”

North Coast, which Stine founded in 2008, currently has partnerships to discover antibodies for five large biotech companies, and one large pharmaceutical company that he says he can identify—Novartis. The partnerships have provided North Coast with more than $1 million in upfront payments for discovering antibodies against targets the customers choose, and allows North Coast to earn milestone payments and royalties if the candidates advance in development, Stine says.

Stine was the driving force behind the Theraclone antibody discovery approach. That process starts with looking at blood or tissue samples from patients, and identifying natural antibodies that are made by people’s immune systems against foreign invaders like viruses, bacteria, or cancer cells. Mother Nature has evolved pretty efficient defense mechanisms against these bad actors, so Stine’s insight was to look for antibodies with broad potential to neutralize many kinds of invaders, and make genetically engineered copies of them as drugs. North Coast follows a similar philosophy in how it looks for antibody drugs, through what it calls BLAST technology. The new technology, Stine says, is more versatile and efficient than we he developed at Theraclone (then Spaltudaq) more than five years ago.

Wiley, who met Stine when the two were … Next Page »

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Biotech companies once dreamed of building soup-to-nuts operations that put everything under one corporate flag. You’d have research, development, marketing, manufacturing all together in one big team of bright people taking big risks. Think first-generation companies like Amgen, Genentech, Genzyme.

The days of starting companies like that are mostly in the past, thanks in part to the financial crisis of 2008, and the many losses investors have suffered pursuing those models. So even at a time when research is more exciting than ever, how exactly can people take advantage of it to build enterprises that make valuable new healthcare products?

This is one of the vital questions facing the biotech industry, and Xconomy is thrilled to bring a dream team of national leaders together on this theme in Seattle on April 3. This big new Xconomy event, “Reinventing Biotech’s Business Model” will be held from 2 pm to 6 pm on April 3 at PATH, in Seattle’s South Lake Union neighborhood.

The star-studded lineup includes a mix of people from around the country who are experimenting with a wide variety of new biotech models:

—Corey Goodman, partner, San Francisco-based venBio. Goodman is what you could call a biotech renaissance man. He was a Big Pharma executive who ran Pfizer’s biotech drug and innovation center. He’s been an entrepreneur, as co-founder of Exelixis and Renovis. He’s also been an academic, as a professor of neuroscience at Stanford University and UC Berkeley. Now he’s a venture investor with venBio, seeking to help pharma companies make some modest bets on biotech ideas with big potential.

—John Maraganore, CEO, Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY). Maraganore runs the leading developer of RNA interference drugs, which has recently revamped its strategy. While Alnylam made its name in the last decade by striking lucrative deals with Big Pharma partners who were enticed by the broad potential of its technology, those partners have scaled back. Alnylam is now zeroing in on developing its own drugs for several rare liver disorders.

—Kevin Starr, partner, Boston-based Third Rock Ventures. Starr is one of the key drivers at Third Rock, which has raised about $800 million since 2007 to bet on some of the most innovative startups the industry has seen created in the past five years. Starr, who rarely makes public appearances, will offer some special insight into the various models Third Rock is employing to start companies based on cutting-edge biology. He’s also either the best or worst dressed biotech venture capitalist you’ll ever meet. He promises to show me where he buys his designer T-shirts the next time I’m in Boston, but I’m not sure I can pull off the look.

—Kathy Glaub, president, Berkeley, CA-based Plexxikon. Glaub was a key architect of one of biotech’s breakout success stories of 2011. Plexxikon used a strategy of partner early/partner often in the early 2000s, which wasn’t in favor at the time. But it enabled Plexxikon to raise a relatively small sum of venture capital, which paid off in spades when it was acquired by Daiichi Sankyo for as much as $935 million.

—Carl Weissman, CEO, Seattle-based Accelerator. Weissman is one of the local biotech leaders who’s been thinking lately about how to evolve the Accelerator model when it’s harder to find venture capitalists willing to bet big on startups, even when they hit scientific milestones. We’ll pair up Weissman for a chat with Bard Geesaman, the chief scientist at Acylin Pharma, one of Accelerator’s young portfolio companies.

—Also from the local contingent, we’ll feature a chat between Thong Le, the managing director of WRF Capital, and Bruce Montgomery, the chief executive of Seattle-based Cardeas Pharma. Le invested in Montgomery’s prior company, Corus Pharma, but now they’ve had to go about things differently in setting up Cardeas.

—Carol Gallagher, the former CEO of Seattle-based Calistoga Pharmaceuticals, has a great story about how her company was able to stay on a tight budget and generate enough data to convince Gilead Sciences to pay as much as $600 million for a new cancer drug. We’ll hear from Gallagher about some of the lessons she learned there.

—Heather Franklin, the former chief business officer of Seattle-based ZymoGenetics, will be on hand to talk about her experience getting a new startup with technology from the Fred Hutchinson Cancer Research Center, Blaze Bioscience, off the ground without help from deep-pocketed venture backers.

—Steven Tregay, the CEO of Watertown, MA-based Forma Therapeutics, has been on a roll of late, striking four partnerships over the past 14 months. Those partnerships with companies like Genentech, Johnson & Johnson, and Boehringer Ingelheim have enabled Forma to build a 100-person drug discovery operation with capability to rival some Big Pharma companies, after raising the relatively small sum of $33 million in venture capital. And he’s experimenting with ways to pay off his VCs without having to go public, or sell the whole company.

—Last but not least, we’ll feature Brian Atwood of Versant Ventures and one of the key entrepreneurs Versant has backed in the past year, Peppi Prasit. Versant has structured a new incubator around Prasit called Inception Sciences, which will flesh out many of his new drug discovery ideas, and enable Big Pharma companies to buy them a la carte, without having to acquire all the administrative overhead that usually comes with biotech companies.

These folks will tell their stories in a series of fast-moving case studies and interactive chats (no PowerPoint). We will only have space for about 250 attendees at PATH, and I expect this event will sell out in advance of April 3. So I’d suggest getting your tickets early if you want to attend. As always, we are setting aside a limited number of discounted tickets for students and for people at startup companies with fewer than 20 employees. The super saver rate for everyone else will be available until Feb. 1.

This is one of the biggest and best events we’ve done the past four years at Xconomy Seattle, and one of two major public life science forums I’m planning for our region this year. I think this event could inject some great new ideas, and forge critical new connections for our local biotech community. I look forward to seeing you and many Xconomy readers there at PATH on April 3.

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Biotech pilgrims are gathering today for the biggest industry frenzy of the year, the JP Morgan Healthcare Conference. This confab in San Francisco’s Union Square is the singular place each year where essentially all industry mover/shakers—and many wannabes—gather for a marathon week of investment scouting, dealmaking, publicity seeking, job-hunting, and schmoozing.

I’ve been going to this conference for at least seven or eight years (but who’s counting?) and look forward to meeting lots of interesting people and digging up all kinds of news every year. It’s the best time to meet industry players face-to-face, and hear about the latest trends at work, in an action-packed few days. Most everybody here is brimming with optimism—or least putting on their best game face—about how they’re going to make new drugs, devices, or diagnostics that will leap tall buildings with a single bound in the coming 12 months.

Some of these dreams will be fulfilled, but the odds aren’t good. Hope and hype are a couple essential ingredients in this business, and every year both are on display at this conference. Sometimes the wishful thinking can congeal into conventional wisdom. So with that, I thought I’d try to anticipate a few popular myths you can expect to hear circulated, in order to debunk them. Here goes:

1. “The biotech IPO market will pick up.” Every year this line gets repeated, and every year it’s nothing more than wishful thinking. All you need to know about IPOs is that Groupon raised more money in its initial offering last year than the entire class of 2011 biotech industry IPOs. Facebook is on the docket this year, and it will dominate the news. Many biotechs that went public last year were weak, and didn’t perform well for investors, which only serves to dampen enthusiasm. And most importantly, it’s always good to remember who will be spreading the positive word about the IPO market, and consider the sources. It’s the investment bankers, lawyers, and consultants who stand to put a lot of money in their pockets from fees every time one of these transactions occurs. Just because they want it to happen, doesn’t mean it will.

2. “Amgen will make a mondo acquisition.” The biotech industry’s biggest company was sitting on a massive stockpile of $17.6 billion in cash and investments at the end of September. Common sense says that Amgen has got to do something with the cash other than collect interest. Shareholders might like getting dividends or seeing share buybacks to lift the stock price, but this won’t excite anybody for long. The company is getting a new CEO, Robert Bradway, who might be interested in putting his own stamp on the company once he takes over in May from Kevin Sharer, who had a lackluster record in the acquisition department. And Amgen might be feeling the need to compete in the acquisition arms race, especially since Gilead Sciences (NASDAQ: GILD) scooped up Pharmasset for $11 billion.

It may sound logical, but this all feels like wishful thinking to me on the part of bankers with vested interests. Amgen will think long and hard before it attempts to do any monster acquisition, especially after seeing the organizational indigestion mega-mergers have caused in Big Pharmaland (see Pfizer/Wyeth, Merck/Schering-Plough, and Roche/Genentech). My hunch is that Amgen may buy a company in the $1 billion ballpark, but it will not pull the trigger on a really audacious mega-merger in 2012.

3. “The FDA is going to be more supportive of innovation.” I’m not sure how many people are really going to go out on a limb and take the FDA at its word that it wants to be more supportive of medical innovation. But a small group of high-powered VCs and industry advocates have pushed for this for a long time, and commissioner Margaret Hamburg has been making more noises about how the agency’s mission is to ensure the safety and efficacy of new drugs, while also helping stimulate biomedical innovation. Just like anything in politics, though, talk is cheap and the record is … Next Page »

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Thong Le, the well-wired venture investor at Seattle-based WRF Capital, is stepping up to become chairman of the Washington Biotechnology & Biomedical Association, the state’s trade organization that represents biotech and medical device companies.

Le will formally replace medical device entrepreneur Tom Clement in the volunteer chairmanship at the WBBA’s annual meeting, which coincides with Gov. Chris Gregoire’s Life Sciences Summit on Nov. 18. Clement, the founder of Kirkland, WA-based Pathway Medical Technologies, is now taking on a new entrepreneurial challenge as CEO of a couple different startups, Aqueduct Neurosciences and Cardiac Insight. He will stay on the WBBA’s executive committee.

Le, 35, has made himself into one of the best-connected people in the local life sciences community since he became a managing director with WRF Capital in 2000. At WRF, he has overseen portfolio investments in Corus Pharma, Alder Biopharmaceuticals, Halosource, Hyperion Therapeutics, Uptake Medical, as well as Accelerator, the venture-backed life sciences startup nurturer. He’s a graduate of Harvard University, and is the Pacific Northwest regional director for the Harvard Alumni Association.

“I’m really thrilled Thong is willing to step up. He’s a very smart guy, a careful thinker and has a lot of energy,” Clement says. Le says he doesn’t see any major strategic changes coming to how the WBBA does business. The role, he says, is about “providing a lot of guidance and support for the president.”

“I’m coming at an exciting time for the organization, with a lot of good things happening in the community,” Le says. “Despite the difficult economy, we’re still a bright spot within the economic ecosystem of the state. Our job is to figure out how we can continue to foster that. We want to help member companies be more successful.”

Clement has been chairman since August 2008, and has overseen the leadership transition at WBBA that occurred later that year when Chris Rivera was brought in as president. Le and Rivera have worked closely for years, not just through WBBA activities, but also through WRF’s investment in South San Francisco-based Hyperion Therapeutics, where Rivera was previously the CEO.

Here’s what Rivera had to say in an e-mail yesterday:

“He is extremely smart, creative and has tremendous industry connections. Since he is an investor in the sector, I think that he brings a different viewpoint to the WBBA. Much of our efforts have been to help support the growth of the sector in WA. We try to do this by the following; 1. Commercialization/Translational research—through our pro-bono consultation, we have helped >55 new companies this year alone, with Chris Porter, Stewart Parker’s and Christiana DeloRusso’s help. 2. Access to Capital—WINGS, VIP Forums and LSINW are our main vehicles. 3. Talent—recruitment, retention and development of the talent needed to grow the sector. 4. Policy—both in Olympia and DC. And, 5. Purchasing Programs—our members have purchased >$30M through our contracts and saved > $4M this year alone.

“Thong is and has been one of our community leaders, will bring some new ideas to the Association, and will help us continue to meet our Mission; help grow life sciences in WA state.

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Sometimes biotech startups can find a backdoor route to going public without going to all the trouble of doing an IPO, and that’s what Seattle-based Allozyne just did today.

Allozyne, the developer of a long-lasting protein drug for multiple sclerosis, said today it has agreed to a merger with San Francisco-based Poniard Pharmaceuticals (NASDAQ: PARD) in which the little private company is essentially acquiring Poniard. Allozyne CEO Meenu Chhabra will lead the newly combined company, Allozyne shareholders will own 65 percent of the new entity, and Allozyne will control four of the seven board seats.

The combined company, to be headquartered in Seattle, plans to develop Allozyne’s experimental drugs and technology, and find a partner to carry on with Poniard’s lead asset, a cancer drug called picoplatin.

Poniard, the company known years ago as Seattle-based NeoRx, has retained its listing as a public company, but has essentially turned into a shell of its former self since picoplatin failed in the third and final phase of clinical trials in November 2009. The company lost about 80 percent of its stock value that day, and the stock was valued at just 19 cents a share today before the Allozyne deal was announced—meaning Poniard was only worth about $11 million heading into today.

So this is a deal that enables Poniard shareholders to get some new drugs that might be worth something, while it provides Allozyne with a way to connect with a new class of public investors, and potentially provide liquid returns for the venture capitalists who have put $43 million into the company since its founding in 2005.

“I’m extremely proud that an Accelerator company, if this merger closes, will be publicly traded. It will be a first for us,” says Carl Weissman, the founder and CEO of Accelerator, the Seattle-based biotech incubator that started Allozyne. “It’s a real testament to how great the company has done.”

Chhabra, a former dealmaker with Novartis, summed up what it means to Allozyne in a short conference call with investors. “We can now access the public markets to accelerate our strategic plan.”

Meenu Chhabra

There are a number of moving parts to the actual deal that were outlined in a statement. Under the deal, Poniard shareholders will issue shares to Allozyne shareholders based on an exchange ratio to be determined when the transaction closes. Allozyne shareholders are expected to own 65 percent of the company, while Poniard shareholders will get 35 percent. Bay City Capital, one of Poniard’s largest shareholders, has agreed to loan the company about $2.4 million at an 18 percent annual interest rate. The board will be composed of four Allozyne directors—Chhabra, Steve Gillis of Arch Venture Partners, Michael Steinmetz of Clarus Ventures, and Carl Weissman of Accelerator/OVP Venture Partners. The board will also include Poniard’s current CEO, Ron Martell, one other director selected by the Poniard board, and one more independent director selected by a majority of the board.

Leerink Swann advised Poniard on the financial aspects of the deal.

For those new to the Allozyne story, the company’s lead drug, AZ-01, is designed to be a long-lasting form of interferon beta, which has the potential to reduce the number of injections that multiple sclerosis patients need to control their disease. The company, based on technology licensed from Caltech, is also working on ways of engineering different properties into protein drugs, like attaching toxins to make them more potent, or devising ways to make them specifically hit two biological targets instead of just one. The company revealed some early-stage clinical trial results for its multiple sclerosis drug in an Xconomy exclusive earlier this year at the JP Morgan Healthcare Conference.

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

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

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

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

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

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

Carl Weissman

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

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

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

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

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

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This week’s biotech news roundup is short and sweet.

—Accelerator, the Seattle-based hothouse for biotech startups, is humming with the activity of a new cancer drug startup called Oncofactor. This company is setting out to spur the immune system to fight tumors.

—23andMe, the Mountain View, CA-based consumer genetic testing company, made an appearance at the Institute for Systems Biology’s annual symposium a while back, and boldly declared that it wants to be a “research company.” Many geneticists snicker at how the company generates data that really isn’t worth much, but ISB president Lee Hood has become increasingly interested in how scientists can tap into the company’s database of 75,000 people, who might be willing to participate in certain kinds of research studies.

—How can a biotech entrepreneur make money with no hope of going public, and fat chance of getting acquired by a Big Pharma company? This week’s BioBeat focused on how Jim Posada of Seattle-based Resolve Therapeutics has structured his company so it will generate liquid returns if he can strike a simple licensing transaction. This idea has sparked a fair bit of commentary on the web, who either like the idea or don’t. A couple days later, Bruce Booth, a partner at Atlas Venture in Boston, wrote an interesting post with his take on various biotech business models.

—Lastly, we had a guest post from Richard Gayle, about “finding a solution to our biotech malaise together.” Gayle laments how hard it is for the sector to offer sustainable employment for scientists and many others required to keep the industry strong, and he’s trying to bring people together to figure out a solution. I’ll keep this post in mind the next time I hear a local pol trot out data from an industry-funded study which says biotech jobs are so bountiful they are growing on trees.

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Local biotech people and companies were moving onward and upward this week.

—Eric Schadt, the shorts-wearing, motorcycle-riding genomics brainiac, the guy who made his name at Seattle’s Rosetta Inpharmatics, is moving to the Big Apple to run a big new genomics institute at Mt. Sinai School of Medicine. Schadt, a co-founder of Seattle-based Sage Bionetworks, says this move should help him pour lots more data into Sage’s fledgling open source database for biologists.

—Should biology move away from its close-to-the-vest tradition, and embrace the whole open source culture to develop better drugs? I’m going to put this question up for a debate between Sage co-founder Stephen Friend and MIT’s legendary biologist, Phil Sharp, at Xconomy’s biggest event of the year, XSITE, in suburban Boston on June 16. A few other familiar faces to readers in Seattle—Charlotte Hubbert of Accelerator, Norm Wu of Qliance Medical Management, and Mike Martino of Carefusion—will also be part of the agenda at the XSITE conference. More to come on what that’s all about in the weeks ahead.

—First things first, I’m running another event for Xconomy here tonight in Seattle called “Separating Hype from Reality in Alternative Fuels.” Yesterday, I laid out the program highlights, which include big ideas being backed by Boeing, Bill Gates, Waste Management, and Kleiner Perkins Caufield & Byers, among others. Tickets are still available, and you can sign up here at the last minute.

—PATH, the Seattle-based global health nonprofit, said its vice president of external relations, Scott Jackson, is leaving to become the CEO of Alexandria, VA-based Global Insight.

—Seattle-based Resolve Therapeutics raised its first $2 million in venture capital this week, which may not sound like much. But the real story was in how CEO Jim Posada plans to put that capital to work. Instead of relying on a future IPO or acquisition, Resolve is seeking to generate returns through striking a licensing deal in a few years with a Big Pharma company.

—Bothell, WA-based Marina Biotech (NASDAQ: MRNA), the RNA interference company that’s like a cat with nine lives, raised another $6.9 million through a stock offering this week.

—Seattle Genetics (NASDAQ: SGEN) continued to gear up during this big year of growth, by taking a seven-year lease on a new building that will cost about $7.7 million. The company, which is vying for FDA approval of a new drug for Hodgkin’s disease and a related lymphoma, started the year with about 350 employees, and plans to end this year with about 500, according to company spokeswoman Peggy Pinkston.

—Will biotech ever again captivate the public imagination like Facebook or LinkedIn? That was the question I posed in this week’s BioBeat column. Maybe I’m just being reflective now that I’ve been writing about this business for 10 years, and still haven’t seen a moment when this industry crossed over into mainstream public awareness like it once did. Commenters I’ve heard from aren’t very optimistic about whether this situation will change.

—We had a couple of strong guest op-eds this week that hit upon biotech-related themes, from very different perspectives. Barrie Carter, the president of the American Society of Gene and Cell Therapy and the former chief scientist of Targeted Genetics, offered an upbeat take on “The Resurgence of Gene & Cell Therapy” as a bit of a preview of his organization’s annual meeting, which is going on this week in downtown Seattle. Despite lots of encouraging advances like this in the local biotech and scientific community, Richard Gayle notes that the local job market in biotech is still pretty bleak for lots of people, and there has to be a better way to enable life scientists to remain gainfully employed.

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Although nobody seems to like the term “incubator”—mostly because of failures from the dot-com era—it’s clear that mentorship and accelerator programs like Y Combinator, TechStars, and MassChallenge have taken off in the mainstream consciousness of innovation. They provide lots of coaching, financial support, office space, and connections to investors and other startups. Yet in most cases they also take a piece of your company.

So one question we are asking at our third annual XSITE conference (June 16) is: Do you really need an incubator to succeed as a startup?

Of course there are simple answers to this question:

—No. Facebook, Zynga, and Twitter didn’t go through any such program. Plenty of other companies make it big without hooking up with an accelerator in their early days.

—Yes. First-time entrepreneurs need all the help they can get. Especially for Web and IT-based companies that can get a product out there quickly and adjust to the market, incubators are invaluable. Y Combinator companies now graduate with a guaranteed $150K in their pocket. TechStars is in four cities around the country, if you don’t want to move to Silicon Valley. MassChallenge offers prize money and doesn’t take an equity stake. There’s something for everybody.

But simple answers are not what we are about at Xconomy. We want the gory details, the untold stories, the controversies lurking under the surface. And so, on June 16 at Babson College, we are bringing together a motley crew of entrepreneurs, some of whom have graduated from the aforementioned incubators, and some who have not. We hope to get a constructive debate going over the pros and cons of the various programs, to provide a window into the incubator process so students, entrepreneurs, and investors in the audience can make up their own minds. (No chair throwing, please.)

We’ll have on hand: Sean Creeley of Embed.ly, who went through both Y Combinator and MassChallenge; Ziad Sultan of Marginize, from TechStars (Boston); Jason Jacobs of FitnessKeeper, who went through none of these programs; Charlotte Hubbert from Seattle-based Accelerator, a biotechie who will not be afraid to mix it up; and Jason Baptiste of OnSwipe (TechStars New York) is a tentative yes too. We’ll have plenty of questions for them. And we want to hear yours too.

We’re looking forward to seeing you at XSITE on June 16 at Babson.

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There was a great buzz yesterday at ZINO Life: Life Sciences Investment Forum where 14 biotech and life sciences companies pitched to a room full of eager investors. Many exciting technologies were on display, including Empowering Engineering Technologies‘ ExoWalk—the 2010 Zino Life fund recipient—as well as Cerevast Therapeutics’ ClotBust-ER. All presenters delivered energetic and compelling presentations that demonstrated the persistent enthusiasm and innovation that continues to propel the vibrant life sciences sector of Seattle.

Chris Rivera of the Washington Biotechnology and Biomedical Association reminded the attendees that the No. 1 challenge facing entrepreneurs today is access to capital. The event was a great example of how angel investment groups, such as ZINO Society, are diligently working to bring entrepreneurs and investors together. Following dealflow presentations this afternoon, Cathi Hatch, the CEO of the Zino Society, announced four finalists were selected by investors:

1. David Hatton of Aseptica—Aseptica’s technology prevents catheter related infections.

2. Michael Hite of Impel NeuroPharma—Impel is developing a novel drug delivery device to enable central nervous system drugs to bypass the blood-brain barrier,

3. Steve Baird of S-Ray Incorporated—S-Ray owns a unique way of using ultrasound to detect cracks and cavities in teeth, without radiation.

4. Paul Hagen of VacuPractor—VacuPractor is a revolutionary device for lower back pain.

Following due diligence, one of these companies will be awarded a $25,000 investment from the combined ZINO 2011 Annual Angel Fund.

Paul Hagen (VacuPractor) and Steve Baird (S-Ray) were also selected by the audience for Best Presentation and Best Investment Opportunity.

Optimism filled the conference room at the Pan Pacific Hotel as Rivera reflected on the trends in the Seattle life sciences industry, one of the top five job sectors that have demonstrated continued growth, even in the face of the recent economic climate. Alan Smith of Fenwick & West delved further into the current financial climate for biotech in Seattle by probing the panel of prominent faces in Seattle’s life sciences sector. The group included Rivera; John Bowers, senior vice president of SonoSite; Tom Clement, the chairman & founder of Pathway Medical Technologies; and David Schubert, president and chief business officer, Accelerator Corporation.

The dynamic discussion reflected on the difficulty to get funded and the need to ‘de-risk’ investment opportunities by demonstrating more than proof of concept to investors, in addition to the importance of maintaining realistic expectations for the timeline for return on investment following investment in life sciences companies. This pragmatic advice was, however, secondary to the panels’ confidence in the community. They reiterated that Seattle is a hotbed for innovation, cool technologies, and fantastic ideas. In reference to comparing Seattle’s innovative life sciences sector to the nation and worldwide communities, Schubert emphatically stated that, “Seattle is at the top of ANY pyramid you want to put it on.”

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It’s billed as the world’s largest startup competition and accelerator program, and it takes place right here in Boston. MassChallenge, coming off a successful first run in 2010, is gearing up to do it again this year—but not without some important changes and improvements to its structure.

Last year, the Boston-area nonprofit organized a $1 million global startup competition and housed more than 100 startups—across a dizzying array of sectors that included software, life sciences, cleantech, and social impact—during a three-month accelerator/mentorship program in its Fan Pier building. The program culminated in an awards ceremony in October to honor 26 finalist companies, of which 16 received money from the program (either $50,000 or $100,000 apiece).

But John Harthorne, MassChallenge’s CEO and co-founder, is hardly satisfied with those results. His goal is much bigger: to spur innovation in the Boston area, and beyond, by supporting entrepreneurs and connecting them with funding and other resources—thereby creating a large-scale spectacle that will draw more attention and more resources. “I’m convinced we are on the verge of a renaissance,” Harthorne says.

And he wants MassChallenge to be the catalyst. To that end, the program’s budget is increasing from $1.5 million last year to $2 million this year, Harthorne says. The total prize money will remain $1 million, and the extra money will be spent on improving MassChallenge’s website and its resources for entrepreneurs, as well as on hiring more technical and support staff. What’s more, this morning the White House announced the creation of a private organization, Startup America Partnership, that aims to accelerate entrepreneurship throughout the U.S.—and MassChallenge is a key partner in the effort.

In its inaugural year, the nonprofit received $500,000 from the Massachusetts state government in a one-time deal. (No state money is expected this year.) Harthorne has been busy securing the $2 million for 2011 from returning sponsors and some new investors—the overall list now includes The Blackstone Foundation, The Fallon Company, MassMutual, Johnson & Johnson’s Corporate Office of Science & Technology, Microsoft, Xerox, Foley & Lardner, and the Deshpande Foundation.

When you try to do something as ambitious as MassChallenge, of course, you’re going to get your share of criticism. Over the past few months, I’ve talked with entrepreneurs and mentors who took part in the program, and I’ve heard a lot of constructive feedback and suggestions for what could … Next Page »

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Biotech executives were on the prowl a couple weeks ago in San Francisco, many of them urgently seeking tens or hundreds of millions of dollars from Wall Street. But one of the fun, offbeat ideas I encountered during my trip was from a Kalamazoo, MI, entrepreneur seeking to nail down his first $5 million for a startup called Axonia Medical. This company is betting it can treat nerve damage in arms and legs without touching an embryonic stem cell.

Axonia’s president and founder, Harry Ledebur, told me about his dream for this regenerative medicine startup during a break between meetings with investors at the JP Morgan Healthcare Conference. He’s a molecular and cell biologist by training, so he knows the difference between an axon and neuron (more on that later). But he also has an unusual personal experience battling the problem his company is seeking to solve, as someone who has lost a leg because of a peripheral nerve injury.

If Axonia can raise the cash it seeks, the company will be off and running with a new approach to regenerative medicine. Several companies, like Menlo Park, CA-based Geron (NASDAQ: GERN) have made headlines with efforts to treat spinal cord injuries through embryonic stem cell-based approaches to regenerate new nerve cells. But these approaches are still controversial, because of the way embryonic stem cells are obtained. Axonia is seeking to help reconnect the wiring of the central nervous system a different way, essentially by using a laboratory device to grow and stretch out the key cells—known as axons—and then implanting them in an injured limb.

If these implants can take hold and spur growth of new axons in clinical trials—still a very big if—then Axonia could someday offer a new treatment strategy for the 50,000 to 100,000 people in the U.S. who undergo surgery for moderate to severe nerve damage in their arms and legs each year. Eventually, it could also be a part of combination treatment for spinal cord injury, traumatic brain injury, and stroke, Ledebur says. Axonia’s investor prospectus says the market opportunity for peripheral nerve injury alone—the most likely use of the technology at first—is $1.2 billion a year.

“This is one of the coolest technologies I’ve seen in a long time,” Ledebur says. “It’s a business opportunity that could be transformative.”

Harry Ledebur

Ledebur found the idea for Axonia while sifting through more than 2,000 different biotechnology proposals from universities and research centers, as part of his work as an executive in residence for Southwest Michigan First, a Kalamazoo-based economic development organization that seeks to recruit and build companies to the region. The Axonia technology, developed in the lab of Douglas Smith at the University of Pennsylvania, stood out for him.

The concept, as the name suggests, is all about axons. These are the long, thin cells that act as extensions of neurons, carrying electrical signals throughout the body. While humans might be able to naturally regenerate a lot of oxygen-carrying blood cells after they get knocked down by cancer chemotherapy, axons aren’t nearly so resilient, which isn’t news to anyone who has suffered a spinal cord injury or a nerve damage to an arm or leg, like combat veterans.

Scientists have long struggled to find ways to even grow these long unwieldy axons in a conventional cell culture in a lab. They can grow to be as long as 30 meters … Next Page »

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Allozyne can’t be accused of thinking too small. The Seattle-based startup, after taking a hard look at its first clinical trial, is daring to push ahead with a frontal attack on the world’s largest maker of multiple sclerosis drugs, Weston, MA-based Biogen Idec (NASDAQ: BIIB).

The challenger’s experimental treatment, a long-lasting injection for multiple sclerosis, was safe and well-tolerated at all three doses in its first study in 40 healthy volunteers. Allozyne’s drug, importantly, stayed active in people’s bloodstreams for about 14 days at a high and medium dose, which means Allozyne has a shot at making a product that MS patients could inject themselves once a month, instead of once or twice a week as they do today. The company is releasing the results today in the hopes of wowing Big Pharma dealmakers and venture capitalists gathered in San Francisco for the JP Morgan Healthcare Conference.

There’s no cure out there for multiple sclerosis, a disease in which the immune system goes haywire, attacking nerve cells, and ultimately robbing patients of their vision, speech, and their ability to walk. More than 400,000 patients in the U.S. have this chronic disease. What drug companies know is that many people can keep symptoms at bay for years with interferon-beta products which tamp down the immune system. The interferons—marketed as Biogen Idec’s Avonex, Merck KGaA’s Rebif, and Bayer’s Betaseron—generate billions in sales. But they don’t stop the progressive march of the disease, and patients often complain about all the injections they must endure.

That has created intense interest over the years in making a longer-lasting form of interferon. Allozyne—and Biogen Idec, the market leader—have both hit upon the same idea, combining the interferon beta molecule with a polymer that’s supposed to keep it stable in the bloodstream for a longer period of time. Even though Biogen had a big head start and ought to have the first mover advantage, CEO Meenu Chhabra says she is emboldened to challenge Biogen in this market now that she has clinical trial data, and a plan to take it the rest of the way through clinical trials to the market.

“Allozyne is no longer just an Accelerator graduate with an interesting platform technology,” Chhabra says. “We’re a clinical stage company with a pipeline of products. It’s an evolution.”

Meenu Chhabra

OK, so what did we really learn from the first clinical trial? I have to say a healthy grain of salt here is required, because these results haven’t been presented in a peer-reviewed journal or at a scientific conference.

Chhabra walked me through the trial results last night, and what it means strategically, along with Bruce Leuchter, the director of clinical neuropsychiatry at Weill Cornell Medical College in New York, and a member of Allozyne’s clinical advisory board.

The Allozyne study found that its drug, AZ01, given via an injection just under the skin, was well-tolerated—although there were some flu-like symptoms at the highest dose tested, Chhabra says. The drug lasted about 14 days in the bloodstream, at both a 3 milligram dose, and a 10 milligram dose, although the lower dose produced a more steady, stable concentration, Chhabra says. The Allozyne study wasn’t designed to answer any important questions about effectiveness—like its impact on brain lesions, MS flares, or ability to keep patients from becoming disabled.

While the Allozyne trial didn’t directly compare its drug … Next Page »

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Two of the key players in Seattle life sciences formed interesting new connections to the Eastern time zone this week.

—Accelerator, the venture-backed biotech startup nurturer in Seattle, made its first new investment in a company with East Coast roots. The company, Acylin Therapeutics, is built on the vision of a Boston biotech entrepreneur, and technology from Johns Hopkins University School of Medicine and the Wistar Institute at the University of Pennsylvania.

—The Bill & Melinda Gates Foundation gave a $6 million grant to NanoBio, a company in Ann Arbor, MI developing a nasal spray vaccine for RSV infections. This is one of the most common bugs that infects infants around the world, and the Gates folks structured this deal so NanoBio could keep the commercial rights in lucrative territories like the U.S., while the foundation can ensure it still gets to kids in poor countries.

—The University of Washington is now tangling in federal court with GE, accusing the industrial giant of violating an ultrasound patent from the lab of bioengineering professor Yongmin Kim. The UW technology, which it contends is used by GE’s fast-selling Logiq E9 ultrasound machine, is supposed to make it so medical staff can combine images from ultrasound with other common diagnostic technologies like CT scans and MRI’s. GE declined to comment on the suit.

—As many of you know, Xconomy pulled together some of the leaders in Seattle biotech this week for an event on Monday, called “Biotech’s Back in Seattle.” We packed the house at PATH’s new South Lake Union headquarters, bringing in more than 200 people for the moderated conversation and top-notch networking. You can see you was there by checking out this photo gallery, and, even better, watch this slide show from professional photographer Robert Wade.

—One of the regular contributors to the guest editorial section of Xconomy, Stewart Lyman, had an interesting post here this week titled “The Myth of the Patent Cliff.” In what might be an Xconomy first, he used some colorful imagery from an Indiana Jones film to make a point.

—We also ran a guest post from Scott Forrest, the senior director of business development at The Scripps Research Institute in San Diego. Forrest offered his view on how broad sponsored research agreements ought to work between Big Pharma companies and academic centers. This is always a sticky issue, and it’s become timely now that the Dana-Farber Cancer Institute, Novartis, and a startup called Gatekeeper Pharmaceuticals are entangled in a complicated dispute about who really owns the rights to a promising cancer drug.

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Accelerator, Seattle’s best known hotspot for hatching biotech startups, has found its latest idea for a new company on the East Coast.

Most of Accelerator’s investments of the past have come from its West Coast network, but the youngest pup in the litter at the Seattle-based startup machine, Acylin Therapeutics, is based on the vision of a biotech entrepreneur from Boston, and some science from Johns Hopkins University School of Medicine and The Wistar Institute at the University of Pennsylvania. Acylin is announcing today it has secured an undisclosed Series A venture round (which is typically in the ballpark of $4 million) from the usual suspects who back Accelerator—Alexandria Real Estate Equities, Amgen Ventures, Arch Venture Partners, OVP Venture Partners, PPD, and WRF Capital.

The idea here is that Acylin (pronounced ACE-uh-lin) will make small-molecule drugs aimed specifically at a class of enzyme targets known as histone acetyltransferases. The concept of fighting cancer through this route has been gaining increasing attention in Big Pharma and venture capital, particularly since Cambridge, MA-based Gloucester Pharmaceuticals won FDA clearance of its drug romidepsin for a rare lymphoma last year, and was quickly bought out by Summit, NJ-based Celgene (NASDAQ: CELG) in a deal that could be worth $640 million over time. Merck also has an approved drug, vorinostat, in the same class of histone deacetylase inhibitors (HDAC), and Novartis has a candidate in advanced development for cancer called panobinostat.

Acylin’s hope, based on science from the labs of Philip Cole at Johns Hopkins and Ronen Marmorstein at Wistar, is that it will develop more specifically targeted and more potent drugs that work through this pathway against cancer, metabolic diseases like diabetes, and neurodegenerative disorders.

Carl Weissman

“We are the first company to target this class in a serious way,” says Bard Geesaman, Acylin’s chief technical officer. “The founders have solved a number of 3-D structures, so designing drugs is more straightforward than it was before.”

Biotech is clearly one of those industries built on relationships, and Acylin is no exception to the rule. Accelerator CEO Carl Weissman goes way back with all the key business players here. Back when Weissman was with MPM Capital in 2001, he hired Geesaman as the top technical guy at Cambridge, MA-based Centagenetix, based on a recommendation from stem cell researcher George Daley. Centagenetix was merged into Elixir Pharmaceuticals in 2003, where Weissman got to know chief scientific officer Peter DiStefano. Years later, DiStefano hooked up with one of his former Millennium Pharmaceuticals colleagues, Suresh Jain, who was seeking help in getting his business vision for Acylin off the ground.

Jain, who believed in this company so much that he … Next Page »

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The Xconomy Meetup was an experiment last month. Now I reckon it’s time to replicate the experiment.

Tomorrow afternoon, Xconomy readers are welcome to break away from the lab or the desk to come join me and special guest Chris Rivera of the Washington Biotechnology & Biomedical Association for an informal meetup-style event. Regular Xconomy readers will recall that Accelerator CEO Carl Weissman was the special guest last time around. Just like the last time, this is a free and open event in which we just invite readers to come shoot the breeze and talk about the innovation scene in a relaxed environment. Just come and go as you please.

This was a lot of fun last time around, and more than a couple readers urged me to do it again. So mark your calendars for 4 pm to 6 pm tomorrow, Oct. 26, for this event at the Streamline Tavern in Lower Queen Anne. Please shoot me a note at ltimmerman@xconomy.com if you plan on stopping by.

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So an entrepreneur helps out a prominent angel investor when the latter needs a ride, and gets a seed investment as a result. It sounds like something you might see in a movie. But it’s a reality for Baydin, an e-mail technology startup out of Boston (but soon to be based in the San Francisco Bay Area).

The investor is Silicon Valley’s Dave McClure, a super angel and former Founders Fund member who’s backed 70-plus companies, like Mint.com, Simply Hired, and SlideShare, and now has his own seed fund and accelerator, called 500 Startups. And the entrepreneur is Alexander Moore, founder and CEO of Cambridge, MA-based Web startup Baydin, makers of an e-mail management tool called Boomerang.

So how did it all come about? Let’s just say it pays to be at the right place at the right time—on Twitter, that is. On September 1st, McClure tweeted “YO: need ride from Bucks/Woodside 2 Toyota/MtView @ 9:45am – will hear startup pitch in yr car; can a brother get a lift? Use #PitchVCtaxi.”

“It was kind of a weird confluence of events,” Moore says. The Baydin CEO says he stopped in Silicon Valley for a few days in between weddings he was attending in Seattle and San Diego, trying to set up meetings with investors, but a few had canceled. Moore’s girlfriend noticed McClure’s tweet when they were just a 10-minute drive away from the restaurant where McClure was, Moore says. So he picked him up.

Moore had about 40 minutes while driving McClure to a mechanic’s shop to tell him about Baydin’s technology, which enables e-mail users to write e-mails now and send them at a later date, or triage their inboxes by bringing important e-mails back to the top of their list so they can get to them when they have more time. “He dug pretty deep into our metrics, which you’d kind of expect ’cause it’s Dave McClure,” Moore says, adding that McClure told him at the end of the conversation that he’d be interested in investing at least $50,000 in the company through the 500 Startups fund, provided that Baydin’s technology doesn’t compete with others in the 500 Startups portfolio. McClure did the research and came back the next week saying he’d be giving the company $100,000 in convertible notes, Moore says.

Baydin is also planning a move out to Silicon Valley, likely in Mountain View, CA, for mid-November, Moore says. It’s another loss to its West Coast competition for Boston, but Moore says the company was attracted to the thriving startup and fundraising environment in the Valley. (You can see why he would be, after the “#PitchVCtaxi episode,” and other real-life startup stories like Mark Zuckerberg’s bumping into Sean Parker in the early days of Facebook, a point depicted in The Social Network.) Other Boston-area companies that have moved west include thredUP, Zendesk, and TaskRabbit.

We wrote about Baydin, an alum of the 2009 TechStars Boston class, a week and 25,000 users into the launch of the Gmail version of Boomerang (the company only issued 250 invite codes for … Next Page »

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Seattle biotech is still buzzing more than a week later about Bristol-Myers Squibb’s acquisition of ZymoGenetics (NASDAQ: ZGEN) and whether it means we live in some dead-end biotech loserville. If you have some thoughts on this, please shoot me a note, because the last words haven’t yet been written on the Zymo deal.

—Everyone wants to know what will happen to the 320 ZymoGenetics employees when Bristol takes over, and for now, mum’s the word. The company also isn’t ready to talk about what will happen to its landmark headquarters, the renovated City Light Steam Plant on Eastlake Avenue. Chances are good, according to a couple veterans of the local biotech real estate scene, that this space will likely remain a center for biotech R&D even when Zymo exits the scene.

—One of the region’s other most important biotech companies, Seattle Genetics (NASDAQ: SGEN) suffered a setback this week when it said an experimental antibody for acute myeloid leukemia failed in a clinical trial of 210 patients. While a clinical failure is never good, this wasn’t exactly a disaster for Seattle Genetics because it was considered such a long shot. The more important news will come in the next weeks, when Seattle Genetics gets results from its lead “empowered antibody” in development for Hodgkin’s disease. If that fails, then Seattle Genetics will probably have to make some very hard decisions.

—One of the Seattle companies that got away, University of Washington spinoff Bio Architecture Lab, scored some crucial validation this week. The company, now based in Berkeley, CA, struck a partnership with Norway-based Statoil, the world’s largest offshore oil and gas producer. This 3-year deal will enable Bio Architecture Lab to take process for making ethanol from seaweed into the Norwegian coastal waters, in addition to its existing work off the coast of Chile. Bio Architecture Lab has now secured more than $33 million in support from from venture capitalists, governments, and strategic partners.

—PATH, the Seattle-based global health hothouse, has snagged an important new contract from Uncle Sam to help develop flu vaccines that can be stockpiled for years in case of a global flu pandemic. This deal, worth $5.2 million, will be used to further test work that PATH has been doing for years to make vaccines that don’t need to be refrigerated, even in hot parts of the world that lack reliable electricity and fridge space.

—Seattle Genetics, a day after its leukemia drug disappointment, had a minor positive bit of news. The company licensed its technology to make potent antibodies to Denmark-based Genmab. If Seattle Genetics likes the cancer drug that Genmab comes up with after the first phase of clinical trials, it will have the option to go into a 50-50 co-development arrangement.

—Down the road from Seattle Genetics in Bothell, WA, Alder Biopharmaceuticals was honored as one of the nation’s top 15 biotech companies by FierceBiotech, an online industry publication. Alder, which rose from the ashes of Celltech R&D’s shutdown in 2003, burst on the national scene last year when it struck a billion-dollar partnership with Bristol-Myers Squibb. Alder was the only Seattle-area company to make the FierceBiotech list this year, although Seattle’s Calistoga Pharmaceuticals earned the distinction last year.

—This whole bit about ZymoGenetics and what it means for the future of Seattle biotech was certainly a hot topic of conversation this week at the inaugural “Xconomy Meetup.” This was an informal get-together at the Streamline Tavern, in which I invited Accelerator CEO Carl Weissman to be the special guest for our readers to mingle with over a beer. This event was a big hit, with more than two dozen people coming out for some great networking. We’ll do it again. And if you missed a chance to hear Carl’s thoughts on acquisitions in Seattle biotech, he wrote a guest editorial which sums up his thinking on the issue.

—Just before we put together the informal meetup at the Streamline, we announced one of Xconomy Seattle’s showcase events, coming up Oct. 28. This event, called “VC Crossfire” will bring together some of the region’s top venture capitalists and entrepreneurs for a conversation about how innovation will be financed in the future as traditional VC faces an uncertain future after a decade of lackluster returns. For more information, check out the “VC Crossfire” registration page.

—Last, but not least, we couldn’t have a big news week around here without a little drama from Seattle-based Dendreon (NASDAQ: DNDN). The maker of the first FDA-approved treatment to actively stimulate the immune system against cancer said this week that one of its high-profile board members, Genentech CEO Ian Clark, is resigning from the board. Clark, who oversees a portfolio of the world’s best-selling cancer drugs, said in a statement that he doesn’t have enough time to serve on the board anymore.

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Over the past week or so, I have been asked by a number of people, both privately and in the media, what I think about the acquisition of Seattle-based ZymoGenetics (NASDAQ: ZGEN) by Bristol-Myers Squibb. As is usually true in Seattle, the prevailing reaction following the announcement was some moaning and gnashing of teeth, with “woe is me” pessimism about the inability of Seattle to build an independent “anchor tenant” biotechnology company. I completely disagree with that sentiment.

I have lived in Seattle and worked in biotech for 15-plus years, and I hear this tired refrain repeated each time Big Pharma or Big Biotech comes to town to acquire a company. In the beginning, I bought into the pessimistic view of what is required to sustain the biotech industry in Seattle. However, after watching the aftermath of a number of these transactions, I no longer buy that these acquisitions are harbingers of doom, or even that they are bad things at all. In fact, I have become convinced that events of this sort drive new rounds of innovation and company-formation, and are tremendous positive indicators of the vibrancy and health of the biotech industry in Seattle.

Generally (and grossly oversimplified), there seem to be two types of Big Pharma acquisitions of smaller biotech companies: (1) the strategic operational acquisition; and (2) the asset acquisition. In the strategic operational acquisition, the acquirer is looking to strategically add capabilities and expertise. In the asset acquisition, the acquirer has little interest in the capabilities and expertise and instead is acquiring key product(s). Seattle biotech has experienced a number of each, and I would argue that both are potentially significant “wins” for the local industry.

In a strategic operational acquisition, the acquirer will normally “rationalize” the local operation, trimming redundant functions (or functions in which they are not interested), but retaining key capabilities, teams, and individuals. For all of the disdain heaped upon the Big Company acquirer for subsequently beating innovative and entrepreneurial spirit out of the acquired target company, the injection of capital, stability, resources, etc. into those operations generally enables sustainable and productive operations to remain in Seattle. The acquisitions also generally provide liquidity to the investors in the acquired company, enabling a recycling of investor capital within the Seattle biotech industry and creating wealth for investors and entrepreneurs alike. I would suggest that Corus Pharma, Rosetta Inpharmatics, and Immunex are examples of this type of acquisition.

Yes, I know, things change over time as the realities of the industry catch up with the large acquirers, and occasionally large operations such as Rosetta are later shuttered. For the consequences of this, see the description of asset acquisitions below. In an asset acquisition, the Big Pharma acquirer shuts down the target company, releasing (or offering relocation to) virtually all employees. While this sort of acquisition does not leave in place the sustainable and productive operation as in a strategic operational acquisition, it does provide investor liquidity and the positive effects on innovation that this recyclable capital can (and does, in Seattle) produce. The Lilly acquisition of ICOS is a good example of an asset acquisition. The effect on employees is more abrupt and dramatic, and leads to some talented scientists and entrepreneurs leaving the Seattle area.

However, in both types of acquisition, whether the displacement of talented, innovative entrepreneurs and highly productive and competent individuals is abrupt and dramatic, or more gradual over time, the result historically in Seattle is the same. Those talented folks gather together around new ideas, and they pursue and secure investment in those ideas, and they build great new companies. And most assuredly that will be the result with ZymoGenetics.

I am not unsympathetic to the negative impact (usually short lived) on individuals who lose their employment in these transactions. Being out of work, particularly in this economy, is frightening. However, a certain amount of that comes with the territory. Working in small, innovative, exciting companies that grow to be successfully acquired (or unsuccessfully shut down) is risky. Anyone who cannot live with that level of risk should look for work in a different type of organization/industry. But for those with the stomach for the risk, the emotional, intellectual, and economic rewards can be great. It is those people who can survive and thrive in a cyclical industry of growth, acquisition, reinvention, growth, etc. The fact that Seattle as a biotech community is capable of staying in this cycle and repetitively developing and selling technologies and products is proof that there exists the critical mass for a sustainable and flourishing industry.

So, applaud the successes and marvel at the resilience and depth of biotech in Seattle.

[Editor's Note: This post can also be found over at the OVP Blog.]

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