Ann Arbor, MI-based startup Aastrom (NASDAQ: ASTM) recently announced it has reached an agreement with the FDA on the terms of a Special Protocol Assessment for the design of its Phase III clinical study of ixmyelocel-T, the company’s multicell therapy for patients with critical limb ischemia (CLI) who have no other treatment options.

CLI is a severe form of cardiovascular disease in the legs, known as peripheral artery disease, in which blood vessels get so clogged up that doctors are forced to amputate. Aastrom’s approach involves withdrawing a patient’s bone marrow cells, incubating them in a proprietary process at its Ann Arbor facility, and spurring growth of adult stem cells and progenitor cells that promote healing. Those revved up cells get re-infused into the patient, where they are supposed to foster the growth of new blood vessels to improve circulation.

“The FDA encouraged us to pursue this [Special Protocol Assessment] process since there aren’t a lot of new therapies for iscemia,” said Aastrom CEO Tim Mayleben. “The Special Protocol Assessment provides Aastrom and our investors with more confidence that we’re running a well-designed trial. It’s not a guarantee that they’ll approve our therapy by any means, but if we follow the protocol plan and deliver good results, there’s a high chance of FDA approval.”

Mayleben said one thing that attracted him to Aastrom’s method of therapy is that the patients’ own cells are used, eliminating the ethical controversy that sometimes hampers other stem-cell studies.

“More importantly,” Mayleben said, “there are fewer safety issues.”

Mayleben estimates the trial will take two and a half years—18 months to recruit patients, and 12 months to follow up. He said Aastrom is one of the few biotech companies in the world that has come this far, to the third and final stage of clinical trials normally required for FDA approval.

“It’s an exciting place to be from a healthcare standpoint,” Mayleben said.

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New York biopharmaceutical company NeoStem (NYSE: NBS) says it signed a definitive merger agreement to acquire Amorcyte, an Allendale, NJ, biotech developing cell therapy treatments for cardiovascular disease. Amorcyte, a development stage company, has a product candidate, AMR-001, in the works for the treatment of acute myocardial infarction. NeoStem plans to commence a phase II clinical study on AMR-001 by first quarter 2012.

NeoStem issued 6.8 million shares of common stock and warrants to purchase 1.9 million shares to acquire Amorcyte. NeoStem will issue an additional 4.1 million shares upon the achievement of certain milestones regarding AMR-001. The deal is pending approval by Amorcyte and NeoStem shareholders.

The Amorcyte acquisition is the latest move by NeoStem to shift its focus to cell therapy. In January, NeoStem acquired Progenitor Cell Therapy, also of Allendale.

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Selling expensive new medical equipment to doctors today, no matter how good it may be, is no easy thing. Just ask Pathway Medical Technologies.

Almost three years have passed since the Kirkland, WA-based company won FDA approval for its first device, which drills through and sucks out tough-to-treat blockages in leg arteries. The company, founded in 1998, has raised $130 million of investment capital for this feat of engineering, and has a staff of 170 employees today.

Yet Pathway, stung once before by setting its own overly aggressive sales goals, has carefully watched its budgets the past couple years, and is taking a grind-it-out approach to get to the next level—sustained profitability.

“It’s not about growth at any cost. It’s about pursuing growth we feel we can afford,” Pathway CEO Paul Buckman said when I visited his office in Kirkland a couple weeks ago.

Pathway has had a lot of success with winning a series of FDA approvals for various versions of its device, which it markets under the Jetstream name. For those new to the story, Pathway’s device uses a tiny stainless-steel drill mounted on a catheter that slides inside clogged leg arteries, where it cuts through and vacuums out hard plaque blockages and squishier clot-like substances. It’s approved for patients with peripheral artery disease, a condition related to cardiovascular disease that has caused 2 million Americans to seek treatment, complaining of pain when they walk. Most people go undiagnosed, partly because there aren’t many good options for treatment.

The company showed some early signs of breakout potential in its first few months on the market, and raised $40 million in March 2009 during one of the worst stretches of the recession. But just a couple of months later, Pathway made a public admission that it had set overly aggressive sales goals, and had to cut 20 percent of its workforce to conserve cash, with an eye toward reaching break-even in mid-2011.

Paul Buckman

It’s mid-2011 now, and when I stopped by Buckman’s office for an update a few weeks ago, he said the company still isn’t profitable. Even though Pathway vowed two years ago that it wouldn’t raise more capital, Buckman now says the company will likely have to raise money next year.

Even though Pathway is falling short on those predictions, if there’s a word to sum up the company’s performance, it might be “stable.” The company still has 170 employees, the same as it did two years ago. Under constrained resources, it grew revenues by 50 percent in 2010, compared to the prior year, Buckman says. This year, Pathway expects to grow sales by another 30 percent, he says. About 15,000 patients in the U.S. have had a Pathway procedure done, and about 300 doctors are routinely using the device, Buckman says.

The hurdles here are numerous. Pathway doesn’t like to disclose what its drill sells for on average, but Buckman says all devices in its class sell for about $3,000 per procedure, and Pathway’s sells for a premium. This comes at a time when many hospitals and insurers are increasingly wary about adding costs. There are strong competitors like Dublin, Ireland-based Covidien and St. Paul, MN-based Cardiovascular Systems. And there is the inertia that comes from treating a form of cardiovascular disease in the legs that hasn’t traditionally been treated … Next Page »

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Palo Alto, CA-based CardioDx, which developes genomic tests assessing patients’ risk of developing cardiovascular disease, has raised $40 million in a round of equity-based financing, according to a regulatory filing. New investor Longitude Capital led the Series E round, according to a report in Dow Jones VentureWire. CardioDx’s existing investors include Kleiner Perkins Caufield & Byers, TPG Biotech, MDV, Intel Capital, Pappas Ventures, DAG Ventures, Asset Management Group, and GE Capital.

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Massachusetts is expected to gain 350  jobs from Pfizer (NYSE:PFE) as the world’s largest drugmaker restructures its global research and development activities to cut $1.5 billion in spending, the Boston Globe reports. New York-based Pfizer—which employs 2,300 workers at two research hubs in Cambridge and a facility in Andover it acquired through its 2009 buyout of Wyeth—will be cutting 100 jobs in the Boston area while adding 450 jobs here through the relocation of its neuroscience and cardiovascular metabolic research groups from Groton, CT, the Globe reports. The company is now looking for a new site to house those research operations in the Boston area.

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Genzyme’s sales of non-core businesses continues. The Cambridge, MA-based biotech company (NASDAQ:GENZ) said this morning that it has agreed to sell its diagnostic products business to Japan’s Sekisui Chemical for $265 million in cash. The deal takes Genzyme, the world’s largest provider of drugs for rare genetic diseases, a step further in sharpening its focus as it fights off an unsolicited takeover bid from the French drug giant Sanofi-Aventis.

Sekisui, which is expected to close on its purchase by the end of this year, is offering jobs to the some 575 employees of the Genzyme diagnostics business—which has operations in Framingham, MA, San Diego, and at least four other locations, according to Sekisui. The diagnostics business, which brought in $167 million in 2009 revenue, sells raw materials and other products for the cardiovascular, diabetes, infectious disease, and renal health markets.

Genzyme announced in May that it planned to sell off its diagnostics business and two others as part of a plan to raise shareholder value. In September, the 29-year-old company sold its genetic testing business to Burlington, NC-based Laboratory Corporation of America (NYSE:LH) for $925 million. Genzyme still has one of the three businesses, its pharmaceutical ingredients unit, on the block. The company says it might use proceeds from these transactions to finance the second half of its $2 billion stock buyback, which was also announced in May.

Genzyme’s stock closed at $69.75 on Wednesday, November 17.

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Arena Pharmaceuticals is getting ready to make another run for U.S. regulatory approval of its obesity drug, and now it has some clinical trial data that the FDA has said it wants to see.

The San Diego-based biotech company (NASDAQ: ARNA) is announcing today that its experimental weight loss treatment, lorcaserin (Lorqess), reached all three of its main goals in a clinical trial called Bloom-DM, which enrolled 604 overweight or obese patients who also have Type 2 diabetes. The study essentially showed that these patients, who are generally tougher to treat than other overweight and obese patients, had a similar experience to more than 7,000 patients who participated in the last two pivotal trials, Bloom and Blossom. Some details are being released today to investors, while more details are expected to come out later at a medical meeting and peer-reviewed scientific journal.

Today’s data release represents Arena’s hope for redemption after what has been a brutal couple of months. The company’s application to market its treatment was ripped by FDA staff in September over some concern about tumors in rats, and then the agency formally turned down Arena’s application to start selling lorcaserin, saying it offered only “marginal” ability to help people lose weight. The FDA, in its complete response letter to the company, recommended that the company turn in detailed reports on this other study, Bloom-DM, to provide more evidence that the drug helps people who face the doubly whammy of obesity and diabetes. An estimated two-thirds of people in the U.S. are considered overweight or obese, which puts them at risk for a slew of other chronic, and costly, ailments like cardiovascular disease, arthritis, and depression.

So while the potential benefit—and market—for an effective weight loss would be huge, the FDA has also made clear through its actions this fall against both Arena and one of its competitors, Mountain View, CA-based Vivus (NASDAQ: VVUS), that any new drug developer must clear an extremely high bar for safety and effectiveness if it wants to start selling a new product to millions of people in need. San Diego-based Orexigen Therapeutics (NASDAQ: OREX), the next obesity drug developer in line at the FDA, will either learn from these lessons and advance onto the market, or step into yet another buzz saw when it appears before an FDA advisory panel on December 7.

Arena CEO Jack Lief wasn’t making any predictions about whether the Bloom-DM study will put his company over the top, but he expressed his usual confidence, and how this latest study will help buttress his argument that lorcaserin deserves a spot in the U.S. market.

Jack Lief

“Patients with type 2 diabetes have much more difficulty losing weight than other patients. And although we believed they would benefit, you have to demonstrate that. This study has demonstrated they benefit as well,” Lief says.

Arena plans to crunch the numbers on this latest study, and discuss the new evidence with the FDA before the end of the year, Lief says. Arena’s partner, Japan-based Eisai Pharmaceuticals, remains committed to pushing forward with the program, a spokesman said.

OK, for the stat nerds out there who want to want to dig into what we’ve learned here, now you can get your hands dirty.

Patients who entered this study had an average body mass index of 36, Lief says. People with a body mass index of 30 or greater—which translates to 5-foot-10 and 209 pounds—are considered obese, according to the National Heart, Lung, and Blood Institute. They also entered the study with an average score of 8.0 on their hemoglobin A1c counts—an important measurement of blood sugar control. People are generally considered normal at … Next Page »

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Biogen Idec is returning to its biotech roots, in a way. The Weston, MA-based company (NASDAQ:BIIB) made headlines yesterday for its plans to cut 650 full-time jobs and narrow its research and development focus to emphasize its core expertise in neurology. And a big part of the restructuring plan, the firm’s CEO, George Scangos, says, is to make the biotech company, well, more biotech-like.

Xconomy was early on Biogen’s big news yesterday and also provided details about where the job cuts are being made in Massachusetts and San Diego, where the company plans to completely close its R&D center.

Scangos, who took over as Biogen’s chief executive on July 15, inherited a company that has not brought a new product to market sine 2004 and has been criticized by billionaire investor Carl Icahn and others on Wall Street for an overall lack of research and development productivity. (Those critiques sound an awful lot like the knocks on lumbering big pharmaceutical companies.) So Scangos is taking action, not just to address concerns among investors, but also to remove some of the productivity-hampering bureaucracy from the firm, he says.

“What’s best about small companies is they are fast, they are efficient, and there’s not a lot of bureaucracy,” Scangos said in an interview. “As the company gets larger, it gets harder and harder to do that. We want to make Biogen more like a biotech and less like a pharmaceutical firm.” The CEO has reduced the number of R&D committees, for instance, and he has designated project leaders who report directly to him.

Biogen, founded in 1978 during the biotech industry’s earliest days, has grown into a profitable industry leader, best known as the world’s largest maker of multiple sclerosis drugs. However, the company’s $1.2 billion in revenue for the third quarter of 2010 rose a modest 5 percent from a year ago, in part because of decreased revenue from one of is three major products, the anti-cancer and rheumatoid arthritis drug rituximab (Rituxan). Also, the company’s MS franchise faces competition from, among other products, the Swiss drug giant Novartis’s recently approved oral MS treatment, fingolimod (Gilenya).

Scangos inspected the company’s R&D pipeline and other operations over the summer, and concluded that the company was stretched too thin in terms of the number of therapeutic areas it was researching. A major part of the restructuring plan is to divest the company’s cancer and cardiovascular drug pipelines. The company has designated 11 programs that it plans to remove from its pipeline, including its molecule galiximab for lymphoma, the anti-tumor drug volocixiumab, and the cardiovascular therapy lixivaptan.

Scangos wants Biogen to build on its leadership in neurology. This means increasing revenue from its blockbuster MS drugs interferon beta (Avonex) and natalizumab (Tysabri), developing its existing pipeline of drugs for neurological disorders, and researching biomarkers and other avenues to help personalize treatments for people with illnesses such as multiple sclerosis, he said during a conference call with investors yesterday. The company highlighted its late-stage pipeline, which features five new neurological disease treatments that could reach the market by 2015. The firm also has two hemophilia drugs in late-stage development.

Still, there are lingering worries about the increasing number of cases of a potentially deadly brain … Next Page »

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Weston, MA-based Biogen Idec (NASDAQ:BIIB) plans to lay off most of the 300 to 350 employees at the company’s San Diego research center as part of the restructuring plan announced this morning, Biogen spokeswoman Christina Chan said. The drug development company, which was created in the 2003 merger of Massachusetts’ based Biogen and San Diego’s Idec Pharmaceuticals, says it will close all San Diego operations.

Xconomy reported the wider scope and strategy behind the cuts at Biogen this morning, including the major theme of focusing the company’s resources on neurology products, such as its multiple sclerosis drugs natalizumab (Tysabri) and interferon beta-1a (Avonex). Meantime, the firm is deemphasizing its research in the areas of cardiovascular and cancer therapies, the latter of the two being a focus of its San Diego R&D group.

Indeed, the cuts appear to be a major blow to the San Diego biotech community, where Biogen Idec ranks as a prominent leader and local success story. The layoffs in San Diego comprise roughly half of the 650 positions, or 13 percent of the firm’s total work force, that it says it will eliminate through the restructuring plan.

The impact is less severe in Massachusetts, where Biogen is consolidating its operations and cutting about 80 workers, or 4 percent of its 2,000 employees in the Bay State, Chan said. The firm is closing its operations in Wellesley, MA, and Waltham, MA, consolidating its Massachusetts operations at its Cambridge, MA, and Weston facilities.

Biogen is planning to offer jobs to some of its San Diego workers—but they will have to move out of the state for those positions. Chan said that about 25 percent of the firm’s San Diego employees are being offered jobs at the company’s sites in Cambridge and Research Triangle Park, NC. Otherwise, most of the firm’s workers in San Diego will be let go by January 10, while a smaller number of employees will stay on until mid-2011 to assist in winding down operations there, she said.

Xconomy plans to follow up on our initial reports on Biogen’s bold cuts with further analysis and interviews with company executives about the impacts on the San Diego and Boston-area biotech communities.

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It’s keep-your-fingers-crossed time for the people at Arch Venture Partners and the Fred Hutchinson Cancer Research Center in Seattle. Both organizations have millions of dollars at stake in the upcoming initial public offering of Ikaria.

Ikaria, a Clinton, NJ-based company developing futuristic “hibernation-on-demand” technology with roots at the Hutch, is hoping to cash in on its promise next week. The company is seeking to sell 10 million shares to IPO investors at a proposed range of $15 to $17 next week, according to Renaissance Capital. The deal could bring in as much as $195 million if Ikaria can command the high end of its price range, and underwriters like Goldman Sachs and Morgan Stanley exercise their right to buy another 1.5 million shares, according to a filing with the Securities and Exchange Commission.

If Ikaria can pull the trigger on this deal, it will be a windfall for Arch, the largest life sciences venture investor in Washington state. Arch, one of the founding investors in Ikaria back in 2005, has 3.5 million shares the company, which will be equal to a 7.8 percent ownership stake once the IPO is complete, according to the most recent SEC filing on October 26. If Ikaria prices its IPO at $16, or the mid-point of its proposed range, then the company will have a beginning market capitalization of $711 million, and Arch’s stake will be worth about $56 million, according to my calculations based on regulatory disclosures.

Neither Arch nor any other venture investor in Ikaria will be able to cash out immediately because it is prohibited from selling any shares for at least 180 days, as part of a typical “lock-up” agreement.

This transaction is in the midst of an SEC-mandated quiet period, so Arch’s managing director in Seattle, Bob Nelsen, said he has no comment. Same goes for Ulrich Mueller, the vice president of technology transfer at the Hutch.

It’s much harder to pin down the exact stake the Hutchinson Center has in the Ikaria IPO, but it’s clearly smaller than Arch’s. The Hutch, and Ikaria’s scientific founder Mark Roth, aren’t listed in regulatory filings among Ikaria shareholders who have a 5 percent ownership stake or greater.

Mark Roth

Still, the Hutch has got to have high hopes for this deal. The Seattle-based cancer research center received 807,500 shares of common stock in Ikaria, plus 142,500 shares of preferred stock, when it was originally spun out of the center in 2005, according to an exhibit attached to the Ikaria investor prospectus. It’s unclear based on my reading of the SEC documents how many shares the Hutch still has, or what percentage that represents today. The company did complete a one-for-2.72 reverse stock split on October 25 as it made final preparations for the IPO, which means that pre-IPO holders will have about one-third as many shares as they did before the split.

Plenty of well-known individuals around Seattle have stakes in this deal. Roth, the scientific founder, was granted 2,187,790 shares in the original Hutch license agreement in 2005, according to a regulatory filing. Ben Shapiro, a former executive vice president at Merck, and a former member of the Ikaria board, had 5,000 shares of preferred stock after the Series A venture financing. Steve Gillis, a managing director at Arch and the co-founder of Immunex and Corixa, held … Next Page »

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Cerenis Therapeutics, a biotech based in Ann Arbor, MI and Toulouse, France, said today that it has raised an additional $13.9 million in its Series C funding round. The first closing of the round was announced in July. The new capital, which came from the investment group IRDI-IXO and undisclosed private investors, brings the Series C round to $69.7 million and the total amount the firm has raised to $162.9 million, according to the company and based on today’s exchange rate between the Euro and the U.S. dollar. The company plans to use the third-round financing to fund a Phase II trial of its lead drug, CER-001, for cardiovascular disease. Its previous investors include Ann Arbor’s EDF Ventures, France’s Fund for Strategic Investment, Sofinnova Partners, HealthCap, Alta Partners, TVM Capital, OrbiMed Advisors, and Daiwa Corporate Investment.

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Aastrom Biosciences is gearing up for a definitive test of a first-of-its-kind regenerative medicine that uses adult stem cells. The Ann Arbor, MI-based biotech company said today it has gotten the FDA’s “fast track” designation for its pivotal clinical trial plan of a treatment that it hopes will help people with severe cardiovascular disease to avoid limb amputations.

The FDA designation itself doesn’t mean a whole lot—it really just enables Aastrom (NASDAQ: ASTM) to potentially get a faster-than-usual six-month regulatory review which is sometimes granted to life-saving therapies. The designation also means that Aastrom will be able to file its application for FDA approval as data becomes available in bits and pieces, rather than wait to bundle everything together at the end for the regulatory review, which can take more time.

The true test for Aastrom will begin early next year, when it plans to start a pivotal clinical trial of its treatment for critical limb ischemia (CLI). This is a severe form of cardiovascular disease in the legs, known as peripheral artery disease, in which blood vessels get so clogged up that doctors choose to amputate. Aastrom’s idea is withdraw a patient’s bone marrow cells, incubate them in a proprietary process at its Ann Arbor facility, and spur growth of adult stem cells and progenitor cells that promote healing. Those revved up cells get re-infused into the patient, and they are supposed to foster growth of new blood vessels to improve circulation.

If this can be proven in the pivotal clinical trial, it could be Aastrom’s first marketed cell therapy, and could offer a less invasive treatment option for doctors who perform 160,000 limb amputations a year.

Aastrom has already conducted a clinical trial of 90 patients. A preliminary analysis showed that the company’s cell therapy was able to delay some of the most severe complications of the disease (amputations, large wounds, and gangrene). The company hasn’t yet presented the full set of data, and hasn’t yet talked publicly in detail about the design of its pivotal clinical trial. If that study is set up in a way to generate a convincing answer on whether the Aastrom therapy works, then this story will start to get more and more interesting for scientists and investors.

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Columbia, MD-based W.R. Grace & Co said today it has entered into an acquisition agreement with Albany, OR-based Synthetech, to purchase the chemical manufacturer for approximately $19.2 million. Synthetech manufactures fine chemicals, specializing in organic synthesis, biocatalysis, and chiral technologies, for use in the pharmaceutical and biotechnology industries. Its products are used in drugs to treat cancer, cardiovascular issues, AIDS, and other diseases. W.R. Grace says the company will be integrated into its specialty technology business, providing it with manufacturing capacity for specialty single-site and polypropylene catalysts used to make plastics, and expanding its discovery science offerings to include the pharmaceutical sector. Synthetech currently has 63 employees divided between the Oregon facility and an R&D location in San Diego.

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SonoSite looked like it was out of ideas. Why, after all, would the maker of portable ultrasound machines spend $89 million of hard-earned cash to buy back shares a couple months ago? That’s one of those time-honored financial engineering tricks that companies often do when they don’t have any promising new products to boost sales, and they need some artificial means of inflating their stock price.

Since Xconomy’s lens is fixated on innovation in the Northwest, I figured it was safe to turn the page on SonoSite, as just another maturing company doing its best to sell what it already has. Then the Bothell, WA-based company (NASDAQ: SONO) surprised me. Last week, SonoSite paid $71 million to acquire Toronto-based Visualsonics.

It was a bold move to obtain a new kind of ultrasound technology that’s five times more sensitive than anything on the market, and which can be used to offer extremely high-resolution images in places where ultrasound could never go before—to watch a developing fetus, a tumor, or a blood vessel forming inside a lab mouse, for example. Conventional ultrasound machines, like those sold by Siemens, Philips Healthcare, and General Electric, typically use a frequency range that provides good pictures when you get 3 centimeters or more below the skin, but aren’t useful just beneath the skin. SonoSite, which has sought for the past 12 years to match or beat the big boys with its miniaturized ultrasound technology, is now seeking to miniaturize this powerful and sensitive new breed of ultrasound, to keep a technical advantage over its rivals and to crack open entirely new markets.

“It’s gotten me very jacked up,” says SonoSite CEO Kevin Goodwin.

Kevin Goodwin

Visualsonics has been pursuing this idea of ultra high frequency, microscopic-level ultrasound for more than a decade. The company was founded in 1999 by Stuart Foster at Sunnybrook Health Sciences Center in Toronto. Over the years, Visualsonics showed it could make a system that uses five times the frequency currently used in conventional ultrasound systems (40MHz versus 8MHz). That frequency range essentially allows the Visualsonics ultrasound system to see biological structures as narrow as the width of a human hair (30 microns).

The initial market for Visualsonics has been in preclinical biology labs. The company developed a $200,000 cart-bound ultrasound system, complete with probes, disposable products needed to operate the machine, and software to help analyze the images. It was a completely new market for ultrasound, and something that has caught on with academic researchers. Suddenly, they could do animal experiments with, say, a cancer drug and examine its anti-tumor effect over and over after repeat doses, rather than dissect the mouse. Other non-invasive forms of imaging, like CT scans, magnetic resonance imaging (MRI), or positron emission tomography (PET), weren’t practical because of cost and hassle factors. Ultrasound, in the way Visualsonics offered it, made sense. The company generated $30 million in sales over the past 12 months, and turned a $5 million operating profit.

“Simply put, we like the business, we like the technology, we like the management team,” Goodwin told analysts on a conference call last week to explain the deal.

From a strictly financial point of view, in today’s numbers, this deal looks hard to justify. SonoSite is coming off a bad year in 2009. Annual revenue—for the first time in SonoSite’s history—declined … Next Page »

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It’s been a big two days for LightLab Imaging. Good Morning America featured the Westford, MA, firm’s coronary imaging technology on national television today. And St. Jude Medical, the cardiac devices powerhouse, revealed late yesterday that it has bought the small firm for about $90 million in cash.

St. Paul, MN-based St. Jude (NYSE:STJ) is buying LightLab from Goodman Co., the Japanese medical devices firm that has owned LightLab since 2002. With much of its core technology from MIT, LightLab has developed a so-called optical coherence tomography (OCT) catheter—which uses infrared light to capture detailed images of tissues—to diagnose cardiovascular disease.

The FDA gave the LightLab permission to begin selling the system in the U.S. this month, and St. Jude expects its new acquisition to add $20 million to its revenue stream in second half of this year. Before garnering FDA clearance, LightLab had received permission to sell the system in Europe, Asia, the Middle East, and other parts of the world.

In December, Massachusetts officials highlighted LightLab as a source of jobs growth in the state, granting $188,951 in tax incentives to the firm as part of Gov. Deval Patrick’s $1 billion initiative to grow the life sciences sector in the commonwealth. The good news for the state is that St. Jude plans to continue LightLab’s operation in Westford and has no “big layoff plans,” said Amy Nesbit, a spokeswoman for LightLab.

LightLab CEO David Kolstad, in an interview Tuesday unrelated to the buyout, said that the company has committed to adding 29 new workers under the terms of its tax incentives from the state. The company currently employs about 70 people, he said. Nesbit said today that the company plans to apply for another round of state tax incentives this year to support its hiring plans. Kolstad is expected to transition from his chief executive role to a vice president position at St. Jude, she said.

LightLab launched in 1998 to apply some of the OCT discoveries from the labs of MIT professor James Fujimoto and those of his colleagues, including Eric Swanson, to coronary imaging. Fujimoto and Swanson are now technical advisors for the firm, Kolstad says.

St. Jude says it expects to wrap up its buyout of LightLab by the end of June.

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Yesterday afternoon, I attended the Seattle-based Technology Alliance’s “Innovation Showcase” at the Rainier Square Conference Center downtown. This is a relatively new event—the fourth one so far, and the first open to the press—in which tech and life sciences companies from Washington state pitch their businesses to a small, select crowd of angel investors, entrepreneurs, business leaders, and service providers.

The event had a strong University of Washington flavor, as several of the speakers and sponsors had UW ties. Linden Rhoads, vice provost and head of the UW Center for Commercialization, and her deputies, Rick LeFaivre and Tom Clement, each said a few words about the presenters.

Similar to the NWEN First Look Forum last week, the five presenting companies cut across some very different disciplines, including hardware, wireless sensors, and biotech. Guess how many software or Internet companies presented? None.

Well, none of the traditional Web 2.0, social networking, or business software, at least. Susannah Malarkey, executive director of the Technology Alliance, told me this was a conscious decision. Her team chose non-software companies for this event, in part because software startups tend to need less capital and can get off the ground more easily these days than other tech and life sciences firms. One of the goals of the Innovation Showcase was to highlight different kinds of companies compared to other events around town—though each was built on a strong technical idea.

Here’s a quick rundown on the companies, and what stood out to me. No audience voting, no winners, just the facts. I’ll say a little more about some companies than others, but this is by no means comprehensive:

1. Enravel (Seattle)

Linden Rhoads introduced this startup by pulling out her iPhone and iPad (yes, one of those) and talking about the devices’ display capabilities. “These are great, these are fun, but they’re going to be so much more fun when there are projectors available for them,” she said. “That day is very, very close at hand.”

Enravel is led by UW mechanical engineer Brian Schowengerdt, an expert in alternative displays, user interfaces, and human visual perception. He co-founded the company in 2009 to commercialize a laser-based “pico projector.” The idea, he says, is to “take a display of iPad size and compress it into the size of an iPhone.” More specifically, to shrink a projector to “the size of a grain of rice” and use it to project on-screen images, video, games, websites, e-mail—you name it—onto any larger surface.

The core technology is a “scanning fiber” projector that uses fiber optics and a vibrating element to scan an image and blow it up, for example, to a size of 17 inches across from just five inches away. A matchbook-size assembly of laser diodes (off the shelf) provides the light source to project the image. You could imagine such a projector might be crammed into a smartphone and used … Next Page »

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Natick, MA-based Corindus has corralled $5.3 million of a proposed $10 million round of equity financing, according to an SEC filing. The firm is developing a robotic system that helps surgeons control the position of guidewires in veins in procedures to implant vascular stents, according to the firm’s LinkedIn profile. A call to company CEO David Handler was not immediately returned today, and it’s not stated in the SEC filing who participated in the financing. Prior to this financing, the firm raised $12.8 million in a Series B financing in spring 2008, according to a story I wrote about the deal for Mass High Tech.

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Isis Pharmaceuticals (NASDAQ: ISIS) likes to talk about how its gene-silencing technology known as antisense creates so many innovative ideas for new drugs that it can’t commercialize them all itself, so it spins a few off into what CEO Stanley Crooke calls “satellite companies.” One of the more interesting ideas orbiting around Isis in Carlsbad, CA is a startup called Excaliard Pharmaceuticals.

This company is the brainchild of Nick Dean, who spent 13 years at Isis, including a stint as vice president of functional genomics and oncology before he became the founder and chief scientist of Excaliard in 2006. The idea was to take one of the most intriguing projects on the back burner at Isis—a new drug that could curb excess skin scarring—and make it the foundation for a new company.

“It was a bit of a skunk works thing, that people worked on after hours, on weekends, or with academic collaborators,” Dean says. “It never quite made the cut at Isis, because the company was focused on cardiovascular disease and metabolic disease.”

But Excaliard found a receptive audience two years ago from Alta Partners, ProQuest Investments, and RiverVest Ventures, who pumped $15.5 million in Series A financing into the company. Two years later, Excaliard is still a virtual company with just four employees, but it has made a lot of progress—it is on track to complete enrollment in its first clinical trial by the end of this year, and start a more rigorous mid-stage trial in the first half of 2010, Dean says.

The concept at Excaliard is to protect the body from excess scarring and fibrosis, Dean said. The Excaliard drugs use antisense technology to silence specific genes that control scar formation and fibrosis at the site of wounds. The company has its eye on developing this as a way to make scars less visible and bumpy, like those from the 1 million Caesarian section births performed each year, knee surgeries, and reconstructive plastic surgeries. It could also be used for some rarer dermatology conditions like hypertrophic scars that are red, raised, itchy and swollen, or keloids, that are large and raised above the skin like a benign tumor.

Dean was intrigued partly by the science, and partly by the market opportunity. The science is built on increasing knowledge of genes that control pathological scar formation, as well as proprietary compounds that Excaliard says can be delivered in a localized part of the body to curb that excessive scarring.

From a business standpoint, this is an untapped market, with no real effective therapy approved by the FDA that works the same way. Patients get by with lotions, creams, or corticosteroids that control swelling but don’t really fix the root of the problem. Any drug like Excaliard’s … Next Page »

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Kirkland, WA-based Pathway Medical Technologies has to be considered one of the bright spots in the recent history of Seattle life sciences. The medical device maker won FDA approval for its first product about 15 months ago, raised $42 million in venture capital, and recruited a CEO with loads of experience in commercializing medical devices. Back in February, co-founder and chairman Tom Clement said the company showed signs of becoming “a real winner.”

If only the story were that neat and tidy.

Even with that good fortune, Pathway has had some hard knocks. The company introduced its tool that drills through and vacuums out blockages in leg arteries right in the middle of the recession, as patients were losing health insurance and hospitals were tightening their belts. The old medical device business model of simply pitching a cool new toy to doctors who place orders appears to be morphing into a new paradigm in which hospital purchasing committees are calling more of the shots, and demanding more proof that such a treatment is cost-effective. These changing market forces are at least part of the reason why Pathway wasn’t able to meet its aggressive internal sales forecasts in the first half of this year.

In May, it axed one-fifth of its workforce. CEO Paul Buckman made clear then that the company had raised $120 million from investors, and with a plan to turn profitable in 2011, it needed to lower the burn rate so it wouldn’t have to raise any more venture capital.

So while Pathway hasn’t been quite the overnight success that it might have been with its nifty tool a few years ago, Buckman offered a candid assessment in a recent interview of how the company is adjusting parts of its plan while sticking to its long-range philosophy. Buckman says he sees encouraging evidence of acceptance from physicians even while Pathway has learned the hard way about what it still needs to prove.

Pathway doesn’t disclose absolute revenues or net losses, but it did say last month that it has seen 172 percent sales growth over the past two quarters. About 200 to 215 hospitals have ordered Pathway’s Jetstream products as of the last week of September, and they have treated about 2,500 patients, according to a conservative estimate, Buckman says. Some of the early adopter physicians … Next Page »

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Loyalty has its rewards, and in the case of San Diego’s Accumetrics, that means the company’s existing investors have just completed a fifth round of venture funding—putting another $16.5 million into the medical diagnostics company.

The Series E funding brings Accumetrics’ overall investment close to $68 million, although, as I explained in June, that includes a false start after founder Robert Hillman re-acquired the company five years after he started it. The company has been re-energized further since Timothy Still was named CEO last year.

Still sees a potential multibillion-dollar market for the company’s VerifyNow system, a blood-assay device that helps doctors quickly calibrate the right dosage for the most widely used anti-clotting drugs, including aspirin, clopidogrel (Plavix), prasugrel (Effient), and others. Because patients respond to antiplatelet medications differently, Accumetrics says doctors can use the automated diagnostic device in a quick blood test to measure a patient’s individual response to an anti-clotting drug.

Of course, it also helps to have backing from an investment syndicate that includes such prominent healthcare venture firms as Essex Woodlands Health Ventures and Kaiser Permanente Ventures. Accumetrics’ chairman Tony Arnerich, whose firm Arnerich Massena is the company’s largest investor, says in a statement released by Accumetrics, “We view the VerifyNow platform as a breakthrough technology in one of the most important remaining areas of cardio-diagnostics.” Two other firms, BBT Fund/Apothecary Capital, and RiverVest Venture Partners also returned to invest in the current round, which is expected to fully finance the company into 2011.

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