—It wasn’t exactly news when the board at San Diego-based Illumina (NASDAQ: ILMN) said it had rejected the $5.7 billion hostile takeover offer from Swiss drug maker Roche. Now Wall Street’s arbitragers are placing their bets on whether Roche can prevail. The most intriguing news about the deal, however, came from The Wall Street Journal, which revealed potential conflicts of interests with Illumina’s key adviser, Goldman Sachs.

—A new molecular diagnostics startup stepped into the light in San Diego. Applied Proteomics named Peter Klemm as CEO, and disclosed it raised $22.5 million in venture capital last summer from Vulcan Capital and Domain Associates. Applied Proteomics also said it moved to San Diego last June from the Los Angeles area, and double its staffing over the next year.

—San Diego-based Tocagen and Siemens Healthcare Diagnostics disclosed a partnership that will begin with Siemens’ support of clinical trials Tocagen has planned for its viral gene therapy treatments for primary brain cancer. Siemens said it will help provide companion diagnostics that are intended to help doctors decide the best course of treatments for patients, based on their unique genetic characteristics.

—San Diego’s OncoSec Medical, which was created out of a reverse merger less than a year ago, is beginning mid-stage trials of a treatment that combines electroporation and immunotherapy in patients with three types of skin cancer. Electroporation is a technology that causes cancer cells to take up higher concentrations of anti-cancer drugs by administering pulses of electricity directly to the cancer cells. OncoSec is trying it on patients with metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma.

—Brooks Life Science Systems, a Poway, CA-based division of Brooks Automation, (NASDAQ: BRKS), said it had established a development and commercialization partnership with The Scripps Research Institute (TSRI). Brooks plans to manufacture and commercialize a microplate imaging system under an exclusive licensing agreement with the biomedical research institute.

—San Diego-based Prometheus Laboratories Inc., a specialty pharmaceutical and diagnostic company, said it signed a research and collaboration agreement that provides its proprietary cancer diagnostic technology to an unnamed global pharmaceutical. Financial terms were not disclosed. Prometheus said its technology can detect the activation of specific cancer pathways with high levels of sensitivity and specificity.

—San Diego-based Synthetic Genomics and Ipswich, MA-based New England Biolabs (NEB) said they signed a non-exclusive licensing agreement allowing NEB to commercialize the “Gibson Assembly Master Mix,” a one-step, isothermal approach to enable the rapid assembly of multiple DNA fragments. The companies said Daniel Gibson and colleagues at the J. Craig Venter Institute (JCVI) developed the technology as part of a program sponsored by SGI. Financial terms were not disclosed.

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Connect, the non-profit group that supports innovation and entrepreneurship, named San Diego’s eight most-innovative products of 2011—and bestowed its highest honor on Gen-Probe (NASDAQ: GPRO) for its nucleic acid test for screening donated blood.

Connect gave Gen-Probe its William W. Otterson Award for its Procleix test, which won FDA approval in 2002, saying Procleix has significantly increased the safety of the world supply of donated blood by dramatically reducing the risk of contracting HIV, Hepatitis C, Hepatitis B, and West Nile virus from a blood transfusion. Previous recipients of the award include Intuit for TurboTax, Qualcomm for CDMA technology, and General Atomics for the Predator unmanned spy plane.

But the afternoon belonged to Bill Walton, the legendary basketball player and Grateful Dead fan, who served as Connect’s master of ceremonies at the luncheon ceremony Friday. With his extensive experience as a sports broadcaster and counter-culture icon, the NBA Hall of Famer delivered a moving tribute to the spirit of entrepreneurship and the determination needed to overcome adversity.

Almost three years after undergoing a new type of spinal surgery that San Diego-based NuVasive (NASDAQ: NUVA) helped to pioneer, Walton proclaimed himself “the luckiest man alive.” The injury-prone basketball great has said that his back pain was so intense before the surgery that he considered suicide. Now living without pain for the first time in years, Walton is a walking testimonial for NuVasive, and a life-affirming example of what a breakthrough in medical technology can accomplish.

In a commentary that was vintage Walton, “the Big Red Deadhead” intertwined the lyrics of several Grateful Dead tunes in a paen to entrepreneurship and San Diego’s Challenged Athlete Foundation. He urged entrepreneurs to defy those who say, “that will never work,” likening their experience to handicapped athletes who struggle to compete. And he reminded the audience that in “Stella Blue,” the late Jerry Garcia sang, “It all rolls into one and nothing comes for free.”

Connect says it received more than 140 nominations—a record number— from local companies for its 24th annual “Most Innovative New Product Awards.” In one category, software, there were a record 37 applications, more than any other category in the history of the event.

To be eligible, the product must have been developed in the San Diego area, introduced between March 2010 and September 2011, and generated sales revenue. More than 850 people attended the awards luncheon, which offers awards in biomedical diagnostics and research tools, medical products, software, communications and IT, cleantech, aerospace and security technologies, hardware and general technology, and action and sport technologies.

The 2011 winners of … Next Page »

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Economists from the UCLA Anderson Forecast and University of San Diego will break out details of their 2012 economic outlook at a conference in downtown San Diego this morning. The study was released earlier today. We have highlights, along with a roundup of last week’s San Diego tech news.

—Job growth in the nation, state, and San Diego remains the biggest concern in the 2012 economic outlook being released today by the UCLA Anderson Forecast. The San Diego economy will “continue to grind along with slightly positive job growth… mirroring the softening forecasted for the nation and state,” according to University of San Diego economists Ryan Ratcliff and Alan Gin, who prepared the local economic outlook for the next three to four quarters. They say, “Unfortunately, this job growth will just barely keep up with the growth of the labor force.” They see unemployment holding steady at 10 percent in San Diego County. The California forecast sees virtually no growth in employment, with the jobless rate stuck at 12 percent. The forecast predicts very modest national economic growth of 2.5 percent to 3 percent, with nationwide unemployment at 8.6 percent.

—Japan’s Sony Corp. agreed to pay almost $1.5 billion to buy Ericsson’s share in Sony Ericsson, the joint venture the two global giants formed 10 years ago to make wireless handsets. The deal could pose ramifications for San Diego-based Sony Electronics, part of Sony’s U.S. operations. By buying out its Swedish partner, Sony is expected to integrate smartphones produced by its new handset business with Sony’s existing expertise in consumer electronics, as well as games, music, and movies.

—In a separate announcement, Sony said its U.S. subsidiary based in New York has acquired Redmond, WA-based Micronics, which is focused on developing “point of care” medical devices. Financial terms of the buyout were not disclosed. This deal also could involve Sony’s operations in San Diego, which has been emerging as a hub for both biomedical diagnostics and wireless healthcare. The Japanese giant said it bought Micronics to accelerate its own R&D in point-of-care diagnostics, and to accelerate the commercialization of Micronics’ other point-of-care devices.

—The Consumer Electronics Association showcased wireless health at its annual industry forum in San Diego last week. The CEA says a study on the role of technology in consumer health and wellness found that consumers are interested in communicating with their doctors via wireless devices. The study says 36 percent of those polled said they would be interested in sending health data to their doctor via a wireless device; 33 percent are interested in managing their health records online; and 32 percent would be willing to consult with their doctor via online video.

—U.S. Chief Technology Officer Aneesh Chopra told a consumer electronics industry forum that government initiatives in technology innovation are leading to a host of success stories in communications, from helping to find lost children to fostering better collaborations among police, fire, and other emergency “first responders,” according to the Consumer Electronics Association. In a keynote speech during the CEA Industry Forum in San Diego, Chopra named Compete.org as a website where entrepreneurs can find information about incentive prize competitions and other challenges the government has established.

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GenMark Diagnostics (NASDAQ: GNMK), a Carlsbad, CA, maker of automated DNA and RNA diagnostics testing systems, said it plans to raise at least $30 million through a secondary offering of its stock to the public at a price of $4.25 per share. The offering, which is expected to close Wednesday, consists of more than 7 million GenMark shares, with an additional 1 million shares available as an option to cover over-allotments.

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[Updated 5/24/11 9:25 am. See below.] San Diego’s Prometheus Laboratories, a specialty pharma and diagnostics company in registration for an IPO, has instead agreed to a buyout offer from Nestlé Health Science, a new subsidiary of Switzerland’s Nestlé S.A.

[Updated with estimated buyout range.] Financial terms of the deal were not disclosed in a statement today. Zurich-based analyst Jean-Philippe Bertschy of Bank Vontobel estimates that Nestlé may have paid from $567 million to more than $1 billion for Prometheus, according to a Bloomberg report.

As I reported last summer, Prometheus has focused its business on detecting, diagnosing and treating gastrointestinal diseases and disorders in the United States, and planned to change its name to Prometheus RxDx. The company was generating most of its revenue from budesonide (Entocort EC), a glucocorticosteroid prescribed for mild to moderately active Chron’s disease. The company also was integrating its marketing and delivery of pharmaceuticals with its high-value diagnostic testing capabilities for cancer and gastrointestinal diseases.

Prometheus, which filed for an IPO in December, 2007, updated its filing last summer and again about three months ago. The privately held company has nearly 500 employees and is profitable, with annual net income of more than $48 million on revenue of nearly $519 million in 2010, according to its latest IPO filing.

Nestlé says its Health Science subsidiary was established almost six months ago to provide “science-based nutritional solutions” to improve health care. In the statement from the companies, Nestlé Health Science CEO Luis Cantarell calls the Prometheus acquisition “a strategic move into gastrointestinal diagnostics. Prometheus’s leading edge diagnostics technology and outstanding sales force will help us to develop an integrated approach to personalized healthcare.”

Prometheus CEO Joseph Limber says the Nestlé deal will enable the company to accelerate its development of diagnostic technologies and potentially expand into other therapeutic areas.

Prometheus was founded in 1995 with equity funding from DLJ Merchant Banking Partners, SPVC (managed by Split Rock Partners), Sprout Group (sub-advised by New Leaf Venture Partners), Apax Partners, Pamlico Capital and Brentwood Venture Capital.

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In a letter to federal regulators yesterday, Carlsbad, CA-based AutoGenomics withdrew its filing for an initial public offering, which the company submitted in July, 2008. The company said at that time that its IPO would be made only by means of a prospectus, with J.P. Morgan Securities Inc. acting as the sole book-running manager of the offering. CEO Fareed Kureshy gave no reason for withdrawing, but said it “may undertake a subsequent private offering.” AutoGenomics, which makes molecular diagnostic machines, has not made a profit since it was founded in 1999. VentureWire, which reported the withdrawal, said the company had an accumulated deficit of nearly $68 million at the end of March 2010.

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Shares of Quidel (NASDAQ: QDEL), the San Diego diagnostic test maker, sank more than 8 percent on heavy volume today, after the company priced a secondary public offering of 4 million common shares at $13.15 a share. The company, which granted an additional 600,000 to the underwriter to cover over-allotments, says the closing of the offering is expected on or about Tuesday. Quidel’s share price fell by $1.20, or 8.3 percent, to close at $13.23 in trading of nearly 2.1 million shares—nearly 11 times the company’s recent average trading volume. Quidel, which has about 28 million shares outstanding, says it plans to use the proceeds for working capital and other purposes, including possible acquisitions.

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An Italian medical diagnostics company, Silicon Biosystems of Bologna, has established the headquarters for a new U.S. subsidiary in San Diego, according to a statement from the company. Bob Proulx, a local life sciences executive who was previously the director of marketing and business development at CryoPort, will head the newly formed business. Silicon Bio says its new U.S. business is focused on the North American research and clinical diagnostics markets for its DEPArray technology platform. In the statement issued by the company, CEO Giuseppe Giorgini says, “Our DEPArray platform will allow clinicians and researchers working to advance personalized medicine in areas such as clinical oncology to identify new biomarkers and improve patient treatment.”

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San Diego-based Nexus Dx, a startup founded in 2009 to consolidate technologies focused on point of care blood diagnostic testing, said yesterday it has merged with New Jersey-based International Technidyne Corp. (ITC). The New Jersey company specializes in hemostasis management (the process in which bleeding stops). The private equity firm Warburg Pincus acquired ITC for $55 million immediately prior to the merger. ITC was previously a subsidiary of Pleasanton, CA-based Thoratec (NASDAQ: THOR).

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Lee Hartwell would be excused if he wanted to rest on his laurels at the age of 70 and enjoy the sort of retirement that you read about in personal finance magazines. Instead, he’s now setting out to do the most ambitious things of his career. He wants to change the way the world thinks about personalized medicine, help make the world a more sustainable place, and improve how children learn about science.

“I’m not a person who looks back,” Hartwell says. “I don’t tend to miss things. I look upon each stage as an experience and a learning opportunity. I came into this to learn about medicine, and it was an enormously powerful experience. Now it’s time to move on and use that knowledge.”

Hartwell made his name as a basic scientist; his fundamental discoveries about cell processes in yeast earned him the 2001 Nobel Prize. Then as the president and director of the Fred Hutchinson Cancer Research Center in Seattle, he oversaw 13 years of growth and integration between basic science, clinical practice, and public health. Now that Larry Corey has been tapped as his successor, Hartwell is preparing for his next major challenge: chief scientist of The Biodesign Institute at Arizona State University, starting Oct. 1. He told me about his vision for the next chapter of his career when I recently visited his office in Seattle.

His vision is to create a new wave of precise and predictive diagnostic tests, based on systematic analyses of all sorts of proteins in the blood that could be early warning signs of disease. These tests will enable physicians to answer basic problems, like determining when an emergency-room patient’s chest pain is just garden-variety or an early warning sign for a heart attack or stroke. Armed with that kind of individualized knowledge, physicians would be able to make more informed decisions about patient care, saving resources that are currently wasted.

Many people see this as essential to fixing healthcare in the future, but Hartwell is looking through an even wider societal lens. He talks about how this more efficient model of healthcare will help the world focus resources on global sustainability, like clean air, clean water, or as he puts it, “maintaining the planet in a way that will continue to support human life.” One part of that vision, for which he plans to devote half of his time, will be about improving K-8 science education. Done right, it could help foster a new generation of more scientifically literate citizens who will help support those initiatives.

One of Hartwell’s peers, Leroy Hood of the Institute for Systems Biology in Seattle, said he expects big things from Hartwell’s new mission. Hartwell, he says, “approaches the … Next Page »

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The life sciences news over the past week was almost all about deals. Money came out of INC Research, a contract research organization in North Carolina that was founded in San Diego. Money went into Otonomy, Accumetrics, and some other San Diego startups. We round it all up for you here.

—San Diego-based Otonomy, a two-year-old startup developing new drug candidates for treating hearing and balance disorders of the ear, closed a $38.5 million Series B round of venture funding. Otonomy was started by San Diego’s Avalon Ventures, which converted $9 million in loans into equity as part of a $10 million Series A round investment just three months ago.

—The recent $575 million buyout of INC Research, a contract research organization based in Research Triangle Park, NC, was a happy outcome for investor (and Xconomist) Drew Senyei of San Diego’s Enterprise Partners Venture Capital, and neurologist Kenneth Selzer. It took a long time for the payday to arrive—INC Research was founded in San Diego 14 years ago.

—San Diego-based Avalon Ventures rounded up five other VC firms to acquire a compound called fenretinide, which was under development in Florida, for treating age-related macular degeneration. The six venture firms founded ReVision Therapeutics in San Diego just five months ago to resume development of fenretinide after Sirion Therapeutics of Tampa, FL, ran into some economic doldrums last year.

—A biomedical diagnostics company, San Diego-based Accumetrics, has raised $7 million as part of a Series E venture round that began with $16.5 million last October. Accumetrics, which makes an automated diagnostic instrument that measures the effectiveness of anti-clotting drugs, says now it should reach profitability.

—Cebix, a San Diego startup developing a supplemental treatment for complications that arise from type 1 diabetes, has raised $16 million over the past 14 months.

—San Diego-based Cypress Bioscience (NASDAQ: CYPB) said it acquired rights to two novel therapies in separate deals. Cypress acquired a potential treatment of the core symptoms of autism from Marina Biotech (NASDAQ: MRNA) of Bothell, WA. And Cypress licensed an electronic nicotine delivery technology from Alexza Pharmaceutical (NASDAQ: ALXA) of Mountain View, CA, that helps smokers quit smoking by enabling them to gradually step down how much nicotine they inhale.

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San Diego-based Accumetrics says today it has raised an additional $7 million as part of a Series E venture round that was announced last October, when the biomedical diagnostics company raised about $16.5 million. The company says it has closed out the round after raising $24 million altogether.

The latest funding brings the total capital invested in Accumetrics to roughly $75 million since founder Robert Hillman reacquired the core technology and restarted the company in 2003. Accumetrics says it expects to reach profitability with this latest capital infusion. Accumetrics says the $7 million in funding came primarily from its existing investors, which include: The BBT Fund/Apothecary Capital of Chicago; Oakland, CA-based Kaiser Permanente Ventures; St. Louis, MO-based RiverVest Venture Partners; Portland, OR-based Arnerich Massena & Associates; and Palo Alto, CA-based Essex Woodland Health Ventures.

Accumetrics makes an automated diagnostic instrument called VerifyNow to help doctors calibrate the dosages they prescribe of anti-clotting drugs such as aspirin, clopidogrel (Plavix), abciximab (ReoPro), and eptifibatide (Integrillin). Accumetrics designed the desktop unit for use by doctors in clinics and medical offices. Because patient response varies widely, the test gives doctors a quick way of assessing whether the dosage they’ve prescribed is working as intended. This matters because if an anti-clotting drug is a little too effective, and makes the blood too thin, it can cause certain patients to suffer bleeding episodes.

In the company’s statement, CEO Timothy Still says the closure of the fifth round of financing demonstrates the venture firms’ “unwavering confidence” in Accumetrics. He adds, “We are excited to be positioned at the forefront of a major market shift in the healthcare sector where medical diagnostics will play a greater role in personalizing patient treatment.”

Accumetrics says proceeds from the financing will be used to help pay for development of next-generation technology, clear regulatory hurdles, and continue its expansion of global commercialization efforts.

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San Diego-based Prometheus Laboratories, a specialty pharma and diagnostics company, has filed an amendment to its plans for an initial public offering, which has been in registration for nearly three years.

The regulatory filing offers a wealth of new insights into the company. Prometheus says it generated first-half profits of $28.9 million and $259.6 million in total revenue during the first half of 2010, according to its amended IPO filing. This represents a 60 percent increase in revenue and a 75 percent profit gain over the first half of 2009. The company reported total debt of more than $194 million as of June 30.

Prometheus also says its total annual revenue has grown from $138.9 million in 2005 to $341.9 million in 2009, according to the regulatory filing. Most of that revenue, however, has come from a relatively short list of drugs targeting gastrointestinal disorders or cancer. In 2009, Prometheus generated just $84.2 million, or 24.7 percent, of its overall revenue from diagnostic cancer and gastroenterology services.

In fact, the company has been generating most of its revenue from a single drug—budesonide, a treatment for moderate Crohn’s disease marketed as Entocort EC. During the first six months of this year, budesonide sales accounted for roughly 63 percent of the total sales at Prometheus—and 74 percent of its drug sales. Prometheus began selling budesonide capsules in 2005 under an exclusive rights agreement with AstraZeneca—which is set to expire at the end of this year. Two patents protecting the drug also are scheduled to expire in May 2011 and January 2015.

The company has been diversifying its product line. Prometheus says it bought the drug alosetron hydrochloride (Lotronex) for treating irritable bowel syndrome from GlaxoSmithKline in early 2009. Earlier this year, Prometheus acquired and began selling aldesleukin (Proleukin) for treating metastatic renal cell carcinoma and metastatic melanoma under an agreement with Novartis Vaccines and Diagnostics.

The company also launched a test for Crohn’s disease, saying it can predict a patient’s risk of developing the disease later in life. It also signed a deal in March with Bayer Schering Pharma AG, that could be worth as much as $160 million, to develop diagnostic tests for cancer drugs that Bayer has been developing.

The company, which had 476 employees in mid-July, has applied for a listing on the Nasdaq under the symbol RXDX. As part of a reorganization that will follow the IPO, Prometheus Labs plans to change its name to Prometheus RxDx. A report in VentureWire says Promethus has raised more than $132 million in debt and equity since it was founded in 1995. Its investors include DLJ Merchant Banking Partners, Split Rock Partners, Sprout Capital, Apax Partners, Pamlico Capital, and Brentwood Venture Capital.

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Buying that personal genetic test kit from the drug store is going to take longer than expected. Walgreen says it has postponed its planned sale of kits from San Diego-based Pathway Genomics, after the FDA told company its test needed regulatory approval before it could be sold in stores. Amid a proliferation of companies planning to sell similar genetic tests and services, the FDA is now considering the legality of selling such tests directly to consumers, according to The San Diego Union-Tribune. Pathway had planned to sell a $20 kit through retailers, enabling consumers to send a sample of spit in for tests that range from $79 to $249.

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San Diego’s Sequenom, which scrubbed the launch of its diagnostics test for Down syndrome back in April 2009 over “mishandled data,” says today it’s resuming development with a new testing schedule. Sequenom says it could launch a laboratory test “before the end of 2011″ if everything goes as planned.

In announcing its financial results for the first quarter that ended March 31, Sequenom laid out a timeline that begins with the optimization of a DNA sequencing-based test to be completed by the fall of this year. By the end of 2010, the company said it expects to have collected a sufficient number of blood samples from high-risk pregnancies for its blinded clinical studies. “These blinded studies represent the pivotal validation studies to support launch of a noninvasive T21 test,” the company says, using shorthand for Trisomy 21, the scientific name for Down syndrome.

In a surprise announcement last April 29, Sequenom postponed the long-anticipated debut of its flagship Trisomy-21 test, which screened a blood sample drawn from a pregnant mom for fetal DNA linked to Down syndrome-due to “employee mishandling of R&D test data and results.” A subsequent internal investigation prompted a special committee formed by Sequenom’s board to fire CEO Harry Stylli, senior vice-president of R&D Elizabeth Dragon, and three other employees. The CFO and another executive resigned.

The company, which is now headed by chairman and CEO Harry Hixson, still faces long odds on several fronts, including federal criminal and civil investigations as well as a looming shortage of cash. Sequenom did not say how much it will cost to restart development of its Down syndrome diagnostic test, but as of March 31, the company says it had total available cash and securities of $29.2 million—with another $8.6 million due from in unpaid bills. The company says it used net cash of $13.4 million in its first quarter to support operations.

Sequenom is reporting a loss of $16.9 million, or 27 cents a share, for the first quarter of 2010. That compares with a loss of $17.5 million, or 29 cents a share, in the same period a year earlier. The company says total revenue amounted to $10.6 million in the first quarter, a 22 percent increase over the 8.7 million in revenue during the same quarter last year.

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Sequenom (NASDAQ: SQNM) says a federal judge in San Diego has approved its $14 million settlement with shareholders in an agreement that consolidated multiple securities class action lawsuits against the San Diego maker of diagnostics kits and products. The cases were filed after Sequenom withdrew plans last April to introduce a diagnostic test for Down syndrome due to “employee mishandling” of R&D test data and results. The company plans to report its first quarter financial results tomorrow afternoon.

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Economic downturns often light the fuse of revolutionary change. And one key change is becoming apparent now in San Diego’s life sciences community—which has been hammered by the 2008 capital markets collapse and plunge in VC funding.

Unable to raise capital, many biotechs and medical instrument makers were forced over the past 16 months to slash their budgets, lay off employees, and look for easier and less expensive ways to carry on the process of bringing drugs and devices to market. In some cases, that has meant outsourcing research, clinical trials, and other work to overseas labs. But many San Diego life sciences companies also are turning to local consulting firms, biomedical research laboratories, and a variety of specialized service providers. Collectively, they are known as CROs, or clinical research organizations—and in San Diego, at least, they are proliferating. (CROs are alternately known as contract research organizations)

At Xconomy’s request, San Diego-based Assay Depot, an online marketplace for CRO services, conducted a survey of CROs in the greater San Diego area. To our mutual surprise, Assay Depot found 144 companies providing a variety of contract services for local life science companies. Assay Depot’s Christopher Petersen plotted these companies on a Google map, below; you can scroll and zoom the map and click on each pin for the name and URL of each company. We also have provided a complete list of all the companies, with links to the websites of all-but-one CRO, at the bottom of this story.

Is 144 enough to count as a new technology cluster in San Diego?

If so, it is a hub that has been 15 years in the making, according to Joe Panetta, CEO of Biocom, the nonprofit industry group that represents San Diego’s biotech and biomedical instrument companies. Panetta says that Biocom was formed in 1995 to help local biotech startups connect with local business, law, and scientific service providers.

In recent years, though, there has been an explosion in the number of local companies that provide specialized biomedical research, from matching molecules with targets for drug development to recruiting patients for clinical trials.

The CROs “create efficiencies and cost-savings and a level of expertise that biotechs would not otherwise have,” Panetta says. The proliferation of CROs has accelerated in recent years because of the weakened economy, he adds. With waves of layoffs sweeping through the upper echelons of many biotechs, Panetta says, “A lot of experts are moving into consultant roles. So over the last year, we have seen a real buildup in the numbers and depth of CROs.” With the venture-backed model for life sciences startups stalled by the weak economy and uncertainty over the outcome of health reform in Congress, Panetta says CROs represent “a different model in which [life science] companies can succeed by relying on outside expertise that they previously would have relied on internally.”

View San Diego CROs in a larger map

Kevin Lustig, Assay Depot’s CEO, cites a variety of other factors for the growth of CROs, including great academic centers, San Diego’s high quality of life, lack of large pharmaceutical employers, and cheap lab space close to academic centers. “As always, the actual reason is likely some combination of these factors,” Lustig says.

As he puts it, many outstanding researchers come to work at one of San Diego’s renowned biomedical institutes (which include UC San Diego, The Scripps Research Institute, The Salk Institute, and recently renamed Sanford-Burnham Medical Research Institute)—and they stay for the balmy coastal lifestyle. “Since we have relatively few large pharmaceutical and biotechnology companies in San Diego, these researchers tend to work at smaller companies,” Lustig says. And perhaps because they work … Next Page »

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OccuLogix, a biotech startup founded near Toronto, Canada, in 1996 to develop ophthalmic treatments for age-related macular degeneration and glaucoma, apparently has relocated in San Diego, according to an SEC filing. In its Form D filed today, OccuLogix discloses that it has raised more than $1.7 million from investors in a round that intends to raise $5 million.

The company is listed as a Toronto-area company on LinkedIn and Hoover’s. But OccuLogix, which is now doing business as TearLab, lists a San Diego address in its SEC filing and on its website. The company describes itself as an “in-vitro diagnostics company developing and commercializing novel, lab-on-a-chip technologies that enable eye care practitioners to test for highly sensitive and specific biomarkers in tears at the point-of-care.”

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The cost of sequencing a person’s genome continues to fall. Illumina this week introduced a machine that can sequence an individual’s genome for under $10,000. That is one percent of the $1 million it cost to decode a human genome three years ago.

The announcement pushes San Diego-based Illumina to the forefront in an intense race to develop faster and cheaper genome-decoding equipment. The next-cheapest technology costs five times more.

Illumina, which unveiled its HiSeq 2000 at the JP Morgan Healthcare Conference in San Francisco, clearly believes the machine will establish its leadership in the gene-sequencing category. “Other companies are talking about future products, but we’re talking about products that are going to ship next month,” CEO Jay Flatley told Forbes.

Illumina says its first customer is BGI, formerly known as the Bejing Genomics Institute, which has ordered 128 of the new gene-sequencers for its new genome center in Hong Kong. The HiSeq 2000, which can sequence two genomes simultaneously, is priced at $690,000. Flatley said during Illumina’s R&D Day presentation today that the purchase will make BGI the world’s largest genome center. In a statement issued by Illumina, BGI’s president says it is focused on using genetic analysis to enhance agriculture and food production and to develop the personal genomics field in China.

It will be interesting to see how the competition shapes up from here. Complete Genomics of Mountain View, CA, which Luke profiled in 2008, has a stated goal of sequencing individual genomes for $5,000 each. It has a different business model from Illumina. Rather than selling sequencing machines, Complete Genomics does the genome decoding in-house and sends clients the results. Last November, the company published a “proof of principle” in the journal Science that demonstrated it could sequence and analyze a person’s genome for $8,005 to $1,726.

Another competitor is Helicos Biosciences of Cambridge, MA, which announced last year that it had sequenced the genome of one of its founders for $50,000. That is about the same price Illumina set last August for its sequencing service aimed at consumers.

Cheaper sequencing will enable more researchers to examine genomes from large numbers of individuals for differences linked to health risks or disease. Some believe that the information will lead to personalized medical care, based on an individual’s genetic information. No one knows how low the cost of genome sequencing can go. But it’s probably fair to say we haven’t seen the bottom.

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Life Technologies (NASDAQ: LIFE), the Carlsbad, CA-based provider of biomedical diagnostic equipment and laboratory supplies, has agreed to acquire AcroMetrix, a diagnostics controls specialist based in the Bay Area community of Benicia, CA. Financial terms of the deal were not disculosed. Life says in a statement that AcroMetrix’ diagnostic quality control products allow a laboratory to achieve better standardization across systems and are more economically efficient to use than “homebrew” control reagents.

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