Enigma Diagnostics, a UK-based medical diagnostics startup, plans to close its current U.S. office in San Francisco and open a new office in San Diego as its U.S. headquarters, according to chairman and CEO John McKinley.

McKinley outlined Enigma’s development of rapid molecular diagnostic technology in a presentation yesterday at the annual investor conference organized by Biocom, the San Diego life sciences industry group. The company has developed a desktop-size instrument based on advances in PCR (polymerase chain reaction) technology, which McKinley says can identify certain pathogens in less than 45 minutes. Amid concerns over the H1N1 swine flu outbreak and other infectious disease, McKinley says, “There currently is nothing in the market like our pending technology.”

Enigma expects to make an official announcement about its new San Diego office next month, McKinley says, and he estimates the company will have 30 employees here by mid-2010. He tells me he decided to establish an American beachhead for Enigma Diagnostics in San Diego because, “It’s a diagnostics center for the U.S. The pool of labor is certainly here.”

Among the factors that McKinley cited is the presence of Life Technologies (NASDAQ: LIFE), the Carlsbad, CA, company that was formed in last year’s merger of Invitrogen and Applied Biosystems, as well as Quidel (NASDAQ: QDEL), and Stratagene, a San Diego business that is now part of Santa Clara, CA-based Agilent Technologies.

Enigma ML device

McKinley says Enigma, a venture-backed company founded in 2004, first developed a rugged military version of its diagnostic machine for field detection of biological agents under funding from the UK’s Defence Science Technology Laboratory. The company’s investors include the UK’s Porton Capital Group, GlaxoSmithKline, and the UK Government Science Technology Laboratory.

The company intends to first win approval for its automated Enigma ML “mini laboratory” in Europe by next September. Following that, McKinley says Enigma intends to ask the FDA to waive requirements under CLIA, or Clinical Laboratory Improvement Amendments, which would enable the device to be operated in U.S. hospitals, clinics, and other point-of-care facilities.

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Biotech investing can sometimes be a downright confusing game, even for people who are supposed to know what they are talking about. Ask the folks at San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR).

Optimer has been one of a few bright spots in biotech over the past year. Back in November, its lead drug candidate, an antibiotic for C.difficile bacterial infections that cause horrific and potentially fatal cases of diarrhea, reached its main goal in a clinical trial of 600 patients. It was slightly better than the standard vancomycin antibiotic at curing patients, and was significantly better at preserving healthy bacteria in the gut that protect people suffering a relapse. It’s the first new treatment against this pathogen in decades, and it’s about to hit the market right when public health officials are freaking out about fast-rising incidence of “C. diff” in U.S. hospitals. The statistical analyses left no doubt that this drug was working.

Optimer discussed this data in significant detail six months ago, but more complete data were presented on Sunday, May 17, at a medical meeting in Helsinki, Finland. Not much was really new, except for one tidbit about a subpopulation of patients with an especially virulent form of “C.diff” infection known as BI or NAP1/027. The Optimer drug, fidaxomycin, was no better than standard vancomycin at preventing recurrences. About one-third of all patients who get “C.diff” have this especially aggressive form.

So how did the market react to this news? It shot first and asked questions later.

Shares of Optimer closed at $11.60 the last day of trading before the Helsinki presentation. The next day of trading, analysts from Needham & Co., JMP Securities, and Ladenburg Thalmann all downgraded their ratings on the stock. Shares plummeted as much as 18 percent during the day, to as low as $9.54 on heavy volume, as investors followed their interpretation of the bad news.

Then things got weird. Two days later, Ladenburg Thalmann changed its mind, and upgraded the stock again to “Buy.” All those investors who ran for the exits in fear suddenly looked kind of foolish, as the stock regained all those losses and more, closing at $12.28. Since then, Optimer has done nothing but climb even higher, closing yesterday at $13.84—a whopping 19 percent gain since the supposedly negative results came out in Helsinki. Not bad for an obscure stock that was trading for less than $5 back in early November.

What’s going on here? That was the gist of my questioning a couple weeks ago when I spoke to Optimer’s chief financial officer, John Prunty, and chief commercial officer Kevin Poulos.

A lot of people were essentially confused …Next Page »

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San Diego-based Optimer Pharmaceuticals said today it is preparing to apply for approval to sell fidaxomicin (OPT-80) in the European Union on the basis of one successful Phase III trial. The company reported positive results of the new antibiotic in November from the first of two pivotal studies for patients suffering from “C. Diff” bacterial infections. The company says it still intends to complete the second study before it will seek approval for marketing from the U.S. Food and Drug Administration.

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Optimer Pharmaceuticals has good news today for people with a serious bacterial infection. The San Diego-based biotech company (NASDAQ: OPTR) said its experimental drug was slightly better at curing patients than the standard antibiotic for C.Difficile bacterial infection, and was significantly better at preventing the nasty bug from coming back after treatment. Shares of the company doubled to $9 in after-hours trading today following the news.

About 92.1 percent of patients on Optimer’s drug, OPT-80, were considered clinically cured compared with 89.8 percent who took standard vancomycin in a trial of 629 adults, the company said today after markets closed. About 13 percent of patients on the Optimer drug had a relapse after their first round of treatment, compared with 24 percent who had a recurrence after getting standard treatment. The Optimer drug, taken as a twice-daily pill for a 10-day course, was well-tolerated, the company said. The treatment is designed, unlike some broad-sweeping antibiotics like metronidazole and vancomycin, to kill the pathogen while mostly sparing the normal, healthy bacteria we all have in the gut.

The results are a coup for the company, and for researchers that haven’t found anything new to combat “C.Diff” in decades. This particularly nasty bug causes severe diarrhea, the kind that can lead to severe dehydration, inflammation of the colon, hospitalization, and death. It is a thorn in the side of hospitals and nursing homes, that is becoming increasingly more common, according to Stuart Johnson, a Loyola University researcher I interviewed last month. About 30 to 40 cases were reported per 100,000 people discharged from hospitals in 2001, and that figure has climbed to about 100 cases per 100,000 discharges in 2005, according to data from the Centers for Disease Control and Prevention. These cases are so desperate that some doctors are experimenting with stool transplants given via enema in order to restore normal bacteria in the colon that can help ward off the infection, Johnson says.

Optimer still has to show its drug works in another pivotal trial of more than 600 patients, but the first trial is clearly an encouraging sign that the company could be on its way to filing an application for clearance to market the drug from the FDA. Optimer’s drug is the only “C. Diff” candidate in the final stage of clinical trials, so physicians have been eagerly anticipating these results, Johnson said last month. Reducing the rate of recurrence is important, because those patients are usually the toughest to treat, Johnson said.

“We are happy with the results,” said Optimer CEO Michael Chang, in a conference call with analysts. He added that the company expects to report findings from its second clinical trial in the second half of 2009.

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When people walk into the hospital with nasty flu-like symptoms, and doctors don’t know where the bug came from, the custom is to take a fluid sample and grow it in a lab dish for a day or two to get enough material to find out what it is. Then microbiologists use tools to try to identify it. Ibis Biosciences thinks it has a tool that can give a more definite answer within eight to 16 hours, by looking at the bug’s DNA.

Ibis is a subsidiary of Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS). So while I was in the neighborhood meeting that company recently, I stopped by to hear the Ibis story from its president, Michael Treble, who is headquartered right across the parking lot from Isis.

Ibis is working these days to reach milestones that will lead Abbott Laboratories to acquire the company, Treble says. The giant health products company invested $20 million in Ibis in July, and got the exclusive right to acquire Ibis for another $175 million to $190 million before next June 30. The interest stems from Ibis’ T5000 machine, which is used for research that can identify something new and unfamiliar like a SARS virus. It isn’t yet being used as an everyday diagnostic tool in hospital labs to screen for any number of infections, but that’s the vision.

“Molecular technologies have been around 20 years, but you can’t run 100 different PCR reactions to hunt down what the bug is. It’s cost-prohibitive,” Treble says. “With ours, within five hours you have an answer from a sample.” (He’s talking about polymerase chain reactions, or PCR, which amplifies DNA to get enough sample to identify an organism’s unique signature.)

The Ibis systems leans heavily on its connection to a massive database of the genomes of various bugs, so the machine can quickly find a match, or a near-match, to an infectious agent, Treble says.

This kind of machine isn’t cheap, running $300,000 to $400,000 for the instrument and proprietary chemical kits. Ibis, or rather Abbott, wants to sell them to hospital microbiology labs and infectious disease labs. Already, the Centers for Disease Control and Prevention uses one for research, as do Johns Hopkins University, the Naval Health Research Center, and others, Treble says.

Ibis got its first two orders in October 2006 to U.S. government agencies that wanted to do forensic analysis on human remains when the samples are too scarce or too degraded to be analyzed with other tools.

“Governments, organizations like the CDC, hospitals, and health providers throughout the world need better tools to deal with the growing risks associated with SARS-like epidemics and hospital infections. The Ibis T5000 Biosensor System represents a compelling approach,” said Garth Ehrlich, executive director of the Center for Genomic Sciences at Allegheny Singer Research Institute, in an Ibis statement.

Ibis is betting that hospitals will be motivated to buy its tool because of new reimbursement rules imposed by insurers seeking to crack down on them for allowing patients to get infected with costly hospital-acquired infections. If patients get infected at the hospital, insurers are “pushing the costs onto the hospitals’ books,” Treble says. Every year, the CDC estimates that 200,000 people in the U.S. get these kind of infections, like C. difficile or MRSA, which often force patients to be hospitalized for longer periods to take powerful antibiotics like vancomycin. Hospitals may want to screen patients with the Ibis tool before admitting them to the hospital in order to isolate those who are contagious before they pass a bug on to others and run up a big tab, Treble says.

“You can ask, ‘Where is this coming from?” Treble says. “Now you can effectively change things if you know what the source is.”

Treble has been with Ibis for more than three years, and before that was CEO of Madison, WI-based NimbleGen Systems, a company sold to Basel, Switzerland-based Roche in 2007 for $272.5 million. Ibis, he says, should have even more impact. “This is the biggest opportunity I’ve seen in 30 years,” Treble says. He’s hoping his enthusiasm is contagious.

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Optimer Pharmaceuticals will find out soon whether it has come up with the first new drug for a dangerous bacteria known as “C. difficile” in more than two decades. The San Diego-based company (NASDAQ: OPTR) is eagerly awaiting results from a 660-patient clinical trial of its experimental drug, OPT-80. By the end of this year, the company will see whether its candidate is as good or better than a standard antibiotic at getting rid of the so-called “C. difficile” bug, and maybe whether it’s better at preventing relapses.

I got the lowdown on what’s at stake from Stuart Johnson, of Loyola University in Chicago, a consultant to Optimer and one of the country’s leading researchers in the world of “C. Diff” He’s going to be joined by thousands of colleagues this weekend in Washington D.C. at the Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC), where Optimer will be shaking the bushes to get doctors excited about the possibilities with this new drug.

First, a little background. This bug causes really awful diarrhea, the kind that can lead to severe dehydration, inflammation of the colon, hospitalization, and death. It is a thorn in the side of hospitals and nursing homes, who try to use bleach to kill it where it hides on toilets and handrails, but not always successfully, he says. This pathogen has been rising in prevalence, with about 30-40 cases per 100,000 people discharged from hospitals in 2001, and about 100 cases per 100,000 discharges in 2005, according to data from the Centers for Disease Control and Prevention. These cases are so ugly that some doctors are experimenting with stool transplants given via enema—I’m not making this up—in order to restore normal bacteria in the colon that can help ward off a C. Diff infection, Johnson says.

“My wife goes running with a woman who had to go to the hospital with appendicitis, and ended up getting C. Diff. She said she was way more sick with C. Diff. That gives you an idea how bad this is,” Johnson says.

The main treatments for this are old generic stand-bys, metronidazole (Flagyl) and vancomycin. The latter drug is usually the standard, because it has fewer side effects, Johnson says. It can cure patients of the bug about 90 percent of the time, so that gives Optimer “a high bar” to clear, he says. The problem with vancomycin is that about one-fourth of patients relapse a week or two later, and become even tougher cases to treat, Johnson says.

Optimer’s drug is the only candidate in the final stage of clinical trials, so physicians are eagerly anticipating the results, Johnson says. The trial looked at patients who took OPT-80 twice-daily for 10 days on an outpatient basis, compared with patients who took vancomycin four times a day, Johnson says. The Optimer drug has shown potent activity against C. Diff in the test tube, and hopes are high that it will translate in a final-stage study of effectiveness, he says. The drug is designed, unlike some broad-sweeping antibiotics like metronidazole and vancomycin, to kill the pathogen while mostly sparing the normal, healthy bacteria we all have in the gut. If OPT-80 can show roughly equal effectiveness at curing patients, while lowering the risk of relapses, “this could have a significant public health benefit,” Johnson says.

Optimer may be in the lead, but other companies aren’t very far behind with new treatments for this bug. Princeton, NJ-based Medarex (NASDAQ: MEDX) is working on a genetically-engineered antibody drug against the pathogen, while Cambridge, UK-based Acambis is working on a vaccine against it, Johnson says.

Optimer has another 660-patient study of its drug candidate, which is currently enrolling patients, and is expected to wrap up by June 2009. The results from the first trial aren’t expected to be out in time for this year’s ICAAC meeting, but if Optimer can hit its goals in both of these trials, it will surely have an easier time generating buzz about this new treatment for a nasty bug.

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