Who says consumer websites are dead? Maybe you don’t need the ridiculous traffic of, say, Seattle-based Cheezburger Network (LOLcats) to survive on advertising revenues. Maybe user-generated content around a targeted niche, especially where there are purchasing decisions being made, can work well after all.

That’s the sense I got after talking with Tom Seery, the founder and president of Seattle-based RealSelf. Launched in 2006, RealSelf.com provides information about cosmetic treatments in an online community format that includes user reviews, doctor listings, and expert advice from cosmetic surgeons, dentists, and dermatologists. The treatments in question—a multibillion dollar market worldwide—run the gamut from nose jobs and tummy tucks to orthodontic braces and breast implants.

RealSelf is particularly interesting because it sits at the intersection of a number of fast-growing (but also challenging) areas for startups—social and community review sites, health 2.0, and ad-supported media sites. The company has gained some traction, growing 150 percent year over year in Web traffic; it now gets more than 700,000 unique visitors per month, Seery says. In terms of local startups with a similar strategy for capturing niches of Internet content (but these are not competitors), I’d mention Avvo, TeachStreet, Raveable, Redfin, Urbanspoon, and Zillow.

Like most promising startups, the story of RealSelf began with some important personal and business observations. Seery was a longtime employee of Bellevue, WA-based Expedia (NASDAQ: EXPE), and he saw the competing startup TripAdvisor plug away at hotel reviews and other user-generated ratings until 2004, when IAC (which then owned Expedia) had to buy it. “That was the ‘aha,’” Seery says. He thought, “Where else can we take this empowerment of consumers?”

Around the same time, Seery’s wife was researching a laser cosmetic treatment, and was having a hard time finding trustworthy reviews. So he thought, “Let’s create TripAdvisor for the cosmetic space.” The key adjustment he made was to introduce medical experts to the user community. The challenge there, as with most e-health sites like WebMD and Revolution Health, is that doctors are …Next Page »

Comments | Reprints | Share:        

The same people who invented Sonicare toothbrushes have another emerging hit on their hands. This time, David Giuliani and his team of scientists and engineers in Bellevue, WA, who make the Clarisonic device have created a sonic-wave powered brush that’s designed to give people a cleaner, healthier-looking face.

They’re marketing a $195 luxury consumer product in the middle of a recession — and it’s working. Their angel-backed company generated sales of $40.1 million in 2008, up from $1.7 million three years earlier. It has now turned profitable on an annual basis, and has grown to 150 employees after adding 20 new people this year, Giuliani told me last week when I visited his office. This year will be “considerably” better in revenue, although he wouldn’t disclose projections.

Clarisonic’s technology is new, but the problem it’s trying to solve is old. Anybody who’s walked by an American magazine stand knows there’s a powerful demand for products to help people look and feel younger and healthier. There’s also no shortage of late-night TV hucksters with overhyped lotions and potions, so it can take a while for a legitimate product in the skin care business to gain traction. But for those that do succeed, like Allergan’s anti-wrinkle product Botox or Medicis’s Restylane, the rewards can be huge. The U.S. market for skin-care products is estimated at about $20 billion a year, according to Impact Marketing Consultants.

The Clarisonic product has been around for five years, but it started gaining momentum in the past two. It started in 2007 when Oprah gushed on her TV show that it was one of her favorite things (that always helps). More recently, Courtney Cox confided on The Rachael Ray Show that Clarisonic is one of her beauty secrets. Cameron Diaz, Tyra Banks, and Justin Timberlake have all said publicly they are fans of Clarisonic. None are paid spokespeople, says marketing director Bill McClain.

Social media has been even better for Clarisonic. Back in June, a young woman with an earnest voice, Michelle Phan, posted a rave review of the Clarisonic product on YouTube. Within a few hours it had 15,000 page views. Three months later, the review has gotten more than 320,000 viewers, and Clarisonic didn’t have to pay a dime.

“People who use the product love it,” Giuliani says. “The important conclusion that the market is drawing is that this thing really works. It shocks people. They’re used to things that don’t work. You should see customers when they hear about it. They say, ‘Oh, yeah, I’ve heard that one before.’ So we need to deliver for them.”

The story of Clarisonic began in 2001, a year after Giuliani, a Stanford-trained electrical engineer, became a wealthy man through selling his company, which developed the Sonicare toothbrush, to Dutch consumer-products giant Philips Electronics. The founding team had all worked together on the Sonicare. Robb Akridge brought immunology skills; Steve Meginniss was the mechanical engineer; Ken Pilcher, the electrical engineer; and Ward Harris, the chemist.

They set out to focus this science and engineering talent on coming up with something special for skin care. “It’s so big, and overlooked,” Giuliani says.

The original ideas were to try something with light technology, or chemicals, but ultimately the team settled on something right in their wheelhouse—sonic technology like what they’d used to clean teeth with Sonicare. Their key insight: Our skin tightens up when …Next Page »

Comments (5) | Reprints | Share:        

Our last installment concerning Histogen ended in a cliffhanger. As I reported in February, Histogen CEO Gail Naughton was scrambling to raise funding after a patent infringement lawsuit was filed against her biotech company by SkinMedica, a rival based in nearby Carlsbad, CA. The lawsuit led a group of angel investors to back away from their planned $2.4 million investment in Histogen, which forced Naughton to lay off all 36 Histogen employees at the end of January.

Undeterred, Naughton is forging ahead. Today a cosmetics division called Histogen Aesthetics is launching its line of ReGenica skin care products for use in anti-aging and to promote healing following chemical peels, dermabrasion, and phototherapeutic laser skin treatments. The company plans to market its new products through dermatologists and plastic surgeons, as well as direct sales from Histogen’s website.

I left a message for SkinMedica CEO Mary Fisher after business hours Friday, after I had learned of Histogen’s plans, but Fisher didn’t get back to me over the weekend. SkinMedica also has targeted the skin care market and sells its TNS Recovery Complex through physicians’ offices. In a statement issued in January, SkinMedica says it acquired two patents in the bankruptcy liquidation of Advanced Tissue Sciences, Naughton’s previous company, that encompass SkinMedica’s NouriCel technology. SkinMedica’s patent infringement lawsuit seeks damages and a court order preventing Histogen from developing aesthetic and therapeutic products that infringe on its patented conditioned cell culture media technology.

Naughton contends that ReGenica products are not infringing on the patents SkinMedica acquired from her previous company. The skincare market must be a lucrative business. A 1.5 oz bottle of Regenica Advanced Rejuvenation System is priced at $99 on the Histogen Aesthetics site.

ReGenica, which is the key ingredient in Histogen Aesthetics’ products, was developed from Histogen’s laboratory expertise in culturing and growing fibroblasts, the cells that form connective tissue. ReGenica is made from fibroblast-secreted proteins, growth factors, and other products. Histogen, meanwhile, is focused on developing therapeutic products, and has been studying whether ReGenica injected into the scalp will stimulate hair regrowth.

Meanwhile, Naughton says she’s managed to raise about $350,000 for Histogen over the past few weeks. But the company still needs about $2 million to resume normal business operations. Naughton says about 18 people who were on Histogen’s payroll in January continue to work almost full-time, even though they’re not getting paid.

In coming weeks, Naughton says, Histogen also plans to report the final results of an early-stage clinical trial that tested ReGenica’s potential to regrow hair on the pates of balding men. In February, Naughton reported preliminary results of the five-month study, which was conducted outside the United States.

“The rest of us are submitting grants and trying to raise money,” Naughton told me Friday evening. “We’re riding out this time until we can get this business going again. Basically, we’re back in startup mode.”

Stay tuned to this Xconomy site for our next episode of the Histogen saga.

Comments | Reprints | Share:        

A patent infringement lawsuit filed last month against Histogen has triggered a funding crisis at the San Diego biomedical startup, which was forced to lay off all 36 of its employees at the end of January.

Histogen founder and CEO Gail Naughton told me this afternoon the suit filed by rival SkinMedica of Carlsbad, CA, prompted a group of angel investors to withdraw their planned $2.4 million investment in Histogen at the end of January. The ensuing funding crisis has been playing out behind the scenes at Histogen, even while Naughton reported promising findings on the startup’s experimental hair regrowth treatment last week at the 4th Annual Stem Cell Summit in New York.

“The lawsuit really took us by surprise, particularly because it was an infringement suit that was filed when we don’t even have a product on the market,” Naughton told me. “It really cut us off at the knees.”

Since then, Naughton says she has been working on two fronts to find new funding for Histogen. But losing the early stage funding, which had been set to close on Jan. 29, necessitated the immediate layoff of all Histogen employees, she said. About 20 employees have volunteered to continue working despite the layoffs, which were first reported today by The San Diego Union-Tribune.

“I’m not trying to take advantage,” Naughton told me. “They are an unbelievably engaged and passionate group of people who really believe in what we’re doing, and I’m very grateful.”

Privately held SkinMedica provides both prescription-based and cosmetic skin-care products to dermatologists and others to improve the health and appearance of skin. SkinMedica’s suit alleges that Naughton, Histogen, and its cosmetics subsidiary, Histogen Aesthetics, are infringing on two SkinMedica patents covering its “NouriCel” product line and related proprietary technology for culturing human cells in growth media. SkinMedica acquired the patents in 2003 from Naughton’s previous company, San Diego-based Advanced Tissue Sciences, which filed for bankruptcy in 2002 after spending 14 years developing living tissue skin patches.

Naughton denied that Histogen or its subsidiary are infringing on SkinMedica’s patents.

Naughton says she’s been meeting over the past four weeks with a whole new group of investors, whose primary interest is in the potential use of ReGenica, Histogen’s lead product in development, as a hair regrowth product. Histogen says ReGenica is made from proteins and other molecules secreted by human fibroblast cells grown in proprietary bioreactors that mimic the embryonic environment. Last week, Naughton reported early results from a clinical trial that suggests that injecting ReGenica into the scalp promotes hair growth. She says she also has been having simultaneous discussions with four pharmaceutical companies about forming a partnership to help bring certain Histogen products to market.

Comments (9) | Reprints | Share:        

We had another mixed bag of Seattle biotech news this week, as one of the region’s oldest biotech companies (Cell Therapeutics) ran dangerously low on cash, and one of the newer scientific institutions (Institute for Systems Biology) said its budget for the coming year is growing by $20 million.

—Cell Therapeutics is skating closer than ever to the brink, with only enough cash to last until the end of February. The Seattle-based biotech company (NASDAQ: CTIC) is attempting to keep its head above water to commercialize two cancer drugs. The company had trading in its stock halted last week in order to meet requirements of Italian securities regulators, although it resumed trading yesterday.

—What breed is your dog? A pair of canine genomics researchers from the Fred Hutchinson Cancer Research Center developed a test to answer this question, now being marketed by Mars, the giant candy and pet food company. Mars doesn’t disclose sales, but the test, at $125 to $150 a pop, hasn’t yet caught on the way its founders hoped.

—It’s a struggle to whip up enthusiasm for high-risk, high-reward biotech investments, but the folks at the Washington Biotechnology & Biomedical Association are soldiering on this year with the eighth annual Invest Northwest. The trade group has signed up more than 200 people to attend the meeting March 17-18, and has a goal of getting to 500-600.

—Leroy Hood gave an update on the Institute for Systems Biology last Friday at the Technology Alliance’s Science & Technology Discovery Series. Despite the downturn, support is growing for his vision of “P4″ (predictive, preventive, personalized, and participatory) medicine. The Institute’s budget is increasing from $35 million to $55 million next year because of support from the government of Luxembourg.

—Helix Biomedix, the Bothell, WA-based maker of peptide molecules, raised $3.2 million in convertible debt for general corporate purposes and to go after new opportunities in the consumer market. The firm’s peptides are used in skin care and cosmetic products.

Comments (1) | Reprints | Share:        

San Diego-based Histogen CEO Gail Naughton is presenting encouraging preliminary results today at a stem cell conference from the startup’s first human trial of its hair regrowth treatment, ReGenica.

The company says it is in the midst of conducting a five-month clinical trial somewhere outside the United States to assess the safety of ReGenica. After 12 weeks, the company says, patients using the treatment show increased, thicker hair growth, with no adverse reactions. ReGenica is an injectable liquid product made by culturing cells from newborns and collecting growth factors, so-called wnt proteins, and other molecules that the cells secrete. In mice, wnt proteins are involved in triggering stem cells in the skin to form hair, according to Histogen’s press release.

About 25 subjects enrolled in the Phase 1 trial. They are all men, from 18 to 45 years old, with varying stages of male-pattern baldness.

Naughton is reporting the results at the 4th Annual Stem Cell Summit in New York. Histogen says its goal in conducting the study outside the country is to obtain human safety data for the under-the-scalp injections more rapidly, and thereby speed development of the product. Naughton told me in November her early focus is developing products for cosmetics, dermatology, and plastic surgery industries to generate revenue needed to support long-term development of living tissue skin grafts and other products.

Comments (10) | Reprints | Share:        

It was a relatively light week for deals in the Northwest, with modest activity in business software, Internet, and biotech.

—PivotLink, a software firm specializing in business intelligence with offices in Bellevue, WA, and San Francisco, CA, closed a $10 million Series C round led by StarVest Partners. Other investors included Trident Capital and Emergence Capital Partners. PivotLink was called SeaTab Software until January 2008.

—Seattle-based Ontela, a mobile-imaging startup, closed an undisclosed amount of new funding from Eastven Venture Partners. Ontela has also signed deals with four of the top five handset makers to pre-install its photo-management software on mobile phones.

—Beaverton, OR-based Infinity Softworks raised an undisclosed amount of financing from undisclosed investors. The company makes software for doing calculations and creating reports on the iPhone, BlackBerry, and other mobile devices.

—Luke reported that Helix BioMedix (OTCBB: HXBM), a Bothell, WA-based developer of peptide molecules, raised $3.2 million through debt that can convert into shares of stock plus warrants to buy its stock. The company’s peptides are used in skin care and other cosmetic products.

—Bothell, WA-based MDRNA, a developer of RNA interference drugs, agreed to license some of its technology for a one-time, non-refundable execution fee from Roche, the Swiss drug giant. The deal is non-exclusive to Roche, as Luke reported, and the financial terms were not disclosed.

—Seattle-area startup Frugal Mechanic, an online search engine for auto parts, closed a round of seed funding from Seattle-based Founder’s Co-op, a peer-to-peer investment fund. The exact amount was not disclosed, but is between $250,000 and $500,000. Frugal co-founder Eric Peters told me the story behind the company and how it got funded in a difficult climate.

—Smartsheet, a Bellevue, WA-based firm that makes work-management software for businesses, formed a partnership with Amazon to deliver outsourcing services to mass consumers. The new offering is powered by Amazon Mechanical Turk’s 100,000 virtual workers, and rates for outsourced tasks run between $0.01 and $5.

—In a snapshot of Seattle-area tech startups, four companies formed significant new partnerships, though no financial terms were disclosed. Bellevue-based Apptio, an IT optimization firm, made deals to work with Amazon Web Services, Skytap, VMware, and Citrix. Seattle-based Earth Class Mail licensed its online postal-mail delivery software to Swiss Post. Seattle-based Evri is providing its content recommendation widgets to the Washington Post for online news stories. And Seattle’s Redfin announced new partnerships with more than a dozen real estate brokers around the country, representing a shift in the company’s business strategy.

Comments | Reprints | Share:        

Helix BioMedix, a Bothell, WA-based developer of peptide molecules, said it has raised $3.2 million through debt that can convert into shares of stock, plus warrants to buy its stock. The company (OTCBB: HXBM) plans to use the money for general corporate purposes, and to continue expanding its consumer program. The company’s peptides can be found in skin care and other cosmetic products.

Comments | Reprints | Share:        

Privately held SkinMedica of Carlsbad says it has filed a patent infringement lawsuit against new San Diego startup Histogen and Gail Naughton, its founder and CEO. The lawsuit, which was filed in federal court in San Diego, alleges that Histogen and its affiliated Histogen Aesthetics business infringe on two SkinMedica patents related to proprietary conditioned cell media technology. SkinMedica says its complaint asks for unspecified relief for the “misapprorpiration of SkinMedica trade secrets and confidential information by Histogen.”

Comments (1) | Reprints | Share:        

Since I wrote about Living Proof this summer, we’ve had a flurry of comments and questions about the Cambridge, MA-based firm’s biotech-inspired products for combating frizzy hair. And my Xconomy colleagues and I have had some questions of our own about the company and its wares, so I recently caught up with Living Proof CEO Rob Robillard and co-founder Amir Nashat, of Polaris Venture Partners, to get some answers.

Living Proof was keeping details about its operations and products close to the vest late this summer, in part (I later learned) because the startup had gotten word from Allure magazine that its “No Frizz” products would be among Allure’s “beauty breakthroughs of the year” and not to talk about them before the magazine’s story came out in October. Now Living Proof, which even drew a mention on the Today Show for its technology last month, is planning a series of launches for the products over the next several months, Robillard told me. And Polaris’ Nashat filled me in on the genesis of the company.

First, however, Robillard shed some light on the technology behind the three-year-old firm’s anti-frizz line. The key ingredient in all the products: a lightweight material called polyflouroester, which Allure describes as an ingredient in coatings for CDs and contact lenses. The substance, Robillard says, combats frizz by both coating porous hair shafts, preventing water from penetrating them, and by smoothing over hair cuticles to prevent surface friction. He argues that polyflouroester prevents frizz better than silicone used in other products because its molecules’ smaller size enables them to fit into tiny pores in our hair that silicone molecules cannot get into.

Robillard says he decided to start selling a limited supply of the hair products back in September on the Living Proof’s Web site, and then the firm struck a deal with QVC to sell off the rest of its initial batch of products on the home-shopping channel. (Robillard didn’t provide sales figures, but he mentioned that as of two weeks ago QVC had nearly sold out.) In the first quarter of 2009, Living Proof plans to fully launch its no-frizz products on QVC, its Web site, and at Sephora beauty shops.

What’s next? While shielding details of future products from competitors in the beauty industry, Robillard says that Living Proof plans …Next Page »

Comments (3) | Reprints | Share:        

San Diego’s Advanced Tissue Sciences tried for 14 years to develop living-tissue patches for healing burns, wounds and chronic sores. But the business went into bankruptcy liquidation in late 2002, a victim of regulatory delays and more than $300 million in debt.

Since then, former CEO Gail Naughton says she’s been invited to speak many times about the hurdles that Advanced Tissue Sciences was unable to overcome and what she would have done differently. “After talking about what I would do differently a number of times,” Naughton says, “I decided to go out and actually do it.”

The result is Histogen, a San Diego-based life sciences company that Naughton founded last year. Naughton says the technology underlying Advanced Tissue Sciences has been reborn—with significant advances—and that Histogen intends to avoid the business pitfalls that crippled the predecessor company.

“Many of us worked for Gail at Advanced Tissue Sciences,” says Robert Kellar, Histogen’s vice president of research and development. “So we joke around by saying ‘We’re putting the band together again.’ ”

After raising more than $5.3 million from private investors in May, Naughton says Histogen plans to raise another $1.4 million from investors by the end of the year. The startup also has secured a $1.4 million loan.

A key difference at the new company is the creation of a subsidiary, Histogen Aesthetics, which is adapting the in-house expertise in fibroblasts, the cells that form connective tissue, to develop skin and hair care products. By focusing at the outset on the cosmetics, dermatology, and plastic surgery industries, Naughton says Histogen can generate immediate revenue to support the long-term development of living tissue skin grafts and other medical products that require a protracted regulatory approval process.

The company’s first cosmetics product is called ReGenica, a liquid made from fibroblast-secreted proteins, growth factors, and other products. It is intended for use in anti-aging skin treatments and to promote healing after cosmetic laser skin resurfacing.

Last week, Histogen said it also plans to evaluate whether ReGenica injected into the scalp will stimulate hair regrowth in a clinical trial of 24 patients. “Our hypothesis is that it helps to stimulate resident stem cells to become hair follicles,” Kellar says.

Naughton says Histogen already has used its expertise in culturing and growing fibroblast cells to develop products derived from human tissue cells that can be used as a growth medium by stem cell researchers. With such products already generating sales, she says Histogen can generate cash to offset at least some losses it expects to endure while it spends years working toward getting approval to sell its therapeutics products.

It was that prolonged march through the desert that eventually killed Advanced Tissue Sciences, which endured a three-year FDA delay amid mounting debts in getting the company’s Dermagraft skin patch for diabetic ulcers to market. Even after getting regulatory approval, Naughton said the reimbursement rate that insurers set for the treatment covered only a fraction of the company’s actual cost to make the patch. Today reimbursement rates are more favorable, Naughton says.

Histogen intends to use its same proprietary human “extra-cellular matrix” to develop a variety of other medical products—coatings for orthopedic implants and stents, patches for repairing torn shoulder ligaments and other tissue, and even “retentive” enemas for treating sores in the large intestine and Crohn’s Disease.

“So basically we’ve learned and we’ve brought the best and brightest people back at Histogen,” Naughton says. “The team that did it before is back together again, with decades of experience.”

Comments (2) | Reprints | Share: