Seattle-based Allozyne wasn’t able to go public this year, so it has fallen back on Plan B, tapping its existing venture capital backers one more time in a bid to create more value around its lead multiple sclerosis drug candidate.

Allozyne, which has spent about $50 million since its founding in 2005 and was down to its last $1.3 million in cash at the end of June, has raised an undisclosed amount of new venture capital from its existing investors, according to CEO Meenu Chhabra. The money from Arch Venture Partners, MPM Capital, and OVP Venture Partners will be used to help the company push ahead with a plan for 2012 to move its lead multiple sclerosis drug into the third and final phase of clinical trials normally required for FDA approval, Chhabra says.

“The syndicate is extremely excited that we are on a Phase III trajectory in 2012,” Chhabra says.

Allozyne remains a private, independent company after it pulled the plug on a six-month effort to merge with San Francisco-based Poniard Pharmaceuticals (NASDAQ: PARD), which was supposed to turn Allozyne into a public company. Selling the proposal to shareholders took longer than expected, and the deal ultimately fizzled because Poniard had fallen out of compliance with NASDAQ listing requirements that say a company must have a minimum market capitalization of $15 million. That was the whole point of the transaction—getting a NASDAQ listing in order to tap large funds that invest in public companies—so it no longer made sense to go through with the deal, Chhabra says.

Moving on, Allozyne turned to additional private financing, and continues to talk with partners and mull other options, like another reverse merger or a conventional initial public offering of shares, Chhabra says. The company has about 20 employees, and hasn’t made any staff cutbacks, she says.

Allozyne’s next strategic move depends heavily on an aggressive clinical development plan for its lead asset, AZ01. Allozyne is looking to leapfrog from Phase I trials all the way to Phase III—skipping the usual intermediate step, Chhabra says. The company believes that is possible because it isn’t blazing a completely new trail with a new molecular entity, but rather is taking an existing drug the FDA knows well—interferon-beta—and packaging it in a new way so it can be injected less frequently than the existing products on the market. Weston, MA-based Biogen Idec (NASDAQ: BIIB) has established this quicker-than-usual regulatory pathway with its own version of a long-lasting version of interferon-beta.

The Allozyne proposal, which it plans to make to the FDA at a meeting in early 2012, will be to enroll 700 patients who will be … Next Page »

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Celgene and a San Francisco-based cancer drug startup called Quanticel Pharmaceuticals have struck an unusual agreement in which the big company is getting the inside track on a new cancer drug discovery platform, and the little company is arranging upfront for a way to get its venture investors some returns.

Summit, NJ-based Celgene (NASDAQ: CELG) said today it has formed an exclusive, strategic collaboration with Quanticel and its primary investor, Versant Ventures. Celgene is agreeing to pump in $45 million over three and a half years to support discovery of novel cancer drugs at Quanticel, with an option to extend the deal. Celgene is getting an equity stake in the smaller company, and is getting an exclusive option to acquire Quanticel at a later date, the companies said. The size of Celgene’s equity stake wasn’t disclosed in today’s statement.

Quanticel was co-founded by Stanford professors Steve Quake and Michael Clarke, and is being led by CEO Steve Kaldor, who ran San Diego-based Ambrx until 2010. The new venture is analyzing the genomes of single cells from patients with cancer, to identify markers that might indicate whether an individual patient will respond to its own internal drug candidates, and those from Celgene’s pipeline.

It’s unusual for a biotech startup to provide a potential acquirer with an exclusive option to buy so early on, but a reflection of how tough it is for startups to achieve returns in an anemic environment for IPOs and for acquisitions by Big Pharma companies. If Quanticel had gone a more traditional route and tried to raise round after round of outside venture capital, it may have slowed down the progress of its technology.

“Celgene’s global research and development capabilities plus the long-term financial commitment to Quanticel enable us to rapidly build the research and development applications of our platform, and to accelerate the potential growth of our pipeline,” Kaldor said in a statement.

Tom Daniel, Celgene’s president of global research and early development, added in the statement that, “Quanticel’s platform approach provides a unique advantage for defining mechanisms of sensitivity and resistance, and for validating and pursuing novel targets for difficult-to-treat cancers. We view this scientific collaboration and this business model as an innovative approach with high potential to advance the delivery of impactful cancer drugs to patients in need.”

Celgene did another unusual deal in the past year with an early-stage biotech startup, Cambridge, MA-based Agios Pharmaceuticals. Celgene committed the large sum of $130 million upfront to help accelerate discovery of drugs that work to starve tumors through targeting cancer metabolism pathways. The Agios deal was recently extended, as Celgene agreed to put another $20 million into Agios.

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There’s lots of interest in the protein drug engineering crowd to come up with new-and-improved forms of biotech drugs, and today we’re seeing another example in a new partnership between San Diego-based Ambrx, and New York-based Bristol-Myers Squibb (NYSE: BMY).

Under the deal, Ambrx said today it will get $24 million upfront, plus undisclosed milestone payments and royalties if any of its work materializes into marketed products. In return, Bristol-Myers is getting exclusive worldwide commercial rights to a couple of Ambrx’s research programs. One is the Fibroblast Growth Factor 21 (FGF-21) protein, which scientists think might be useful for treating type 2 diabetes, and the other is on the Relaxin hormone, which is being studied as a treatment for heart failure.

Ambrx has been around since 2003, working on some hard chemistry that seeks to make new amino acid building blocks to create new biotech drugs. These drugs are thought to have great versatility to swap in and out certain desirable properties, such as features that make them last longer in the body, or carry potent cell-killing agents. Ambrx has raised more than $100 million in venture capital in its history, and built a broad network of partners that includes Merck, Pfizer, Eli Lilly, and Merck KGaA of Germany.

Even while pharma research budgets have been tightening, there has been increasing interest in some of the new tools startups are developing for engineering protein drugs. South San Francisco-based CytomX Therapeutics, South San Francisco-based Sutro Biopharma, and Cambridge, MA-based Eleven Biotherapeutics are a few of the companies that have raised $30 million or more in venture capital in the past couple years, and Vancouver, BC-based Zymeworks struck a partnership earlier this month with Merck. And the seasoned hands of protein engineering at companies like Amgen, Roche’s Genentech unit, and Biogen Idec are working on all kinds of protein drug configurations, like those that can be engineered to hit two targets instead of just one. Seattle Genetics (NASDAQ: SGEN) recently won FDA approval for an engineered antibody linked to a toxin that makes it a far more potent drug for rare lymphomas, which has prompted multiple pharma companies to license the technology against other tumor types.

Ambrx has been pretty quiet on the news front for the past year, since CEO Steve Kaldor left. Ambrx still doesn’t list a new CEO on its website, although chief business officer Simon Allen was quoted on behalf of the company in today’s deal announcement.

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Merck has made plain that it needs to elevate its game in biotech drug development, and that means turning to partners for help. The latest chapter in this ongoing story is now unfolding at a little company called Zymeworks in Vancouver, BC.

Zymeworks is announcing today it has secured a partnership with Whitehouse Station, NJ-based Merck (NYSE: MRK) to develop new antibody drugs for cancer and autoimmune diseases that are engineered to hit two or more targets on cells instead of just one. In exchange for helping Merck create these so-called “bispecific” antibodies, Zymeworks is getting an undisclosed cash fee upfront, plus milestone payments, which could be worth as much as $187 million over time if drugs from the partnership reach certain goals. Merck will have exclusive worldwide rights to sell drugs from the partnership and Zymeworks will get tiered royalties on product sales if any materialize.

The deal is part of Merck’s long term plan to catch up in the business of biotech drug development. Estimates are that eight of the world’s 10 best-selling drugs in 2014 will be biologic medicines, leaving only two compounds made from chemical synthesis—Merck’s historic wheelhouse. The pharma giant has leaned on another startup, Lebanon, NH-based Adimab, as a source of antibody drug candidates, and it has spoken publicly about its growing ability to make antibodies at its GlycoFi facility and in facilities obtained through its Schering-Plough mega-merger of 2009. But the Zymeworks deal represents a chance for Merck to move into a hot area of protein drug engineering that biotech leaders like Genentech, Amgen, and Biogen Idec have been pursuing for years.

“We didn’t invent the field of rational protein engineering, but we have stepped up to take it to the next level,” says Zymeworks founder and CEO Ali Tehrani.

Zymeworks, founded in 2003, has developed a technology for creating lots of custom-designed protein drug candidates with properties drug developers want. The system can be used to make potent proteins that can last longer in the bloodstream, enabling patients to take fewer injections. Zymeworks can also engineer in specific structures that can make an antibody bind specifically and tightly with one or two different targets of interest on diseased cells. And it says the technology can be used to alter proteins to induce what’s known as “effector function,” which basically means that they can be made to trigger an immune system reaction which could give a cancer drug an extra potent boost.

Zymeworks CEO Ali Tehrani

The company spent its first four years trying to develop this technology to make industrial enzymes, until it saw bigger market potential in the pharmaceutical business, Tehrani says. “We could have been a mom and pop, coffee shop type of business,” he says.

Zymeworks now has ambitions to become a drug developer of its own, not just a technology provider to Merck and a few other partners, Tehrani says. The company still has a long way to go on that expensive journey. It has 37 employees, has raised less than $15 million through its history from Montreal-based CTI Life Sciences Fund, the Canadian government, and private investors. It hasn’t yet entered clinical trials with any drug candidates. But Tehrani, who got his microbiology and immunology doctorate from the University of British Columbia, says Zymeworks grabbed the attention of Merck and other prospective partners with “solid” data from experiments with its protein drugs in petri dishes.

Zymeworks certainly isn’t the only startup out there with visions of developing better versions of today’s protein drugs. Seattle-based Allozyne, San Diego-based Ambrx, South San Francisco-based Sutro Biopharma, and South San Francisco-based CytomX Therapeutics are just a few startups in that space along with many of the traditional biotech giants mentioned above. Zymeworks seeks to differentiate itself a couple different ways, Tehrani says. One is that it has software to better characterize the properties of the drug candidates, which ought to help researchers predict how they will perform in clinical trials. The other key feature is that Zymeworks can engineer its properties into immunoglobulin class-1 proteins, which Tehrani says offers an advantage over other techniques in manufacturing.

Zymeworks’ long-term goal, Tehrani says, is to grow up to be like Applied Molecular Evolution, a San Diego-based protein engineering company acquired by Eli Lilly for $400 million in 2004.

Zymeworks had interest from several partners in its technology, Tehrani says, but chose Merck for a few reasons. First, Merck provided enough validation of the technology, and upfront cash, to help stir up some more interest among investors in putting more capital into the company, Tehrani says. Plus, Merck’s development capabilities at its Palo Alto, CA-based biologics facility were a cut above facilities from other companies, he says.

“We are protein engineers. They are drug developers with a detailed understanding of biologics,” Tehrani says. “We see a long term strategic collaboration.”

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Anaphore has found a new corporate benefactor to help create a new generation of more effective biotech drugs.

The San Diego-based biotech company is announcing today it has formed a partnership with Osaka, Japan-based Mitsubishi Tanabe Pharma to develop new protein drugs for autoimmune disorders. Anaphore will get $5 million in upfront cash, plus research support, another $110 million in potential milestone payments, and royalties on sales if one of the Anaphore drug programs goes on to become marketed product. Similar terms could kick in for Anaphore if Tanabe picks two more of Anaphore programs. The money will provide access to Anaphore’s technology, which creates specific protein molecules which are supposed to bind more thoroughly with targets on cells than traditional antibodies.

This is the first publicly announced partnership for Anaphore, although the company does have one other undisclosed collaboration with a biotech company, CEO Kathy Bowdish says. The Tanabe deal is an important validating step for the startup, which was founded in December 2007 and has since raised a total of $38 million in venture capital from 5AM Ventures, Versant Ventures, Apposite Capital, GlaxoSmithKline’s SR One venture group, Merck Serono, and Aravis Venture Associates. The investors’ bet is that Anaphore can create genetically engineered protein drugs with greater capability to bind with targets than today’s antibodies, which are lean and mean enough to penetrate inside bulky tissues, and which are equally good at blocking a biological pathway, or activating it.

“This has been an exciting opportunity, in which I’m trying to take everything I had learned over 10 years with antibodies, and thinking about how to improve on that,” says Bowdish. “We truly view this partnership as very validating.”

Kathy Bowdish

Quite a few companies have been sprouting up and raising cash in the last couple years with similar notions of developing “bio-superiors” or “bio-betters.” Cambridge, MA-based Eleven Biotherapeutics, Seattle-based Allozyne, San Diego-based Ambrx, and South San Francisco-based Sutro Biopharma are all examples could be filed under that header.

Anaphore’s work is still at a very early stage, and it isn’t saying much publicly about its strategy. The company has tested its protein drug candidates in the lab dish, and has seen evidence of activity there against important targets that appear on cancer and inflammatory disease cells, Bowdish says. Mitsubishi Tanabe and Anaphore aren’t disclosing which target for autoimmune disease they are pursuing first, and Bowdish didn’t say when she hopes to move that program ahead into clinical trials. She did say that part of Anaphore’s work concentrates on making “bi-specific” protein drugs, which are specifically engineered to bind with not just one target of interest, but two distinct targets simultaneously.

Since we haven’t covered Anaphore in depth before, I asked Bowdish to explain a little bit of the background. She has a long history in San Diego biotech as the co-founder, CEO and chief scientist at Prolifaron, an antibody drug spinoff from The Scripps Research Institute that was acquired by New Haven, CT-based Alexion Pharmaceuticals (NASDAQ: ALXN). After selling the company … Next Page »

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The buzzphrase “biobetter” is starting to catch on, and South San Francisco-based Sutro Biopharma is the latest to cash in on the trend, as one of the companies hoping to develop drugs with nifty new properties that were never seriously considered before.

Sutro is announcing today it has raised $36.5 million in a Series C venture round led by Skyline Ventures and joined by a couple new corporate investors—Lilly Ventures and Amgen Ventures. Existing backers SV Life Sciences and Alta Partners also participated. The company, formerly known by the geeky name of Fundamental Applied Biology, has now raised $59.5 million since it was founded in 2004.

The big idea at Sutro is to develop a new process for making biologic drugs that doesn’t rely on incubating specific strands of DNA inside living cells. Instead, Sutro is crafting a biochemistry-based method in which genetically engineered drugs can be synthesized in a way that’s faster, cheaper, and more consistent—similar to the way classic “small-molecule” pharmaceuticals are made by big companies like Pfizer and GlaxoSmithKline.

While the underlying technology is critical, the aim here is to use this method to make drugs that have better properties. So Sutro really aspires to enter the emerging class of what some people call “bio-betters” which have clear advantages over existing drugs, like Genentech’s souped-up breast cancer antibody, called T-DM1, or Seattle Genetics’ potent new antibody against rare lymphomas. A few other venture-backed companies—San Diego-based Ambrx, Seattle-based Allozyne, and Cambridge, MA-based Eleven Biotherapeutics—are also working to engineer ideal new properties into protein drugs. The market for biologic drugs is estimated to be worth more than $60 billion, according to Ernst & Young.

“The industry has really recognized that biologics are going to be the driving force from a commercial standpoint for the foreseeable future, and there’s a lot of investment in the area,” Sutro CEO Bill Newell says.

Sutro was founded based on technology from James Swartz’s lab at Stanford University. Much of the early work has focused on how to engineer protein drugs so they don’t … Next Page »

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One of San Diego’s top biomedical research centers has a new boss. H. Martin Seidel, the longtime No. 2 official at the Genomics Institute of the Novartis Research Foundation (GNF), has been hired as the permanent replacement for founding director Peter Schultz.

Seidel, who has served as interim director of GNF since Schultz stepped down in March, was introduced internally as the permanent director last Thursday, according to Novartis spokesman Jeff Lockwood. Seidel, a Harvard-trained chemist, has been at GNF as the associate director since 2003 after previous stints in industry at DuPont and San Diego-based Ligand Pharmaceuticals (NASDAQ: LGND).

Mark Fishman, the president of the Novartis Institutes for Biomedical Research, and the GNF board reviewed about a dozen other candidates for the job and ultimately settled on Seidel after seeing his performance following Schultz’s departure, Lockwood said. The Novartis-funded institute is one of the major scientific players on the Torrey Pines Mesa research cluster, with 560 employees working in a 260,000 square foot facility. No major changes to the operation have taken place in connection with the leadership switch, Lockwood says.

“He (Seidel) brought to the job what the board was looking for, in terms of his leadership, and his experience in biotech and pharma and at GNF,” Lockwood says. “He showed he was ready for the position.”

Neither Novartis, nor Schultz, has commented publicly on the reason for his departure from GNF since Xconomy first reported on the move back in July. Schultz retains a faculty post at The Scripps Research Institute in San Diego.

Schultz’s departure from GNF was significant, as I pointed out in the original story in July, because he is one of the best-known chemists in the world. He left UC Berkeley to come to San Diego in 1999, when he joined the faculty at Scripps and founded GNF. Schultz, a member of the National Academy of Sciences and the Institute of Medicine, has also been a prolific entrepreneur, having co-founded eight biotech companies. The list includes Affymax Research Institute; Syrrx (which was sold to Takeda Pharmaceuticals in 2005 for $270 million); Kalypsys; Phenomix; Symyx Therapeutics, Ilypsa (acquired by Amgen in 2007 for $420 million); Wildcat Technologies; and Ambrx.

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San Diego’s life sciences newsmakers must have been over compensating, after slacking off last week. This week we have deals, fundings, comings, and goings—not to mention Luke scoops No. 1 and 2—and our summary begins now.

—Infinity Pharmaceuticals of Cambridge, MA, could pay San Diego-based Intellikine as much as $488.5 million in various types of payments under a global drug development and commercialization deal revealed last week. As much as $450 million depends on whether Intellikine can win regulatory approval for two anti-cancer drug candidates and get them to the marketplace.

—UC San Diego Health Sciences and its Clinical and Translational Research Institute got a five-year, $37.2 million grant from the National Center for Research Resources (NCRR). The funding is intended to boost what’s known as “translational science,” which encompasses the concept of rapidly translating lab research into new and effective therapies.

—Luke scoop No. 1: Ambrx CEO Steve Kaldor, who joined the biotech startup three years ago, quietly left the company at the end of June. The company did not issue a statement about the executive departure, but a spokeswoman for Ambrx confirmed Kaldor was no longer with the company. The spokeswoman added that Peter Schultz, a renowned chemist, Ambrx founder, and a member of its board, is expected to offer more advice.

—Speaking of Peter Schultz, Luke also learned … Next Page »

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Seattle-based Allozyne has been operating in stealth mode for more than a year, prompting some biotechies to wonder if it had quietly run out of cash and closed its doors.

Far from it.

Allozyne, one of the startups that graduated from the Accelerator biotech startup incubator, has been making huge strides behind the scenes, based on what I gathered from an exclusive interview this week with CEO Meenu Chhabra. The biggest news is that Allozyne has now gathered what Chhabra calls “very promising” results from its initial clinical trial of a longer-lasting multiple sclerosis drug. Full details aren’t yet available, although Allozyne is planning to issue a press release and to present the data in a scientific forum, Chhabra says.

That might have been enough to secure more capital, but the company didn’t stop there. It has also shown that its technology, originally licensed from the Caltech, could be used to make scalable and reproducible quantities of a two-pronged “bi-specific” antibody drug for a hot target against inflammatory diseases. The company has shown it can do more than just make small proteins and fragments of antibodies in fermenters with E. coli bacteria. Its techniques can also be extended to commonly used mammalian cell hosts that are better at producing full-length antibodies like the ones that sell for more than $30 billion a year to treat cancer, rheumatoid arthritis, and other diseases. And last, Allozyne has secured a research partner in the form of an undisclosed Big Pharma company that will extend its cash runway.

Allozyne has done all of that in the past couple of years with 25 employees, and without completely burning through the $30 million it raised in October 2007 from MPM Capital, OVP Venture Partners, Amgen Ventures, Arch Venture Partners, and Alexandria Real Estate Equities. Chhabra, a former Novartis dealmaker, said she’s done it with line-by-line budgeting in which she personally scrutinizes the tiniest expenses. She has saved more than $1 million in salaries by insisting that she and chief scientist Ken Grabstein handle all the key executive functions—operations, business development, finance, medical affairs—by themselves. She provides box lunches, not fancy dinners, for board updates. The CEO with the Novartis pedigree even flies coach herself, uses frequent flier points, and only lets her team attend a couple key conferences a year.

Meenu Chhabra

It might just sound like prudent business in a downturn, but OVP managing director Carl Weissman says the company’s recent achievements amount to “incredible progress.” Chhabra and the Allozyne team have adapted, he says, to “the new realities of venture-backed biotech.”

Chhabra, who says she likes to use visual analogies to explain things, put it this way:

“I had this beautiful bulb in front of me to plant when I joined Allozyne,” Chhabra says. “We’ve planted the bulb, and it has sprouted a lot of things.”

Before I dive into the nitty-gritty details of Allozyne’s progress from the past year, a little background is required. Allozyne was founded in 2005 with technology from William Goddard and David Tirrell at Caltech, and incubated at Accelerator in Seattle. The Caltech scientists, as I described in this October 2008 feature on Allozyne, discovered a way to essentially snip out a certain amino acid found in the backbone of protein drugs (methionine), and replace it with a genetically modified amino acid that can stick like Velcro to other molecules. This is sort of like plugging in a Lego block, which performs a certain function wherever researchers want on the backbone of the molecule.

This was thought to be important to provide the rock-solid consistency … Next Page »

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Peter Schultz, the prominent chemist who founded one of San Diego’s top research centers more than a decade ago, is out as the director of the Genomics Institute of the Novartis Research Foundation (GNF), Xconomy has learned from multiple sources.

Schultz’s departure was confirmed on his faculty biography on The Scripps Research Institute’s website, which says he founded the GNF in 1999 and stayed there until sometime in 2010. The Novartis-funded institute is one of the major scientific players on the Torrey Pines Mesa research cluster, with 560 employees working in a 260,000 square foot facility.

Novartis and Schultz didn’t respond to e-mailed requests for comment. The GNF website doesn’t have a statement on Schultz’s departure, and doesn’t say who is replacing him, or provide any biographies of its executive leaders.

Schultz is one of the best-known chemists in the world, and a potential candidate for a Nobel Prize, according to this 2005 profile in the San Diego Union-Tribune. He left UC Berkeley to come to San Diego in 1999, when he joined the faculty at Scripps and founded GNF. Schultz, a member of the National Academy of Sciences and the Institute of Medicine, has also been a prolific entrepreneur, having co-founded eight biotech companies. The list includes Affymax Research Institute; Syrrx (which was sold to Takeda Pharmaceuticals in 2005 for $270 million); Kalypsys; Phenomix; Symyx Therapeutics, Ilypsa (acquired by Amgen in 2007 for $420 million); Wildcat Technologies; and Ambrx.

Peter Schultz

Ambrx, and Schultz, made news earlier this week when Xconomy broke the story that Ambrx CEO Steve Kaldor had stepped down and the company had started to search for a replacement. A spokeswoman for Ambrx noted that Schultz, a member of the Ambrx board, was expected to offer more scientific advice to the company while maintaining his full-time faculty position at Scripps.

GNF, according to its website, offers scientists the freedom to initiate and conduct research programs while staying in contact with their counterparts within Novartis R&D. The arrangement with Basel, Switzerland-based Novartis, the world’s fifth-biggest pharmaceutical company with $44 billion in revenue in 2009, is supposed to provide a unique environment at the nexus of academic inquiry and industrial resources. The center uses chemistry, biology, IT, and automation to study some of the biggest disease markets on the pharma industry radar—cancer, cardiovascular disease, autoimmunity, respiratory disease, infectious disease, and neuroscience.

“This relationship has allowed GNF to develop a unique environment and accompanying technological infrastructure not found in any university or commercial pharmaceutical setting,” GNF says on its website.

Besides working with Novartis, the GNF has collaborations with big nonprofit research supporters like the Wellcome Trust, the Juvenile Diabetes Research Foundation, and the Medicines for Malaria Venture.

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Ambrx, one of the richest venture-backed biotech startups in San Diego, is looking for a new CEO. Steve Kaldor stepped down from the company’s top job the last day of June and the company is beginning to search for a replacement, Xconomy has learned.

Kaldor joined Ambrx in July 2007 after stints as the president and chief scientific officer at Takeda Pharmaceuticals’ operation, and as president and chief scientist at San Diego-based Syrrx. Ambrx didn’t issue a statement about the executive departure, but a spokeswoman for the company confirmed that Kaldor has left the company.

“Steve is taking some time off as he considers other options,” says Heidi Chokeir, a spokeswoman for Ambrx. Kaldor, along with the board, determined that it was time to find a different person to take the company forward, Chokeir says.

No interim CEO has been appointed, although Ambrx’s scientific founder and a member of its board, Peter Schultz, is expected to offer more advice, Chokeir says. Schultz, who has co-founded eight biotech companies in his career, will still maintain a full-time position as a scientist at The Scripps Research Institute, Chokeir says.

Ambrx was founded in 2003, and has since raised more than $106 million in venture capital. Its mission is to engineer protein drugs with new properties that can make them last longer in the blood, or carry potent cell-killing agents. The company has a roster full of big name partners like Pfizer, Merck, Eli Lilly, and Merck KGaA of Germany, who have pumped enough money into Ambrx so that it should be able to operate for “multiple years” without additional venture capital, Kaldor said in an interview last September. No significant changes have been made recently to any of the partnerships, Chokeir says.

Steve Kaldor

Ambrx’s two best-known drug candidates are designed to be longer-lasting versions of protein drugs that treat growth deficiencies and multiple sclerosis. The company lists 10 different drug development programs in its pipeline at various stages of clinical or preclinical development. None of those candidates are in the third and final stage of clinical trials required before a drug can win FDA approval, which generates the most value to investors.

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You spoke, and we listened.

Demand has been surging for the event we’re organizing on the 20-year outlook for San Diego’s life sciences cluster. We sold out all 130 tickets with three weeks left before the big event on March 31. While I must say we were pretty darn happy about that, it also meant many would-be attendees would be left out. But thanks to the gracious and flexible hosts over at Biogen Idec, we found a solution: We’re moving this event into a bigger commons on their campus, with enough room for 30 more regular seats, and 10 front-row VIP tickets.

In case you missed it, this event will feature an interactive panel discussion with Paul Schimmel of The Scripps Research Institute, Dan Bradbury of Amylin Pharmaceuticals, and Fred “Rusty” Gage of the Salk Institute. John Mendlein, the chairman of Fate Therapeutics, will moderate. This stellar panel will be followed by quick 3-minute “burst” presentations by a handful of organizations pursuing innovative biotech ideas in San Diego—Ambrx, Biogen Idec New Ventures, Helixis, Receptos, and VentiRx Pharmaceuticals.

I am flying in from Seattle for this, and Xconomy’s founder and editor in chief Bob Buderi will also be on hand from Boston. My job will be to roam with the microphone to help people aim their questions at this great lineup of speakers. When that is done, Bob and I will stick around the networking reception so we can get to know some of our readers a little better. See you on the 31st.

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A wise man once said that overnight success in biotech takes about 15 years. All kidding aside, we at Xconomy recognize that real innovation in life sciences doesn’t just pop out of the blue on a quarterly time horizon. So we thought it would be worthwhile to ask some of San Diego’s scientific and business leaders to share their long-range visions of what the San Diego life sciences cluster can achieve over the next two decades.

This event, coming up on the evening of March 31 at Biogen Idec’s San Diego office, will feature an interactive panel discussion with Paul Schimmel of The Scripps Research Institute, Dan Bradbury of Amylin Pharmaceuticals, and Fred “Rusty” Gage of the Salk Institute. John Mendlein, the chairman of Fate Therapeutics, will moderate. This stellar panel will be followed by quick 3-minute “burst” presentations by a handful of organizations pursuing innovative biotech ideas in San Diego—Ambrx, Biogen Idec New Ventures, Helixis, Receptos, and VentiRx Pharmaceuticals.

Ever since we first announced this event in mid-February, tickets have been going fast. I’m writing today to remind you that tomorrow is the final day you can buy discounted early-bird tickets for $75. We expect this event to sell out before March 31, so it’s best to get your tickets in advance. You can find all the pertinent details on how to register by clicking here.

I will personally fly in from Seattle to be there to facilitate audience interaction with our great lineup of speakers. I’m also looking forward to networking with a lot of our regular readers at the reception afterwards. Maybe you can enlighten me, and the rest of our growing national readership, on what you think will transform the life sciences business over the next 20 years.

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San Diego has grown up into the world’s third-leading hub of life sciences over the past three decades. But what will the local life sciences landscape look like another two decades from now? Will the region have gained basic research prowess, attracted more venture financing, and stimulated more entrepreneurial activity?

I’m excited to announce that Xconomy has assembled a panel of industry visionaries from San Diego to wrestle with these questions. This event will feature a highly interactive panel discussion with Paul Schimmel of The Scripps Research Institute, Dan Bradbury of Amylin Pharmaceuticals, and Fred “Rusty” Gage of the Salk Institute. John Mendlein, the chairman of Fate Therapeutics, will moderate.

What kind of perspective do these people bring? Schimmel may not be a household name, but he is one of the most accomplished scientific founders in biotech history, having co-founded Alnylam Pharmaceuticals, Alkermes, Sirtris Pharmaceuticals, and Cubist Pharmaceuticals among others. Bradbury is the CEO of San Diego’s biggest local drug developer, which invented the first diabetes therapy that can be injected once a week. Gage has applied his groundbreaking insights into how adult brains generate new neurons to San Diego-based BrainCells, a company he co-founded, which has an intriguing new depression drug in clinical trials. Mendlein guides one of the leading stem cell companies in the country, and before that, was CEO of Adnexus Therapeutics, which sold to Bristol-Myers Squibb for more than $430 million in 2007.

After the panel, we will hear brief 3-minute “burst” presentations from executives at some of the most exciting biotech startups in San Diego. The lineup includes Ambrx, Helixis, Receptos, VentiRx Pharmaceuticals, and Biogen Idec New Ventures. Then it’s all about networking, which we’ve found is one of the highlights when we’ve done similar events in Boston and Seattle.

So if you’d like to listen in on, and even join, the conversation, mark your calendars for the evening of March 31. Registration starts at 5:15 pm, and the program will run from 6 pm to 7:30 pm, followed by an hour of networking. The event will be held at Biogen Idec’s offices in San Diego. You can see all the details on how to register by clicking here.

As those of you who attended our successful San Diego biotech event in December already know, one of the hallmarks of our events is that we believe in stimulating, highly interactive conversations between speakers and the audience. That means I’m personally going to run around with a microphone to help you pose your best inquiries to this distinguished panel. So put on your thinking caps. I look forward to seeing you there on March 31.

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San Diego’s biotech community got busy in the first week of 2010, with a flurry of news falling as heavily as a New England snowstorm. Better get your snow shovel.

—James Mullen announced his plans to retire June 8 (at the tender age of 51) as CEO of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB). Mullen was promoted to head Biogen in 2000 and assumed command of the combined companies following the 2003 merger of Biogen with San Diego-based Idec Pharmaceuticals. In recent years, however, Mullen became a lightning rod for criticism among activist shareholders (including billionaire Carl Icahn), who complained that Biogen Idec shares were underperforming in comparison with biotech peers.

—San Diego-based Ambrx CEO Steve Kaldor told Luke that about one-third of the biotech firm’s staff—and half of its resources—are now focused on building on recent breakthroughs in the development of antibody drug conjugates, a class of protein drugs also known as “empowered antibodies.” For example, Ambrx is developing a new anti-cancer drug, called T-DM1, that combines the ability of an antibody to seek out cancerous cells with a potent toxin that gives the treatment extra tumor-killing kick.

—San Diego’s Intellikine is still on a fast track to develop drug candidates that block a hot cancer target known as the PI3 kinase. Kinases are a type of enzyme that control complex cellular processes, usually by transferring phosphate molecules to specific places in the cells. Intellikine is developing a portfolio of drug candidates designed to disrupt the processes controlled by the PI3 kinase. Intellikine, which was founded a little more than two years ago, is now testing its first drug candidate in humans.

—San Diego-based Sequenom (NASDAQ: SQNM) settled a dispute with Michigan-based SensiGen by issuing about $1.5 million worth of Sequenom shares. After the value of Sequenom shares plunged last year, a lawyer for SensiGen asserted claims that Sequenom had breached representations made when Sequenom acquired SensiGen’s molecular diagnostic tests.

—San Diego’s Adventrx Pharmaceuticals (AMEX: ANX) said it has submitted a new drug application for a new formulation of the anti-cancer drug vinorelbine that Adventrx says has fewer side effects. The application represents an extraordinary comeback for the biotech, which announced plans last March to substantially end its operations. Adventrx also said it was raising $19 million through a private placement of its convertible preferred shares.

—With technology developed at the Los Alamos National Laboratory, Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) has developed a new type of flow cytometer, used to count and catalog large numbers of cells in a biological sample. The new design uses sound waves to measure the size and type of certain cells flowing through a tube.

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There’s no denying that Ambrx CEO Steve Kaldor is a competitor. Still, when I visited him in his San Diego office a few weeks ago, Kaldor was happy to tip his cap to a couple of trail-blazing competitors who have done a lot over the past year to make his life easier.

Ambrx ended the year with about the same number of employees (80), the same amount of cash in the bank as it did a year ago (about $60 million), a new partner in Pfizer, and enough money to operate for multiple years. And while some of that is certainly Ambrx’s own doing, Kaldor sent out a big thank you to Roche and Waltham, MA-based ImmunoGen (NASDAQ: IMGN).

Why? Those companies have built up a body of evidence that suggests they may have the first “empowered” antibody for cancer that has a chance to become a commercial hit. The drug, called T-DM1, combines the ability of an antibody to seek out diseased cells, with a potent toxin that gives the treatment extra tumor-killing kick. This is supposed to be one of the new frontiers in the world of antibody drugs, which have been around more than a decade and have created a market worth an estimated $30 billion a year. While scientists have dreamed for three decades about making more potent versions of plain antibodies, most efforts have fizzled, usually because the toxin broke off and floated in the bloodstream before it could get to the target, causing side effects.

Ambrx has been around since 2003 and has raised more than $106 million in venture capital to engineer protein drugs with new properties that can make them last longer in the blood, or enable them to carry those potent little toxins. But this was the year Ambrx amped up its effort to make so-called “empowered antibodies” that are sometimes called antibody drug conjugates. About one-third of Ambrx’s staff are now working on empowered antibodies, and half of the company’s resources are going toward antibodies, Kaldor says. One of the reasons is that pharma companies have seen the T-DM1 data and want to find a partner who can help them get in the game, too.

Steve Kaldor

“It’s been amazing to see. T-DM1 is floating a lot of other boats,” Kaldor says.

He adds: “It’s been a long haul, but across the industry, people are coming to the realization that if they want to be in the second-generation antibody space, they have to do antibody-drug conjugates.”

One other company, Bothell, WA-based Seattle Genetics, has offered some more evidence to support the “empowered antibody” approach. That company (NASDAQ: SGEN) has produced some compelling data that its drug can cause complete remissions in Hodgkin’s disease patients. The data was strong enough that Seattle Genetics was able to retain 100 percent of the U.S. commercial rights to the drug, while enticing Millennium: The Takeda Oncology Company to pay $60 million in upfront cash for co-promotion rights in all countries except the U.S. and Canada.

“Seattle Genetics clearly had a lot of leverage,” Kaldor says. “People are really craving to get into the space.”

Ambrx doesn’t say much specifically about how this is really affecting its business. The latest … Next Page »

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As the flu season nears, it’s still unclear how severe the H1N1 strain of swine flu will be. But several San Diego companies are nevertheless riding a wave of investor enthusiasm for the public companies that could benefit. Get that and other biotech news here.

—The financial health of San Diego’s public life sciences companies appears to be improving, according to Luke’s recent analysis of available data about the companies’ cash balances, burn rates, and financial projections. Luke concluded that 15 of the 27 public biotechs in the San Diego area are in stronger financial shape now than they were at the end of 2008.

—After presenting highlights of a clinical trial that enrolled more than 4,000 patients, San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) says its obesity drug candidate meets at least one FDA benchmark for effectiveness and is “safe and well-tolerated.” Arena CEO Jack Lief said the company has “accomplished what we set out to accomplish.”

—San Diego-based Ambrx, which has drug development partnerships with Merck, Eli Lilly, and Merck KGaA of Germany, has signed up another major partner—Wyeth. Ambryx will work with Wyeth to create new engineered antibody drugs against multiple diseases, and since New Jersey-based Wyeth (NYSE: WYE) is in the process of being acquired by Pfizer, it means Ambryx will continue to work on the antibody partnership with Pfizer—as long as the buyout goes through.

—San Diego’s Quidel (NASDAQ: QDEL) is among five San Diego biomedical companies that have benefitted from investor interest in swine flu-related products or services in recent months. But as Denise found, not all five companies will generate much additional business if the H1N1 flu season proves to be as serious and some health officials have predicted. The official start of the flu season is Oct. 4.

—Soon after Denise’s profile of San Diego “virtual” biotech Tioga Pharmaceuticals, Luke visited virtual company VentiRx, which has employees in Seattle and San Diego. VentiRx co-founder Rob Hershberg says VentiRx has enrolled 18 patients in its first clinical trial of a drug for cancer, and so far it appears safe.

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Ambrx has ginned up yet another potentially lucrative Big Pharma deal. The San Diego-based biotech company has struck a worldwide partnership with Madison, NJ-based Wyeth to create new engineered antibody drugs against multiple diseases.

Financial terms aren’t being disclosed, but Ambrx says it is raking in an upfront payment, research funding, milestone payments based on progress developing drug candidates, as well as royalties on sales of work that translates into marketed products. This deal, combined with Ambrx’s partnerships with three other major drugmakers, means that Ambrx now has enough cash in the bank to operate “multiple years” without seeking additional financing, according to CEO Steve Kaldor.

“We have no lack of interest in the company,” says Kaldor, who adds that he had talks with five different prospective partners before settling on Wyeth in the latest alliance. “We’ve actually been turning down deals.”

The Ambrx story began back in 2003. That’s when Peter Schultz, director of the Genomics Institute of the Novartis Research Foundation (and the founder of eight biotech companies) had a new idea for creating new amino acid building blocks for a different class of biotech drugs. These drugs could potentially do whatever you wanted, like last longer in the body, or carry potent cell-killing agents. That work has enabled Ambrx to raise about $106 million in venture capital, build a scientific team of about 80 people, and score five different partnerships with three other major drugmakers to date—Merck, Eli Lilly, and Merck KGaA of Germany.

Ambrx’s two best-known drug candidates are designed to be longer-lasting versions of protein drugs that treat growth deficiencies and multiple sclerosis. But Wyeth, a major drug maker that’s in the process of being acquired by Pfizer (NYSE: PFE), was interested in something new that emerged at Ambrx … Next Page »

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Intellikine has the kind of story you rarely see in 2009. Few biotech companies can rustle up $28 million in venture capital in this year of the Great Recession, especially when they don’t have a single drug candidate in human clinical trials. Either investors are having a bout of 1999-style insanity, or the company has something really intriguing under the hood.

That’s what I wanted to find out last week when I had a chance to talk in some depth with Troy Wilson, the CEO and co-founder of La Jolla, CA-based Intellikine. We broke the story in early July that Intellikine had collected the first part of a big round of venture capital, which could total as much as $51 million. The syndicate included Novartis Bioventures, Biogen Idec, FinTech Global Capital, US Venture Partners, as well as previous investors Sofinnova Ventures, Abingworth Management, and CMEA Ventures.

Intellikine, founded in September 2007, is best known for developing drugs to block what’s known as the PI3 kinase pathway, which controls critical cell processes like proliferation, migration, and cell survival. This has become one of the pharmaceutical industry’s hot targets, as researchers have shown the pathway is involved in both cancer and autoimmune diseases. Since these conditions affect millions of people, the field has attracted lots of competitors, many of whom are ahead of Intellikine in development. The list of rivals includes GlaxoSmithKline, Novartis, and Roche, as well as smaller players like South San Francisco-based Exelixis and Seattle-based Calistoga Pharmaceuticals.

So what makes Intellikine special enough to grab this much investment in a downturn? A lot of it has to do with the startup’s own investment in basic biology to characterize the four different variants of the PI3 kinase pathway, combined with a prolific chemistry team that has created 1,500 different drug candidates to block those targets, Wilson says. That’s in contrast to other companies that may be further down the drug-development path, but have picked one or two horses to bet on, which may or may not have the best attributes for a drug, he says.

“We may not be first in class, but we want to be best in class,” Wilson says. “We wanted to look at every possible kind of inhibitor.” Keeping the options open for now is important, he adds, because, “We’re still learning about these targets.”

Intellikine CEO Troy Wilson

Much of what Intellikine is learning about PI3 kinase biology grows out of science from the lab of Kevan Shokat at the University of California, San Francisco. Shokat, a Howard Hughes Medical Institute investigator, is known for developing chemical techniques to better characterize the individual roles of kinases and the signals they send to cells. Intellikine combined that knowledge with Wilson’s business savvy (he’s a co-founder and former chief business officer of San Diego-based Ambrx) and technical expertise from a pair of scientists at the Genomics Institute of the Novartis Research Foundation in San Diego—Pingda Ren and Yi Liu. Zachary Knight, now a fellow at Rockefeller University, was a fifth co-founder, and remains an adviser to the company.

The company’s first couple of years have been focused on building up a library of small-molecule drug candidates that are potent, selectively hit certain targets, and have good drug-like properties such as being soluble in the bloodstream, Wilson says. These compounds have been made to hit … Next Page »

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We saw first-hand the increasing convergence of advanced information technologies and the life sciences here in San Diego last week. The trend was evident in the formation of a new institute for wireless healthcare, and in a roundtable discussion about personal medicine at UC San Diego that highlighted the need for easy access to electronic health records. Those stories, and the rest of the region’s BizTech news, below.

San Diego is now the home of a new medical research institute that specializes in using wireless sensors and technologies to advance health care. With $45 million in funding from the Gary and Mary West Foundation announced last week, the West Wireless Health Institute will test the use of wireless devices in clinical research to help prevent, diagnose, monitor, and treat conditions ranging from Alzheimer’s to heart disease and obesity.

San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) said a late-stage clinical trial of its drug lorcaserin met a key criteria for weight loss drug candidates set by the U.S. Food and Drug Administration. But investors were underwhelmed by the results, which showed that patients on the drug lost only about 3.6 percent more body weight than patients on a placebo. Arena still has two more clinical trials to complete, however, before seeking FDA approval.

Human Genome pioneer J. Craig Venter told scores of venture investors that Synthetic Genomics, the San Diego startup he co-founded, has engineered a species of microbes to “eat” coal and produce methane gas. With interest rising in San Diego’s emerging cleantech cluster, Venter said he’s close to making an announcement about demonstrating the technology on a larger scale.

The U.S. Department of Health and Human Services sponsored a roundtable discussion about personalized health care at UC San Diego as a way to map future funding and research priorities through 2020. But that future could arrive sooner, as the federal government plans to spend more than $19 billion on electronic health records.

Genoptix (NASDAQ: [[ticker;GXDX]]) founder and CEO Tina Nova told Luke her company has become profitable by filling a gap among laboratory testing services. Genoptix operates a specialized facility that provides a comprehensive package of diagnostic tests for cancers of the blood.

Technology developed under a Pentagon program enabled San Diego’s Avaak to develop a commercial product for home or business monitoring that will be released … Next Page »

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