The people in San Diego who discovered a multi-billion dollar asthma drug for Merck have captured the attention of Big Pharma once again.

Amira Pharmaceuticals, a privately held company in San Diego, has agreed to be acquired by New York-based Bristol-Myers Squibb (NYSE: BMY) for $325 million in cash upfront, plus additional milestone payments of $150 million, meaning the deal could be worth up to $475 million for Amira shareholders. Bristol said in a statement that it plans to retain Amira’s scientists, and keep them in San Diego. Amira had 25 employees at last count, in November.

The key asset in the deal is Amira’s drug for pulmonary fibrosis. This is the disease that damages and scars the lungs, and is probably best-known for the high rate of incidence among first responders to the 9/11 terrorist attacks. There isn’t currently an effective FDA-approved treatment, and the disease makes it hard for people to breathe and ultimately kills an estimated 40,000 people a year. While this is a relatively small patient population, Amira CEO Bob Baltera has pointed out this is a “grievous illness,” which means anybody who comes up with a good drug could have a pretty sizable market opportunity.

Amira’s drug has passed the first phase of clinical trials to demonstrate safety, and is now being prepped for the second stage, in which researchers will get a better sense of its effectiveness.

“Bristol-Myers Squibb has identified fibrotic diseases as an area of high unmet medical need that complements our research efforts in several of our therapeutic areas,” Elliott Sigal, Bristol’s president of R&D, said in a statement.

The acquisition is clearly a big win for Amira and its shareholders. The company was started in 2005 by a trio of scientists-Peppi Prasit, Jilly Evans, and John Hutchinson-who worked together at Merck until that company shut down its San Diego operation. Their biggest accomplishment there was the development of montelukast sodium (Singulair), an asthma drug that generated about $5 billion in sales in 2010. Based partly on that track record, Amira raised more than $28 million in venture capital, most of which came from Novo A/S, Avalon Ventures, Prospect Venture Partners, and Versant Ventures in March 2007.

But money has been tight since then, at Amira, just like many biotech companies with products in the early stages of development. Amira has been supported in most recent years by an asthma drug collaboration with GlaxoSmithKline, although that wasn’t enough to cover all of the company’s R&D expenses. Amira cut half its workforce last November, and its scientific founders left the day-to-day operation as the company sought to conserve cash in a tough climate for early stage biotech financing.

Amira’s lead drug, AM152, is designed to block a novel biological target on cells, known as the LPA1 receptor. That biological pathway’s relationship to pulmonary fibrosis was described by Andrew Tager and colleagues at Massachusetts General Hospital in a paper in Nature in 2008. Scientists said that mice who lack LPA1 were protected from fibrosis and death after being exposed to likely environmental triggers of the disease.

Brisbane, CA-based Intermune (NASDAQ: ITMN) has helped blaze the trail here. Its experimental drug for pulmonary fibrosis failed to win FDA approval, but was cleared for sale in the European Union, which has been enough to boost the company’s market valuation to more than $2 billion. Others, like Gilead Sciences and Novartis have R&D programs against pulmonary fibrosis as well.

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GlaxoSmithKline is counting on a new respiratory drug it is developing with South San Francisco-based Theravance, and today the companies got some good news about the treatment.

Glaxo and Theravance (NASDAQ: THRX) said today that its once-daily inhaled corticosteroid combined with a long-acting beta agonist (Relovair) passed a pair of pivotal stage studies looking at safety and effectiveness against chronic obstructive pulmonary disease (COPD). Those results were from six-month studies that randomly assigned 2,200 patients to the drug or a placebo. The companies plan to combine those findings with more data from a pair of 12-month studies when that is available, and submit applications to regulators for approval.

The new drug for respiratory disorders is a big bet for Glaxo and Theravance. Glaxo is hoping that Relovair will replace fluticasone and salmeterol (Advair), its best-selling drug with $8.4 billion in sales in 2010, according to a Reuters report. Besides chronic obstructive pulmonary disease—an umbrella term for emphysema and chronic bronchitis—the new drug is being developed for asthma, another disease that makes it difficult to breathe. The World Health Organization estimated that COPD, often caused by smoking, killed 3 million people worldwide in 2004, and is on pace to become the world’s third-leading cause of death by 2030. Asthma and allergies are estimated to affect 60 million people in the U.S. alone.

Darrell Baker, a senior vice president with Glaxo, said in a statement that passing the two pivotal studies is an “important milestone” for the new drug. More details on how the drug performed will be presented at later scientific meetings.

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New York-based Pfizer (NYSE: PFE) is the biggest drug company in the world, so when it slashes costs and dumps drug candidates left and right, people take note. But sometimes what gets overlooked is that one company’s loss is another’s gain, and that’s what appears to be happening at South San Francisco-based Rigel Pharmaceuticals.

Rigel (NASDAQ: RIGL) said today it has raised a cool $130.4 million through a stock offering of 16.3 million new shares at $8 apiece. There appears to have been strong demand to get into Rigel, as the company only offered the new investors a relatively slim 5.7 percent discount from yesterday’s closing market price of $8.49. Jefferies & Co. and JP Morgan Securities led the offering, and Piper Jaffray & Co. was the co-manager.

The new shot of cash will go toward supporting Rigel’s pipeline of drug candidates, which includes an oral treatment for rheumatoid arthritis that is in pivotal studies through a partnership with London-based AstraZeneca. But investors are also clearly buying into the story from earlier this month, in which Rigel said it basically got handed a big gift from Pfizer.

Essentially, the Big Pharma partner, as part of its cost-cutting and portfolio review, took a Rigel drug for allergy-induced asthma through early-stage clinical trials, prepared it for Phase 2, then decided to bail out on allergy and respiratory drugs entirely. So Pfizer, after investing its money in critical early stage tests, gave a much more valuable drug, called R343, back to Rigel.

“It is rare in our business that one has the opportunity to develop an asset which is both promising and on which the research and development has been as well done as the package that Pfizer is transferring to us. R343 will now become Rigel’s most advanced in-house project,” said James Gower, Rigel’s CEO, in a statement on May 6.

It will be interesting to see how many other companies find themselves in a position to take advantage of the shrinkage going on at Pfizer. If you see any other interesting examples, please shoot me a note.

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U.K.-based drug giant AstraZeneca (NYSE: AZN) is planning to lay off 135 employees at its facility in Westborough, MA, starting at the end of May and continuing through the end of 2011. The news was reported today by the Boston Business Journal, which cites a notice to state labor officials. The Westborough plant, which makes supply and packaging for allergy and asthma drugs, among other products, went through a previous round of layoffs in 2009, according to the report. Before that, AstraZeneca employed some 1,000 workers in the state between the Westborough plant and an R&D center in Waltham, MA. The new layoffs are part of a broader corporate restructuring (including 3,500 job cuts worldwide) that was announced in early 2010.

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South San Francisco-based Rigel Pharmaceuticals (NASDAQ: RIGL) said today it that it will take over development of an experimental asthma drug, R343, after its partner, New York-based Pfizer (NYSE: PFE), decided to stop developing allergy and respiratory drugs. The treatment, an inhalable small molecule designed to inhibit a protein called syk, was licensed from Rigel to Pfizer in 2005. Pfizer has since completed Phase 1 clinical trials, and now that Rigel has regained the rights, it said it plans to design a mid-stage trial later this year.

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San Diego-based Altair Therapeutics, a spinoff from Isis Pharmaceuticals (NASDAQ: ISIS), has shut down operations after the startup’s only drug candidate failed in a mid-stage clinical trial against asthma, Xconomy has learned.

Carlsbad, CA-based Isis told investors back in November on its quarterly conference call that Altair’s lead drug candidate, AIR645, failed to show enough evidence of benefit in patients. Since then, Isis re-acquired the assets of Altair, halted further clinical development of the drug, and dissolved the company, Isis spokeswoman Amy Blackley says.

“We were disappointed,” Blackley says. “The drug was well tolerated and showed signs of activity in early studies, but not enough clinical activity to warrant further development.” The company was dissolved, as well, because AIR645 “was the only drug they had,” Blackley says.

A number of big-name venture groups made a sizable bet on Altair back in November 2009. The company raised $17 million at the time from Domain Associates, AgeChem Venture Fund, Thomas McNerney & Partners, Forward Ventures, and Isis. The company was led by Joel Martin, a former partner at Forward Ventures. Altair’s vision was to use antisense technology, which is supposed to specifically shut down activity of certain proteins, to silence the activity of two inflammatory molecules that play a role in asthma—IL-4 and IL-13. Altair hoped to tap into a potentially huge market of millions of asthmatic patients, with a drug that works via a novel biological mechanism.

Terms of the asset sale aren’t being made public. Altair only had seven employees because it operated in a “virtual” model that leaned heavily on contractors, Martin says. The Altair employees have mostly gone on to find other jobs since the company wound down in December, he says.

Personally, Martin says he’s trying to take some time off, but is already thinking about what he’ll do next. He might choose to run another biotech startup, he says, noting that he’s interested in a new idea for neurology drug development.

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Marlborough, MA-based drugmaker Sunovion Pharmaceuticals has announced that the FDA approved its once-daily, oral tablet for treating schizophrenia. The drug, Latuda (lurasidone HCl), is expected to be available in the U.S. early next year, Sunovion said. The drug company has six other FDA-approved drugs, including the insomnia treatment Lunesta; Omnaris, a nasal spray for treating allergy symptoms; and a number of inhalant drugs for treating asthma.

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FDA regulatory moves turned out to be the biggest news items over the past week, prompting San Diego’s Amylin Pharmaceuticals and CareFusion to respond separately to the agency’s actions. Get our latest assessment here, along with updates on venture funding, CEO pay, and the new museum-quality home for San Diego’s Avalon Ventures.

—Investors hammered San Diego’s Amylin Pharmaceuticals after the U.S. Food and Drug Administration refused to approve its formulation for exenatide once-weekly (Bydureon), which was expected to be a blockbuster diabetes drug. Amylin and partners Eli Lilly and Alkermes said they hope to gather all the data for a re-submission “by the end of 2011.”

—As Luke reported when the news broke, the FDA decision regarding exenatide once-weekly was a chilling signal for any life sciences company developing diabetes drugs.

—Testing a recently discovered pathway of cellular communications, San Diego’s CalciMedica plans to start an early stage trial next year of a once-daily oral pill designed for patients with moderate to severe psoriasis. CalciMedica’s experimental drug could also be useful someday for other chronic inflammatory diseases like rheumatoid arthritis, ulcerative colitis, and asthma.

—Venture Capital firms invested a total of $231 million in 32 San Diego companies during the third quarter that ended in September, with $129.7 million (56 percent) going to 17 life science companies (53 percent), according to the MoneyTree Report. Six of the top 10 deals of the quarter involved life science companies: Otonomy, AutoGenomics, Accumetrics, Auspex Pharmaceuticals, Cylene Pharmaceuticals, and Cebix.

—The MoneyTree Report on third-quarter venture funding echoes results that we reported earlier this week, showing $4.8 billion was invested in … Next Page »

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Boston Scientific (NYSE:BSX) is upping its investment in a new way of treating severe asthma. The Natick, MA-based medical device giant says today it has inked a deal to acquire Sunnyvale, CA-based Asthmatx for $193.5 million.

Boston Scientific, which had previously been an investor in Asthmatx, has presumably been following the California firm’s progress for years. Asthmatx, founded in 2003, has developed a catheter-based device that uses thermal energy to reduce buildups of smooth muscle in the airway, limiting the ability of the muscles to constrict and narrow the airway during asthma attacks, according to the company. The firm garnered permission from the FDA to begin marketing the device, called the “Alair System,” in April 2010.

The buyout deal, which is expected to close in the fourth quarter of this year, includes potential payments, based on sales goals of Asthmatx’s device through 2019, of up to $250 million, according to Boston Scientific. That makes the buyout worth a potential $443.5 million if Asthmatx’s investors get every cent of the additional payments.

Asthmatx has raised at least $92.4 million from investors. Its backers include Boston Scientific, HBM BioCapital, MedVenture Associates, Menlo Ventures, Montreux Equity Partners, Olympus Medical Systems, and Polaris Venture Partners. The company pursued a proposed $74.8 million initial public offering, but withdrew the IPO in November 2006. Yet the company raised $50 million from Olympus in May 2007, enabling the firm to complete development of its device.

The company’s product includes a bronchoscope that accesses the airway through a patient’s mouth to deliver the thermal energy that reduces smooth muscle. The company says that it typically takes three procedures to complete the treatment with its device, and the procedures require only light anesthesia. Patients who are treated with the device typically go home the same day of the procedures, the firm says.

Glen French, the CEO Asthmatx, said in a statement that his firm “will be able to leverage Boston Scientific’s sales and marketing expertise to introduce the Alair System to a growing number of physicians and provide much needed relief to many patients affected by this debilitating disease.”

Boston Scientific and Asthmatx could not immediately be reached this morning to answer questions about the acquisition agreement.

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Waltham, MA-based NKT Therapeutics, a developer of drugs targeting lesser-known immune cells potentially linked to a number of major illnesses, raised $4 million in an equity round from three unnamed investors, according to an SEC filing. Last year, the company raised an $8 million Series A round led by SV Life Sciences and MedImmune Ventures. Ryan wrote about the company’s plans to develop drugs that stimulate white blood cells called natural killer T cells as part of a broader immune response to conditions like asthma and cancer.

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For startup biotech companies, there are many benefits to licensing drug candidates to major drug developers. Partners can be an excellent source of non-dilutive financing, provide the company with validation, and ensure that the drug candidate will have the support it needs to reach the marketplace. However, it is important for biotech entrepreneurs to avoid getting so focused on partnerships that they fail to fully develop a drug that’s wholly-owned.

Importance of Wholly-Owned Programs

If a management team is truly interested in building a company for the long term, then at the end of the day it needs to sell a product, generate revenue and turn a profit. Companies that sell most of the rights to their assets to partners in return for milestones and royalties have a very tough time getting interest from public market investor. Public investors are looking for companies that not only generate their own revenue stream, but have the ability to effectively invest profits into the innovation process.

Market performance over the past 20 years in this industry demonstrates that the most successful companies are those that took drug candidates into the market themselves. Companies that out licensed everything, on the other hand, have not been nearly as successful. In biotech it can be challenging to know when to keep a program versus finding a partner. It is important to understand some of the drivers in this decision.

Primary Care vs. Specialty Care

A generally useful delineation in choosing a program to partner and one that would remain fully owned is whether or not the eventual drug would be prescribed by a primary care physician or a specialist. If the drug in question is of the class that would be prescribed by a primary care physician, it is rather simple math to see why a startup would not pursue bringing that drug to market without the support of a partner. For example, in the U.S. alone, it likely would require thousands of sales reps to fully commercialize a drug with primary care physicians. It is virtually impossible for a startup company to garner the resources to make that investment. Major drug developers, though, have these sales forces in place and the capital needed to expand as required. It is also important to consider the size and cost of the clinical studies involved in the development of a primary care drug. It is almost guaranteed that the amount of investment required moving a primary care drug forward in the clinic would be more than a small company could afford. For these reasons, it is best to consider partnering the program to a company with the financial and infrastructure resources needed to move the product forward.

Amira’s first program, which inhibits a molecular target called FLAP, was clearly in the primary care space for potential treatment of asthma and chronic obstructive pulmonary disease. For this reason, we quickly achieved proof-of-concept in clinical studies which enabled us to secure a lucrative partnership that continues to finance our operations in a non-dilutive manner. We are also in the process of pursuing a similar arrangement with our second program, a DP2 antagonist. We expect the combined financial impact of these partnerships to finance the development and commercialization of our third program, which is a specialty care opportunity.

Science First

All of the business decisions about partnering should still allow … Next Page »

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Acton Pharmaceuticals, the Marlborough, MA-based developer of an inhalable drug for asthma, said today it has secured $15 million in a Series A financing round led by Sequoia Capital.

The company doesn’t have to navigate most of the usual technology and regulatory risks that are inherent in biotech. Acton is getting started with a license from New York-based Forest Laboratories to an inhalable corticosteroid drug called flunisolide HFA (Aerospan) that was cleared for sale by the FDA back in January 2006. Acton, in a statement, said it plans to complete “certain manufacturing requirements” and then start marketing the product in early 2011.

The market for inhalable corticosteroid drugs, which tamp down an excessive inflammatory response in the lungs of asthmatic patients, is worth an estimated $7 billion a year, Acton said. The company plans to build up its own specialized sales force that will pitch its product to allergists and pulmonologists, with the hopes of eventually adding more products to the portfolio. Its aerosol is made with a propellant that doesn’t use ozone-damaging CFC compounds, which are being phased out of asthma inhalers, Acton said.

“Our shared vision with Sequoia Capital along with our strong capital structure will enable us to complete development of Aerospan and build a substantial sales, marketing, scientific, and business development infrastructure that we believe will attract new opportunities for clinical stage and marketed products,” said CEO John Simon, in a statement.

Acton was founded by Simon and David Kriesler, the company’s president and chief operating officer. Both of them are veterans of Forest Laboratories, although Simon was most recently a vice president at Sepracor, and Kriesler’s last position was at JDS Pharmaceuticals. Scott Carter, who leads healthcare investing for Sequoia, is joining Acton’s board.

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Idera Pharmaceuticals said this morning that it’s losing one of its three key Big Pharma partners. Swiss drug giant Novartis has told Cambridge, MA-based Idera (NASDAQ:IDRA) that it will terminate their four-year-old collaboration to develop drugs for respiratory diseases in February.

Novartis has been funding research at Idera under this partnership since 2005 to develop drugs that activate immune responses to treat asthma, allergies, and other respiratory ailments. Idera has collected at least $6 million from Novartis over the course of the collaboration, including a $1 million payment for initiating a Phase I clinical trial for a nasal spray treatment for respiratory conditions. Idera will now retain all the rights to that drug it was co-developing with Novartis, called IMO-2134.

The end of the Novartis deal isn’t the end of the world for Idera. It still has active collaborations with Germany-based drug-maker Merck KGaA and Whitehouse Station, NJ-based Merck & Co. (NYSE:MRK). Idera also announced this morning that Merck & Co. has opted to extend their three-year-old research agreement for another year to develop Idera’s immune system-stimulating drugs for treating infectious disease, cancer, and Alzheimer’s disease. Terms of the extended agreement weren’t disclosed. Idera’s drugs deliver fragments of DNA or RNA into cells to trigger immune receptors known as toll-like receptors. The firm finished the quarter ending September 30 with $46.1 million in the bank.

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[Corrected: 7:26 am Pacific, 11/12/09] San Diego-based Altair Therapeutics, a company developing inhalable drugs to block inflammatory proteins involved in asthma and other respiratory diseases, has closed on the second part of a Series A venture financing, meaning it has raised a total of $17 million this year. [An earlier version said the company has raised $17 million since inception, but that tally didn't count an undisclosed seed investment].

Domain Associates led the latest investment round, and AgeChem Venture Fund joined previous investors Thomas, McNerney & Partners, Forward Ventures, and the group that spun out Altair’s technology in the first place—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS). Altair plans to use the cash to finish a mid-stage clinical trial of 30 asthma patients who will be randomly assigned to get the company’s AIR645 drug candidate, or a placebo.

Altair actually got started two years ago by Isis and Thomas McNerney. The idea was to see if Altair could apply the things Isis knew about gene-silencing technology, known as antisense, as an inhalable drug for respiratory diseases. The concept was an offshoot that wasn’t part of Isis’ core portfolio of drugs for cardiovascular and metabolic diseases. The idea was to make this inhaled antisense drug block a couple of inflammatory proteins that are implicated in asthma attacks—IL-4 and IL-13. The company says it has found some surprisingly encouraging results in early human tests on about 80 people. If that can be confirmed in subsequent trials, it could offer a new treatment option for a disease that affects about one out of every 18 people in the U.S., according to the National Institutes of Health.

“This is a great opportunity for antisense drugs,” said CEO Joel Martin, when I visited his office a few weeks ago. On the statement announcing today’s financing, he added: “We are thrilled.”

The Altair story really began in October 2007, around the same time another company spun out of Isis, called Excaliard Pharmaceuticals. In the case of Altair, Susan Gregory was the inventor and champion of the asthma drug’s prospects inside Isis. She ended up spinning the technology outside the company with help from Pratik Shah, a partner with Thomas McNerney. The deal was structured so that Isis would own 18 percent of the new company in preferred stock, and it stands to receive development milestones and royalties if Altair is successful.

Martin, one of the early scientists at Isis, first got exposed to the technology while he was still a partner with Forward Ventures in San Diego. He left Forward in October 2008, and liked what he saw at one of its portfolio companies, Altair, that he personally joined as CEO in May.

Ivor Royston, a partner with Forward and a member of Altair’s board, told my colleague Bruce Bigelow yesterday that he considers Altair an obvious pick for the portfolio.

“Even in the worst market, with the most restricted kind of financing, this would be a good investment,” Royston says. “This company is in the sweet spot for any venture capital firm.”

Altair sees plenty of room in the market for a new asthma drug. People use inhaled … Next Page »

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Pulmatrix, the Lexington, MA-based company working to stop infectious bugs from being absorbed into the lungs, has raised $30.2 million in a Series B venture round to advance its unorthodox method for treating and preventing respiratory diseases like flu, the company is announcing today.

Arch Venture Partners and Novartis Bioventures Fund co-led the new financing, and were joined by the company’s existing investors, Polaris Venture Partners and 5AM Ventures. On top of that, Pulmatrix is raking in another $2.2 million from the National Institutes of Health to advance its research with broad potential against multiple strains of seasonal and pandemic flu.

The big idea at Pulmatrix, which has its origins in the labs of MIT’s Robert Langer and Harvard University’s David Edwards, has the potential to fundamentally challenge the tradition of antiviral treatment. Instead of engineering a drug to kill a single virus, which the pathogen can resist over time, Pulmatrix is developing a method to stop any strain of invader that might embed in the lungs. Pulmatrix is trying to do this by creating aerosols that contain positively charged ion-based compounds, like calcium and magnesium. These compounds are first supposed to stimulate immune defenses to prevent infection. But beyond that, the Pulmatrix drugs are supposed to alter the viscosity of the mucus that lines the lungs, which activates proteins to form 3-D matrices that create a firewall of sorts, blocking pathogens of any kind from burrowing deep into lung tissue.

“Think of it as like a river with a light coating of ice on top, but with the river flowing smoothly underneath,” said Pulmatrix CEO Robert Connelly, in an Xconomy interview in June. “It’s more difficult to penetrate the surface top layer, and there’s still clearance below.”

Back in June, Connelly said that evidence from animal and early human studies showed the company’s 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.

Pulmatrix plans to use the new money to finance “multiple clinical trials” in 2010 and 2011 against a number of respiratory diseases, according to a company statement. Pulmatrix currently has a drug candidate called PUR003 that’s being tested in an early-to-mid stage clinical trial against flu, and it expects preliminary results by the end of this year. The company plans to start an asthma trial by the end of this year, and is also pursuing a treatment for chronic obstructive pulmonary disease—an umbrella term for emphysema and chronic bronchitis.

In connection with the financing, Pulmatrix has added Steve Gillis of Arch Venture Partners and Lauren Silverman of Novartis Venture Funds to its board.

“We believe that Pulmatrix’s therapies are uniquely positioned to address respiratory diseases in a fundamentally new way which could result in game changing improvements in the lives of patients with many different types of respiratory diseases,” Silverman said in a statement.

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London-based drug giant AstraZeneca (LON:AZN) plans to eliminate 113 jobs at its Westborough, MA, plant next month due to generic drug competition for its asthma drug budesonide (Plumicourt), the Boston Globe reports. Our Boston Tech Layoff Tracker has been updated accordingly. AstraZeneca also has a large R&D operation in Waltham, MA, where the company recently completed a major expansion to its facilities, according to the newspaper.

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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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Even though many venture firms are scrimping, there’s hope for biotech startups in search of capital to fund bold new areas of biological research. NKT Therapeutics, which revealed its $8 million first-round financing in March, has rallied venture capitalists to back its efforts to develop drugs that target lesser-known immune cells that potentially play key roles in asthma, cancer, and a bevy of other major illnesses. Robert Mashal, CEO of the Newton, MA-based startup, filled me on how the firm is channeling its funds into the novel science.

NKT is developing biological treatments to interact with natural killer T cells (or NKT cells), a class of white blood cells, which have a growing following in both scientific and industry circles for their potential to lead to the discovery of new drugs. Though there are drugs in testing that hope to stimulate NKT cells as part of a multi-pronged immune response, no drug that exclusively targets NKT immune cells is in clinical trials or has a track record with the FDA, Mashal says. Thus, NKT Therapeutics has embarked on a biotech journey with both great challenges and great possibilities.

Despite the hurdles ahead, the startup has a deep understanding of NKT cell biology that comes from its founding researchers—Steve Balk, of Beth Israel Deaconess Medical Center, Mark Exley, of Harvard Medical School, and Brian Wilson, at Massachusetts General Hospital—who are experts in the field (they’ve also been research collaborators for years prior to founding the startup in early 2008.) Specifically, the startup has an antibody that is designed to home in on a cellular receptor—a type of protein marker on the surface of cells—it believes is unique to many NKT cells.

The firm plans to initially develop the antibody to block the function of NKT cells in patients with asthma. Research has found that removing NKT cells from genetically engineered mice quells their asthma, Mashal says, and mice or monkeys do have asthmatic responses when NKT cells are activated in their lungs. Yet the firm is about a year and a half to two years from testing the antibody in human clinical trials, he adds.

“If this therapeutic does in humans what it does in animals, then we’ve got a good drug,” Mashal says. “I think that’s the biggest ‘if’ in the industry, and until you do the trials to test that, you never really know.”

The firm’s biotech drug could be especially useful for severe cases of … Next Page »

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San Diego’s Altair Therapeutics today named former Forward Ventures partner Joel Martin as president and CEO. Martin, who left the San Diego life sciences VC firm in October, was previously a co-founder of Avant BioVentures. Altair’s current CEO Paul Brennan will continue working with the company. Privately held Altair, which was founded in 2007, develops therapeutics for respiratory diseases like asthma and rhinitis. Its first compound, an inhaled new class drug, is in Phase 1 clinical trials.

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Seattle-based Calistoga Pharmaceuticals has raised $30 million in a second round of venture capital to support its growing pipeline of drugs for cancer and inflammatory diseases. The venture financing is the second-biggest of the year in the Seattle life sciences cluster, behind the $40 million raised in March by Kirkland, WA-based Pathway Medical Technologies.

Calistoga got the vote of confidence from the same people who invested in its $21 million Series A round two years ago—Frazier Healthcare Ventures, Alta Partners, Three Arch Partners, and Amgen Ventures.

The company has been able to defy the gravity of the downturn because it is hitting its drug development milestones ahead of schedule, and it is pursuing one of the hottest targets in cancer biology of the moment. It’s called the PI3 kinase pathway, which controls critical cell processes like proliferation, migration, and cell survival. When these normal functions get flipped into an overactive mode, it’s a hallmark of cancer cells growing out of control as well as an immune system going haywire and attacking healthy tissue.

Calistoga was born in 2006 when it licensed technology from Bothell, WA-based Icos to develop drugs that hit this target. The company is up against some formidable competition in this cancer category, with GlaxoSmithKline, Novartis, Roche, and Exelixis, to name a few. Yet Calistoga claims to be different because its drugs are aimed to hit more specific types of PI3 kinase, including one known as the delta isoform. This means Calistoga’s drug may have a better profile for blood cancers that express this variety of the PI3 kinase, and it may have milder side effects that would make this drug useful for chronic conditions like inflammatory diseases, says CEO Carol Gallagher.

“This will give us some wind in our sails as we advance these programs,” Gallagher says. “It’s great in a difficult financing environment to get a signal from our investors that they have confidence.”

The financing enables Calistoga to keep building up a pipeline of experimental drugs, so that a year from now it expects to have three different drugs in clinical trials. The new financing means Calistoga has enough cash to operate through 2010, although Gallagher wouldn’t be more specific because the cash burn rate will depend on how fast it decides to push drugs through clinical trials. Calistoga, which has 22 employees, is planning to conserve this capital carefully from the start—it doesn’t plan … Next Page »

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