Virtual companies have been all the rage for some time with biotech venture capitalists, but I’ve been wondering whether this lean-and-mean outsource-darn-near-everything model is really a better way to develop drugs than the traditional soup-to-nuts approach at companies like Genentech. I haven’t seen a good academic paper on this question, and until I do, I’m going to keep asking people who live with this idea on a daily basis, like VentiRx scientific co-founder Rob Hershberg.

VentiRx, as I first described in this space back in January, personifies the trend toward small teams of experienced drug developers who rely on contractors to do a lot of the work. The company, which has a team of just a dozen people in Seattle and San Diego, raised $29 million in its Series A funding in March 2007 from Arch Venture Partners, Frazier Healthcare Ventures, and Domain Associates. VentiRx still has money left in the bank, so it’s apparently sipping fuel like a Honda Civic Hybrid, but the big question I had for Hershberg was this: What has this small team of committed people really accomplished?

The company hasn’t done anything to win headlines at a major medical meeting, but it has made a lot of the step-by-step progress that companies must make on the long slog to FDA approval. VentiRx now has two drug candidates whose safety has been demonstrated at a variety of doses in clinical trials for cancer and allergies. And prospective partners are starting to take a closer look, just as the VentiRx business model called for, Hershberg says.

At least one other virtual company, Brisbane, CA-based cancer drug developer BiPar Sciences, has proven that a virtual company can deliver bang-up results for a new drug, and made windfall profits for its investors when it sold to Sanofi-Aventis for $500 million earlier this year.

“There is really something to be said for focus,” Hershberg says. “I’m not saying the virtual model works in taking a drug all the way from the laboratory to the market. But in going from late-stage preclinical to proof-of-concept in people, like with a Phase Ib or Phase IIa clinical study, you can create a lot of value. It’s really an ideal structure. When you get into the later stage studies, that’s when bigger companies need to get engaged.”

The concept at VentiRx is that it could hit a goldmine if it can prove …Next Page »

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Back in September, I wrote in this space that if a global flu pandemic ever strikes, public health officials might turn to a Lexington, MA-based startup company called Pulmatrix.

The pandemic (a bit overblown, I must say) did strike. And yes, the public health officials have been calling Pulmatrix.

This company’s technology is nowhere near ready for prime time in big clinical trials, much less the marketplace, so isn’t all the fuss a bit premature? Maybe. Then again, most biotech companies work on pretty incremental advances over the standards of care, but Pulmatrix is one of those rare beasts that has a chance to transform how physicians think about treating many major respiratory diseases. The technology has attracted $18 million in initial equity financing from Polaris Venture Partners and 5AM Ventures, and a scientific advisory board that includes David Edwards of Harvard University and Robert Langer of MIT. It’s been a few months since we last wrote about this company, so I got an update from CEO Bob Connelly.

The concept at Pulmatrix challenges the status quo of antiviral treatment, in which a drug is engineered to kill a single infectious invader, which works for a while until that virus inevitably uses its evolutionary tricks to develop resistance. This is the “one drug, one bug,” method, as Pulmatrix puts it. Instead of going that route, Pulmatrix is developing a technique that’s supposed to stop any pathogen or flu strain that might find its way into the lungs. It calls this the “one drug, multiple bug” approach.

“The single drug for multiple bug approach is what’s really generating a lot of attention for us, even though we’ve been keeping a low profile,” Connelly says.

Pulmatrix is trying to do this by creating aerosols that have positively-charged ion-based compounds, like calcium and magnesium, that would be sprayed into the lungs. These compounds are supposed to do a couple of things. First, they stimulate immune defenses to prevent infection. Second, the aerosols are supposed to change the viscosity of the mucus that lines the lungs, which activates proteins in the lungs to form 3-D matrices that create a firewall of sorts that blocks pathogens of any kind from burrowing deep into lung tissue. So far, in animal and early human studies, this method hasn’t gummed up the mucus lining of the lungs, which could make it harder to breathe, or worse, create a haven for infectious bugs to thrive.

“Think of it as like a river with a light coating of ice on top, but with the river flowing smoothly underneath,” Connelly says. “It’s more difficult to penetrate the surface top layer, and there’s still clearance below.”

What’s more, Pulmatrix is supposed to change the properties of the airways, so that when people breathe in a pathogen—like swine flu—it doesn’t form into those tiny droplets that people can sneeze …Next Page »

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They love their coffee at VentiRx. They love it so much that they named their San Diego- and Seattle-based biotech company after the extra-large size of beverage containers that Starbucks shrewdly branded for its menu. The name also happens to symbolize VentiRx’s supersize ambitions for creating new drugs against cancer and inflammatory diseases.

Naturally, I had to catch up with the company’s scientific co-founder, Rob Hershberg, at a Starbucks in downtown Seattle and order a venti coffee myself. (I think he actually got a grande something, but I didn’t take notes on what it was). Hershberg, a molecular biologist and former Harvard Medical School professor, got his biotech experience as chief medical officer at Seattle-based Dendreon (NASDAQ: DNDN), and a key scientific role before that at Corixa. His co-founder on the business side, Michael Kamdar, made his mark negotiating deals at San Diego-based Anadys Pharmaceuticals (NASDAQ: ANDS).

The VentiRx duo has raised $29 million in venture capital from Arch Venture Partners, Frazier Healthcare Ventures, and Domain Associates. The money is going toward building a portfolio of conventional small-molecule drugs designed to work in new ways against cancer and inflammatory diseases. Specifically, the company’s lead drug candidate is supposed to amplify the body’s front-line defense against disease —the innate immune system—to kill cancer cells in combination with other treatments. The company’s second candidate builds on the company’s immunology expertise to make a drug that creates a diversion of sorts that tamps down an overactive response that causes allergies. Something like 30 million people in the U.S. complain of allergies, so anything that works, and is convenient, is a venti-sized opportunity.

“It’s gonna be big,” Hershberg says, with a cheeky nod to the company name.

One thing that’s designed to stay small at VentiRx is the payroll. The company has a total of just 12 employees, with the R&D operations led by Hershberg in Seattle, and the business and finance side in San Diego run by Kamdar. The two of them run the company like co-CEOs, Hershberg says, and have made a pact to talk every day and see each other in person at least once a week, he says.

The game plan is to keep the company lean and hire outside contractors to do much of the work, or operate as a “virtual company” in the language of the VCs, Hershberg says.

VentiRx got its start in 2005 and 2006 with $2 million in seed capital from Arch and Frazier, and some key guidance from Arch managing director Steve Gillis, a mentor of Hershberg’s when they were both at Corixa. They had a shared enthusiasm …Next Page »

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Intense allergic reactions to things like bee stings or peanuts can be life-threatening because some people can suffocate from massive inflammation in the windpipe. But it’s a little-known fact that the same kind of allergic reaction can also cause swelling and narrowing in the food pipe (aka the esophagus). Sometimes it’s so severe that food gets stuck there and needs to be removed in the emergency room.

If Meritage Pharma has sized up this ailment correctly, it may be able to pave the way for a new drug for a little-known disease called eosinophilic esophagitis (EoE). The San Diego-based biotech company is off to a running start, having raised $22.5 million in a Series A financing in March from Domain Associates, Latterell Venture Partners, and The Vertical Group. I learned more about this disease, and Meritage’s experimental drug to treat it, during a visit with CEO Elaine Phillips at the company’s offices (which happen to be just down the hall from Domain).

Meritage (pronounced MARE-uh-tazh) estimates that about 90,000 children and 110,000 adults in the U.S. are diagnosed with this condition in the U.S. each year. Phillips says they generally complain of difficulty in swallowing, chest pain, or heartburn-like symptoms. Sometimes patients get misdiagnosed and put on proton-pump inhibitor drugs like omeprazole (Prilosec), which reduce stomach acid with heartburn. There are no FDA-approved medications specifically for EOE. Meritage’s idea is to develop budesonide, an immune-suppressant commonly used as an inhalable asthma drug, into a thick-liquid formula that will deliver the medicine where it can be most effective in the lining of the throat.

“We’re making it like molasses,” Phillips says.

Actually, Phillips explained, the liquid form of the drug won’t stick in the throat quite like molasses. The drug will be made to coat the throat so it can be easily absorbed by the mucus lining of the esophagus.

This program is still in the early stages of development. The drug is scheduled to enter its initial human clinical trial, a placebo-controlled study of 80 children, by the end of this year. Some early work was done at San Diego-based Verus Pharmaceuticals, which spun budesonide off to Meritage back in March. The new company reunites a quartet of executives who previously worked together at Verus. The Meritage team includes chairman Cam Garner, Phillips as CEO, …Next Page »

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Idera Pharmaceuticals, the Cambridge, MA-based developer of treatments for autoimmune and infectious diseases, said today it has received an undisclosed milestone payment from drug giant Novartis. Idera (NASDAQ: IDPH) received the payment because Novartis started an early-stage clinical trial of QAX935, a drug that stimulates Toll-Like Receptor 9. The companies entered a partnership in June 2005 to develop drugs against TLR9 for asthma and allergies. Idera stock fell 2 percent to $14.34 at 10:33 a.m. Eastern time today.

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