New England Patriots owner Robert Kraft may still be smarting from his team’s loss to the New York Giants in the Super Bowl, but at least one of Kraft’s other organizations has some good news to cushion the blow: Boston-based Acetylon said today that it has received a $15 million equity investment from Celgene (NASDAQ: CELG), the biotech giant based in Summit, NJ.

Acetylon was founded in 2008 and backed with $40 million from several individual investors, including Kraft. The company is working on a class of drugs that inhibit enzymes called histone deacetylases (HDACs). These enzymes regulate gene expression and play a role in many cancers. Last fall, Acetylon began human trials of its lead compound, ACY-1215, in multiple myeloma. Celgene is a leader in that field with its blockbuster myeloma treatment lenalidomide (Revlimid). “Celgene has a strong strategic and market interest in hematological malignancies and other cancers, and we will benefit from their guidance and input,” says Walter Ogier, CEO of Acetylon.

In the past, drug developers have tried to inhibit several HDACs at one time, but Acetylon’s compound targets only one, HDAC6. That selectivity may cut down on side effects such as fatigue and nausea—and it was one of the main reasons Celgene was attracted to Acetylon’s research. “Acetylon has established itself as the leader in developing next generation, selective HDAC inhibitors for cancers as well as non-cancer disease indications and we believe the company’s approach could significantly benefit patients,” said Mark Alles, Celgene’s chief commercial officer, in today’s release.

Acetylon’s scientists plan to test ACY-1215 in combination with bortezomib (Velcade), made by Millennium Pharmaceuticals. “We anticipate a similar opportunity to test it in combination with [Celgene's lenalidomide] and potentially the next-generation of the drug,” which Celgene is currently testing in clinical trials, Ogier says.

Celgene’s investment in Acetylon is a pure equity deal, and Celgene will not receive rights or options to the startup’s technology. Alles will take a position on Acetylon’s board as a non-voting observer—meaning he’ll mostly have an advisory role. “They’ll have a closer view on our progress,” Ogier says. As for whether or not Celgene might become interested in forming a closer research alliance in the future, Ogier says, “anything could happen.” In the meantime, the deal “doesn’t preclude us from forming other partnerships,” he says. “I think this is good for both companies.”

Celgene has taken quite a bit of interest in the Boston biotech scene of late. On January 26, the company announced it was buying Bedford, MA-based Avila Therapeutics for $350 million. Last year, Celegene participated in a $30 million funding of Cambridge, MA-based Acceleron and it extended a partnership with Cambridge-based Agios, adding $20 million to a $130 million alliance. In May 2011, Celgene signed on to use Boston-based Foundation Medicine’s genomics testing technology in trials of cancer drugs, with the goal of identifying patients who are most likely to respond well to the medicines.

For Acetylon, the Celgene infusion kickstarts an already ambitious plan for ACY-1215. The company is currently finishing up the first stage of a Phase 1 trial, and plans to begin the combination phase of the trial later this year, Ogier says. The $15 million investment “is significant for a company at our stage,” Ogier says. “It will allow us to augment our cancer program.”

Comments | Reprints | Share:          

In the fast-evolving advertising arena, Spongecell is a prime example of how a hard pivot with different technology in place can transform a company’s fortunes.

On Tuesday the New York company, which adds interactive functions such as video and Twitter feeds to banner ads, announced it raised $10 million in a Series B round led by Safeguard Scientifics. Spongecell CEO Ben Kartzman says the new funding will go towards product development and other needs. More importantly, though, Kartzman also says Spongecell more than doubled its revenue last year compared with 2010, as he previously expected.

As Spongecell fills its coffers, grows its staff, and expands into new territory, it is hard to imagine that four years ago the company was running out of cash, letting employees go, and searching for a new direction.

Spongecell’s current technology transforms static banner ads into more interactive tools to engage consumers. In addition to Twitter and other social feeds, Spongecell can insert video, maps, coupons, and other features in the ads to grab attention. For example, when users mouse over banner ads for the Mini Cooper the ad plays a video clip that promotes the car. “Video is the fastest-growing segment of the online ad space,” Kartzman says.

Including the latest funding, Spongecell has raised about $14 million in total from backers that include Google executive chairman Eric Schmidt. In 2010, Spongecell generated $3.8 million in revenue and Kartzman says the company more than doubled that figure in 2011, though he declined to give specific numbers.

That is a much different tale compared with Spongecell’s early history. The company, founded in 2006, initially offered a widget platform for ad agencies to use for online promotions. When that did not bring in enough business and Spongecell’s cash ran … Next Page »

Comments | Reprints | Share:          

[Corrected 2/9/12, 9:05 a.m. See below.] A few weeks ago, Dan Gilbert and the Detroit Venture Partners (DVP) crew welcomed reporters for a tour of the newly renovated Madison Building in downtown Detroit. Gilbert had recently spent $12 million to turn the former theater into a sort of fantasy workspace for budding entrepreneurs, and the results of his makeover didn’t disappoint.

The building features plenty of walls that function as whiteboards, a 150-seat auditorium that seems the perfect place to host an investor pitch meeting, and a stunning rooftop kitchen and deck that overlook Comerica Park, home of the Detroit Tigers. Little flourishes, like the exposed brick and the fact that some of the graffiti found in the building during renovations has been preserved, give the space a young, slightly edgy feel. All of it is meant to transform the Madison Building into a destination for startups across the nation—and if the story of Quikkly‘s Shawn Geller is any indication, it’s working.

Geller, a native of Pennsylvania, graduated from Temple University in 2009. While in school, he was bothered by what he saw as a disconnect between the small mom and pop stores surrounding the campus and the students they sought as customers.

“It wasn’t just local stores, but even the national brands would only come on campus one day a year with student ambassadors,” Geller says, noting the cost and inefficiency of that strategy. “It wasn’t a good model whatsoever.”

Geller worked with local merchants in need of promotion to create a simple landing page where students could find coupons and send them to their phones via text message. They would then claim the coupon by showing the text message at the store offering the discount.

Word of mouth quickly spread, and Geller built up a database of about 3,000 Temple students. He then went around to different restaurants and stores and asked them what their slowest times and days were. Armed with that information, he created his first “flash deal,” where he sent a text out to his database offering the first 150 people who responded within a certain amount of time a large pizza for $5. When close to 100 students went in to the pizzeria to claim their coupons, Geller knew he was onto something.

“It was a very cool way of testing the market,” Geller says. “Groupon was less relevant then, so it was exciting to be able to drive student interest in such a short amount of time.”

Geller began incorporating Facebook social gestures into his platform and named his startup Student Coupons. Soon, friends who didn’t attend Temple were noticing the Facebook posts and asking how they, too, could take advantage of the coupons.

Geller starting working with Jason Lorimer, another Philly entrepreneur, to refine and scale up his business model. Lorimer had just begun spending time in Detroit first as a tourist visiting a friend, and then as an entrepreneur scouting for opportunities. Lorimer connected Geller with Josh Linkner, DVP’s managing partner, after he saw some common ground between the national brands Geller hoped to snag as clients … Next Page »

Comments | Reprints | Share:          

A young Canadian software startup with Boston investors is now part of a big Boston-area company. Ottawa-based Blaze Software has been acquired by Cambridge, MA-based Akamai (NASDAQ: AKAM) for an undisclosed cash sum.

What’s interesting here is that Akamai, the Web content delivery and networking giant, is making a move into Web performance optimization—basically tackling Web performance at the browser level (what some call “front end”), rather than the network level. Akamai has been positioning itself as a one-stop provider of a secure platform for businesses to reach customers via the Web, mobile, and cloud. That approach also includes, among other things, speeding up Web and mobile applications, as evidenced by the company’s recent acquisition of its California-based rival Cotendo for $268 million.

Today’s deal is no doubt smaller than that, but it could be an important sign of things to come—especially around Boston. Blaze started in 2010, and its seed funding came from local investors CommonAngels and Boston Seed Capital. So why sell now?

“You always have a choice of how you want to grow the business,” says Chris Sheehan, managing director of CommonAngels. “It made a lot of sense for the guys to partner up with Akamai, who’s so strong in the [content delivery network] space. When I made the investment, [Web performance optimization] was just beginning. The timing was sooner than I expected. But in the last 12 months, this whole thing has really started to take off.” [Disclosure: CommonAngels is an investor in Xconomy, and Sheehan is a board member at Xconomy.]

Blaze’s approach is to optimize the code on Web pages so as to speed up the transmission of content and render pages faster on whatever device the customer is browsing on—PC, tablet, or smartphone. This is particularly useful for e-commerce and media sites, which tend to get gummed up by lots of different pieces of code loading on them. The company’s technology (and team) will be integrated into Akamai’s cloud platform, said Rick McConnell, executive vice president of products and development at Akamai, in a statement.

In speeding up websites, Blaze competes directly with Boston-based companies Yottaa (which is also in Boston Seed’s portfolio) and SiteSpect. Google’s team in Kendall Square also released a free tool for Web page optimization in the fall of 2010.

It’s not just about making websites faster, however. All of the above companies have been trying to combine Web optimization with business analytics so as to help businesses track things like sales and customer behavior more effectively. Now Akamai is firmly in the game, and we’ll see how that affects the competitive landscape.

“It’s going to make it a lot harder,” Sheehan says. “It puts a lot of pressure on the other startups.”

Comments | Reprints | Share:          

OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

Comments (1) | Reprints | Share:          

Plans for IPOs and venture funding dominated the New England deals news this week.

—A new seed fund, backed by venture firm New Enterprise Associates and hosted by Harvard, came out of the woodwork last week. The Experiment Fund will invest up to $250,000 in seed funding in selected startups, with a focus on technologies that come out of Cambridge, MA. The news broke just a few days ahead of Facebook—the one that got away—revealing its plans to go public.

—Radius Health, a Cambridge-based startup working on treatments for osteoporosis, filed paperwork indicating its plans to raise as much as $86 million in an initial public offering.

—A PricewaterhouseCoopers and National Venture Capital Association report shows a mixed picture for life sciences investing in 2011, my colleague Arlene reported. Biotech companies raised $4.7 billion, showing a 22 percent increase over 2010, but the deal volume for the sector dropped 9 percent to 446 transactions. Medical devices companies also showed an increase in funding dollars but a drop in number of deals.

—Cambridge-based Brightcove set the price range of its initial public offering at $10 to $12 per share, according to an amended filing with the SEC. The video hosting startup plans to sell 5 million shares, and give underwriters the option to purchase another 750,000 shares. Brightcove first filed paperwork last August indicating it intended to raise $50 million in an IPO.

—Synchroneuron of Waltham, MA, nabbed $6 million in Series A funding from Morningside Technology Ventures. The startup is developing treatments for movement disorders such as tardive dyskinesia.

Comments | Reprints | Share:          

We’re starting to see fresh signs of life among the Internet software startups in San Diego. Check out this news.

—During a visit last week, TechStars CEO David Cohen talked with the leaders of San Diego’s grassroots Web startup community about the factors that help to create and sustain entrepreneurial communities. One crucial issue confronting San Diego is a crying need for savvy and experienced Internet entrepreneurs who are willing to “pay it forward” by mentoring a new generation of startups.

—A dozen seed-stage companies moved into the new EvoNexus incubator in downtown San Diego. EvoNexus, which was founded by the CommNexus non-profit industry group, will continue to operate its original incubator in University City, where eight startups are taking root. In both locations, EvoNexus provides office space, utilities, and other services free of charge and with no strings attached.

—Sigma Partners led a $10 million round in venture funding for San Diego-based MOGL, a Web startup that has developed a comprehensive customer loyalty program for restaurants and bars, to fuel its expansion into San Francisco and New York. San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures joined in the round.

—San Diego’s MicroPower Technologies named two new board members after raising $6.5 million in Series C funding in a deal that was led by Motorola Solutions Venture Capital and joined by an undisclosed private fund. MicroPower Technologies, which uses wireless networking technologies to create low-cost surveillance capabilities, named PacketVideo CEO Jim Brailean and former DivX CEO Kevin Hell to its board. Hell, who is now chairman of San Diego’s EvoNexus incubator, will join as MicroPower chairman.

—San Diego’s StockTwits said it has established a partnership with Toronto’s Q4 Web Systems, which provides … Next Page »

Comments | Reprints | Share:          

…or really just one great one: Xconomy needs your help. We’re busy cranking out terrific tech and life sciences journalism and putting on stellar events across the six cities in our network, and we’re looking for a kick-ass marketing coordinator to help us get the word out about all of it.

Full details are here, but in a nutshell: This is a full-time position in our Cambridge, MA, headquarters, ideal for somebody who is happiest when juggling a bunch of diverse projects. We need a person who enjoys figuring stuff out as s/he goes along, and has just enough of the old OCD to pull it off without too many embarrassing typos. Some main areas of focus will include marketing our events, managing our social media efforts, and marketing reprints and premium products.

If doing all that in an extremely collegial, slightly wacky startup environment sounds like your idea of a good time we want to hear from you at jobs@xconomy.com.

Comments | Reprints | Share:          

Cambridge, MA-based Flagship Ventures, a $900 million fund known for its successes with companies such as Accuri Cytometers and Acceleron Pharma, is planning to open an office in Michigan in the next six months, says Sean O’Donnell, VP at Credit Suisse’s Michigan office.

The move comes after Venture Michigan Fund II (VMF II), a fund-of-fund which is managed by Credit Suisse, made a $15 million investment commitment in Flagship Ventures Fund IV, which invests in early-stage companies. As part of the agreement, Flagship will invest that $15 million in Michigan companies. Flagship has already found success in local companies with Accuri Cytometers, which is based on technology spun out of the University of Michigan.

“Flagship Ventures is a much larger fund than is typically involved in our program,” O’Donnell says. “We hope they’ll exceed that amount.”

The Venture Michigan Fund II was established in February 2011. Like the first Venture Michigan Fund, VMF II exists to primarily invest in early- and seed-stage Michigan companies. VMF II has $120 million in capital to invest in funds that target high-growth and emerging industries. The commitment to Flagship was the fourth investment it has made.

And what can we expect Flagship to invest in? O’Donnell admitted that Michigan continues to feel the effects of a difficult national fundraising environment, though he says there is actually an increased amount of capital available to Michigan companies compared to years past thanks to programs like VMF II. He pointed to the success of homegrown entities like Arboretum Ventures and HandyLab as helping to persuade investors that Michigan is a viable place to invest.

O’Donnell also says that, though Michigan’s life science sector will remain robust, he predicts movement away from therapeutics and devices in favor of anything that saves money. Where he expects to see increased investment is in the IT sector, particularly in software development, mobile apps, and social media, and the reason is simple: Those kinds of companies are cheap to start.

“I feel Michigan is on the right track,” O’Donnell says. “We’re always going to have gaps, but good deals will still be able to find capital.”

Comments (2) | Reprints | Share:          

The Northwest chapter of angel investment group Keiretsu Forum says its members invested $24 million in 36 companies last year, the highest total since the regional group was formed in 2005. And most of those investments—29 of the 36—were for businesses in the region, Keiretsu says. Nine of the investments were follow-on rounds, and 27 were new deals.

That’s a significant uptick from 2010, when Keiretsu reported just $8.9 million invested in 16 companies, an amount that was still billed at the time as “encouraging,” considering the ongoing economic turmoil. While the economy at large still hasn’t rebounded, technology ventures and angel investors are clearly seeing some optimistic signs.

One thing that stood out to me in perusing the statistics from Keiretsu was that a sizable chunk of these investments went to other investment funds, not startup companies—about half the money went into either real estate funds (38 percent, roughly $9 million) or alternative investment funds (11 percent, about $2.6 million). The rest broke down this way: Technology companies, 30 percent; consumer/retail, 16 percent; life sciences, 4 percent.

Keiretsu Forum Northwest—which encompasses the greater Seattle area along with Portland, OR and Boise, ID—has accounted for nearly $90 million in funding for about 150 companies since the regional chapter was founded in fall 2005. Chapter president Nathan McDonalds says 78 new members were added in the region during the last year.

Some of the Washington-based companies financed through Keiretsu included Atossa Genetics, Cadence Biomedical, NanoICE, and Valant Medical Solutions.

Comments | Reprints | Share:          

This week’s deal news covered a breadth of sectors: biotech, medical devices, mobile applications, software, and robotics. Not to mention a major venture capital fund raise.

—Waltham, MA-based drugmaker Avila Therapeutics was bought by New Jersey-based Celgene (NASDAQ: CELG) for $350 million, with as much as another $575 million available in milestones. Avila is a maker of “covalent” drugs that are designed to shut down the activity of disease-causing proteins for a prolonged period of time.

—Verastem, a young Cambridge, MA-based biotech working on drugs targeting cancer stem cells, completed its initial public offering, led by UBS and Leerink Swann. The IPO (5.5 million shares sold at $10 apiece) represented a strong showing among investors, as Verastem originally indicated it planned to sell 4.5 million shares priced between $9 and $11 each. The underwriters have a 30-day option to buy another 825,000 shares.

—Burlington, MA-based ConforMIS, a maker of knee implant systems, raised $89 million in a Series E funding from private equity investors and government investment funds abroad. The company said it will put the money toward sales, manufacturing, and expansion of its technology.

—Co3 Systems, a maker of data loss management software, received new funding from Fairhaven Capital. The Cambridge, MA-based startup said it will put the money (whose sum was undisclosed) toward sales, marketing, and engineering.

—Malborough, MA-based medical device startup Navilyst Medical will be acquired by Albany, NY-based AngioDynamics (NASDAQ: ANGO) in a transaction valued at $372 million, based on the company’s $14.20 per share closing stock price Monday. Navilyst, which focuses on … Next Page »

Comments | Reprints | Share:          

San Diego’s StockTwits is developing a bit of a Canadian accent, eh, through a partnership being announced today with Toronto-based Q4 Web Systems, which provides online investor relations services for publicly traded companies throughout North America.

StockTwits is an online social media network that enables traders and shareholders to share their market insights, ideas, charts, and news in real time via Twitter. The startup structures financial and investor-related information from its Twitter feed by stock, user, reputation, and other criteria. StockTwits also enables users to save the stocks they follow to their own portfolios and to limit the comments tweeted about each stock to trusted sources.

As I reported last summer, the four-year-old startup has determined that its chief source of revenue also lies with the investor relations and public relations units of publicly traded companies.

By introducing a ticker tag symbol for publicly traded stocks, $(ticker), StockTwits makes it possible for public companies to sign up for a higher level of StockTwits’ Web service and to “claim” their stock tickers. Once claimed, a company’s IR and PR teams can use the ticker tag to distribute corporate information over the Web in real time.

By partnering with Q4, StockTwits plans to integrate its services with the subscription-based services that Q4 provides its corporate customers. Q4 says its website services include more than 30 IR “best practices” modules that help companies properly provide information and other services to investors and shareholders.

“We’re working with them to make it easier for people to use both of our products,” says Francis Costello, StockTwits’ chief operating officer. He tells me StockTwits has more … Next Page »

Comments | Reprints | Share:          

San Diego’s MOGL, a Web-based customer loyalty and rewards program for restaurants and bars, says it has raised $10 million in venture funding to fuel its expansion into San Francisco, New York, and other markets.

The Menlo Park, CA, office of Sigma Partners led the Series B round, which was joined by San Diego’s Avalon Ventures and Austin, TX-based Austin Ventures. That brings total funding for MOGL to $12.4 million, according to a statement from the company. Entrepreneurs Jon Carder, Jarrod Cuzens, and Jeff Federman started MOGL in 2010.

The Internet startup offers its customers multiple incentives for returning to member restaurants and bars, using a mixture of technology, games, and psychology. The incentives include a 10 percent cash back each time a customer returns to eat at participating restaurants. A contest  offers monthly cash prizes to the top three most-frequent customers at each locale. Customers also can automatically donate a meal to someone in need every time they spend $20.

MOGL Homepage Screenshot

MOGL says it provides customer analytics and return-on-investment data for participating bars and eateries. In a statement from the company, Sigma partner Peter Solvik says, “The MOGL team has generated an explosive response from both consumers and restaurant partners, while effectively positioning itself as the most innovative loyalty platform of its kind.”

Since it was launched last April, MOGL has signed up nearly 350 Southern California-based eateries and bars, donated more than 27,000 meals to Feeding America, and has rewarded its members with more than $350,000 in cash back to date.

The company also offers a location-based mobile app for iPhone and Android, so MOGL members can easily locate participating restaurants while on the go. The mobile apps also help customers track their cash rewards and jackpot opportunities, as well as the number of meals donated in their name.

Comments (1) | Reprints | Share:          

[Corrected 2/8/12. See below.] The Bill & Melinda Gates Foundation has joined with 13 pharmaceutical companies and leading public health organizations as part of a massive $785 million drive to wipe out—or at least better control—10 historically neglected tropical diseases by the end of the decade. [Edited to reflect that the total value of the initiative is $785 million not, as originally reported, $785 million. We apologize for the error.]

The initiative will focus on diseases that affect one out of every five people on Earth (1.4 billion people), but don’t get effectively treated because there isn’t a strong enough market to sell drugs to people who can’t afford them. The Seattle-based Gates Foundation is contributing $363 million over five years for research into the neglected diseases, while other money from groups like the U.S. Agency for International Development and Britain’s Department for International Development will finance better distribution of existing medications that are effective. The initiative was announced today in a press briefing in London.

“It used to be that people would commit to a donation but nobody would order the drug because there wasn’t money to do the delivery,” Bill Gates told Bloomberg News in an interview. “Here, because you’ve got delivery money being committed and manufacturing money being committed, every year the amount of people who get this mass drug administration is going to be 10 times what it’s been.”

GlaxoSmithKline CEO Andrew Witty added in a statement that, “Many companies and organizations have worked for decades to fight these horrific diseases. But no one company or organization can do it alone. Today, we pledge to work hand-in-hand to revolutionize the way we fight these diseases now and in the future.”

Here’s who is participating in the initiative, and what they are contributing, according to today’s statement. You can also check out reports from Bloomberg News and the Wall Street Journal.

Comments (3) | Reprints | Share:          

—Peter Clarke of EE Times reported that San Diego’s Qualcomm (NASDAQ: QCOM) has acquired Andover, MA-based Pixtronix, a startup founded in 2005 to develop Microelectromechanical systems (MEMS) display technology. Qualcomm, which confirmed the deal with EE Times but provided no details or press release about the deal, reportedly spent between $175 million and $200 million for Pixtronix. The Massachusetts company founded by Nesbitt Hagood raised more than $53 million in venture funding, athough the Pixtronix technology has not yet been introduced to the market. Qualcomm has spent years working to refine its own MEMS-based display technology—known as Mirasol.

—More than 200 entrepreneurs turned out to hear TechStars founder and CEO David Cohen talk about the startup accelerator program he helped to launch in Boulder, CO, in 2007. Cohen told the rapt audience during a San Diego Tech Founders meetup that the Internet software community in Boulder “is just totally on fire” compared to five years ago. This was the night after Cohen met with local tech leaders to discuss the steps that helped boost the entrepreneurial ecosystem in the Colorado college town. Xconomy San Diego arranged the dinner discussion, and I plan to have more about our conversation later this week.

—Meteorologist Stephen Bennett and investor John Plavan founded San Diego’s EarthRisk Technologies in mid-2010 with the idea of creating predictive analytics technology that could extend the range of weather long-term forecasts from two weeks to 30 or 40 days. They are now providing their Web-based technology to commodities and energy-trading firms on a subscription-basis. Bennett told me the core business at EarthRisk Technologies is focusing on extreme weather events—heat waves, frigid cold snaps, and storms because extreme events are the ones with the highest impact.

—Mark Heesen of the National Venture Capital Association gave a good-news, bad-news presentation to the San Diego Venture Group last week. Among the interesting bright spots: Corporate venture capital is growing and San Diego-based Qualcomm now ranks as the nation’s second-largest corporate venture outfit. The bad news? U.S. VC firms invested $28 billion in startups last year, but only … Next Page »

Comments | Reprints | Share:          

“It is the ‘silver’ age of VC/entrepreneurship. It would be the ‘golden’ age if we could fix the liquidity issues.”

Those are the words of Michael Greeley, general partner of Flybridge Capital Partners in Boston and treasurer of the National Venture Capital Association, referring to the very tight IPO market that is limiting capital-raising options for emerging growth companies. It is also an issue Greeley intends to explore this Wednesday afternoon, at Xconomy’s conference: New York’s Venture Emergence.

That’s because Greeley will be the moderator of a keynote chat with Barry Silbert, CEO and founder of SecondMarket, the hot New York broker-dealer that is doing its share to fix the aforementioned liquidity issue, in large part by creating ways to trade shares of privately held companies.

The chat between Silbert and Greeley is just one part of a fantastic afternoon of discussion and stories from some of New York’s—and the country’s—leading venture capitalists and entrepreneurs, including Union Square Ventures’ Fred Wilson, the Gilt Groupe founding team, 1stdibs CEO David Rosenblatt, RRE Ventures’ Eric Wiesen, Internet advertising pioneer Dave Morgan (now CEO of startup Simulmedia), Todd Dagres of Spark Capital in Boston—and a whole lot more.

If you don’t have your tickets already, get them fast—time is running out, and space is limited.

Greeley says he is really looking forward to his chat. Some questions he intends to ask Silbert include:

—What is the future of stock exchanges, and how companies raise capital and generate shareholder liquidity?

—What does Second Market look like in five years?

—What are the greatest risks to the business going forward?

—What regulatory issues do companies like Second Market face, and what should the government do?

And last but not least, says Greeley (who remember is from Boston): Who will win the Super Bowl? (I personally feel it will be the Patriots’ revenge).

There will also be time for you to ask Silbert a few questions of your own. We look forward to seeing you on Wednesday afternoon. Register here.

Comments | Reprints | Share:          

It’s that outlook time of year, and Mark Heesen, president of the National Venture Capital Association (NVCA), was in San Diego earlier this week, talking about the 2012 outlook for venture capital. Today he’ll make a similar presentation to the New Jersey Technology Council. Next week,  John Taylor, the NVCA’s director of research is set to talk in Florida about the 2012 outlook.

Heesen began his presentation in San Diego by saying, “Be prepared for a roller coaster ride here, because that’s where we’ve been for the past year—and that’s where we’re going.”

In a conversation with Xconomy yesterday, Heesen talked about some of the broader trends he’s charting throughout the United States. Here are some of the takeaways from our talk, and from Heesen’s presentation in San Diego:

—The VC industry continues to contract. Venture capital investments in U.S. startups peaked in 2000, when VCs sank $99 billion into emerging companies of all kinds. There were 1,022 venture capital firms at that time, and they were collectively managing $220 billion worth of invested capital. In 2010, VCs invested more than $20 billion into startups of all kinds. The number of VCs had plunged by almost 55 percent—to 462 VC firms with $177 million under management.

—VCs are raising more capital from their limited partners, but it isn’t enough to sustain current investment levels. In 2011, U.S. venture firms raised a total of $18 billion. That was up significantly from the $14 billion that VCs raised in 2010—but it falls $10 billion short of covering the $28 billion that VC firms invested in 2011. As a result, Heesen says he expects venture investments in U.S. technology and life sciences companies to decline in 2012.

—A handful of VC firms accounted for … Next Page »

Comments (1) | Reprints | Share:          

Cambridge, MA-based Verastem, the biotech startup seeking to make drugs against cancer stem cells, found a way to rustle up enough demand from investors to complete its initial public offering.

The company (NASDAQ: VSTM) said tonight that it raised $55 million by selling 5.5 million new shares at $10 apiece. It was a strong showing of investor interest, given that Verastem had previously proposed selling just 4.5 million shares, at a range of $9 to $11 a share. UBS and Leerink Swann led the offering, and were assisted by Lazard Capital Markets, Oppenheimer & Co., and Rodman & Renshaw, according to a statement on Verastem’s website. The offering could end up raising more money in the end, because the underwriters have a 30-day option to buy another 825,000 shares. Shares of Verastem will now start trading on the NASDAQ on Friday, the company said in a statement.

The IPO was a bold move in a market that has shown limited interest in such offerings from biotech startups, especially companies like Verastem, which was founded in August 2010 and doesn’t yet have any drug candidates in clinical trials. While Verastem contends that cancer stem cells—also known as tumor-initiating cells—are critical players that help tumors resist treatment and spread, scientists still have a lot to prove about the role they play. The bet here is essentially on an intriguing field of science and a high-profile cast of scientific advisors and executives led by CEO Christoph Westphal. He’s best known as the former CEO of Sirtris Pharmaceuticals, the developer of drugs for diseases of aging, which was sold to GlaxoSmithKline for $720 million in 2008.

Christoph Westphal is chairman and CEO of Verastem

Investors haven’t shown much interest in backing such high-risk/high-reward companies like Sirtris or Verastem lately. Last year, just 10 biotech companies went public, according to a tally from FierceBiotech, down from 13 a year before. At least a couple of other notable biotech companies are teed up to test the IPO market in the early days of 2012—Mountain View, CA-based ChemoCentryx, which is trying to sell 4 million shares at $14 to $16 a share, and Cambridge, MA-based Merrimack Pharmaceuticals, which is attempting to sell 16.7 million shares at $8 to $10 apiece, according to the most recent regulatory filings.

The Verastem offering stands to benefit a number of well-known players in the Boston biotech community. Heading into this deal, the biggest holders in Verastem were Longwood Founders Fund, with a 15.4 percent stake; CHP of Princeton, NJ with 13.5 percent; MPM Bioventures with 13.1 percent; Bessemer Venture Partners with 12.9 percent; Eastern Capital Limited with 7.8 percent; and Advanced Technology Ventures with 5 percent.

Comments (1) | Reprints | Share:          

Avila Therapeutics, after just five years in business and $51 million in venture capital, made big news today when it agreed to be acquired by Celgene for $350 million upfront plus another $575 million in milestone payments.

Naturally, there are a lot of people celebrating the success of the Bedford, MA-based company today around the web and on Twitter.

Over at Polaris Venture Partners’ blog, Amir Nashat wrote that “early, Series A life sciences investing pays off.”  He added that this portfolio company is the eighth in the last three years to generate returns, either through acquisition or an IPO. “One common thread that binds each of these companies was their compelling scientific foundation and transformative potential for treating disease. In our model, these areas are essential and go hand-in-hand with strong teams. In the case of Avila, we were fortunate to back a truly unique team of repeat entrepreneurs,” Nashat wrote.

Bruce Booth, a partner at Atlas Venture who also invested in the company, wrote on his blog about how Avila (AH-vill-uh) paid off big-time for its early venture investors. The company raised just $51 million in venture capital its five-year history. The company is generating a 5x return on investment on the upfront payment from Celgene, which has potential to balloon to a 15x return if Avila hits its future milestones.

Booth offers some interesting background on the Avila story, and some lessons in four bullet points. “Avila has exhibited many of the hallmarks of a great biotech story today”: Specifically, he said those hallmarks are:

 Commitment to discovering and advancing real innovation

 Healthy focus on ‘equity capital efficiency’

 Dedication to creating strategic optionality for the company’s future

 And, most importantly, a fantastic team

Over on Twitter, Michael Gilman of Cambridge, MA-based Stromedix (@Michael_Gilman) recalled sitting in his living room more than five years ago with Avila co-founder Jus Singh, talking about his idea for the company. “The sweet thing about Avila is that it’s a triumph of data over dogma. People HATED covalent drugs. Avila changed their minds,” Gilman said on Twitter.

Avila Therapeutics CEO Katrine Bosley

You can read the Xconomy story on the deal by my colleague Arlene Weintraub. The one thing I’ll add is that I saw Avila CEO Katrine Bosley along with VP of corporate development Nagesh Mahanthappa and CFO Andrew Hirsch a couple weeks ago at the JP Morgan Healthcare Conference in San Francisco. Bosley talked a bit about how the company’s lead drug candidate, a Btk inhibitor, was being readied for mid-stage clinical trials against cancer later this year, and that it was thought to have potential against autoimmune diseases.

It was a quick meeting, and there wasn’t any hint that a deal this big was ready to be announced. But Hirsch tried to persuade me that maybe the IPO market for biotech isn’t as barren as some people think, which I took as a subtle hint that Avila might be sniffing around at that option. “I think there is an appetite from the investment community for high-quality stories,” Hirsch said.

And Mahanthappa optimistically noted that some big companies have been doing creative deals to support innovative biotechs. In particular, he singled out Celgene for its partnerships with Cambridge, MA-based Agios Pharmaceuticals and Acceleron Pharma. When I asked him about predictions for the year ahead, he predicted that creative deals like that would continue.

Comments | Reprints | Share:          

[Updated 1/26/12 8:30 am. See below.] When Avila Therapeutics’ CEO Katrine Bosley spoke with Xconomy in December, she predicted the oncology world would show “a lot of excitement” for drugs that inhibit an enzyme called Bruton’s tyrosine kinase (Btk)—and in particular for Avila’s experimental compound in that category, AVL-292. Her words were prescient: Today Summit, NJ-based Celgene (NASDAQ: CELG) announced that it is buying Avila, which is based in Bedford, MA, for $350 million, plus up to $575 million in milestone payments.

[Historical material added.] AVL-292 is part of a class of compounds Avila developed called “covalent” drugs. Covalent molecules bind tightly to disease-causing proteins, thereby shutting down their activity for a prolonged period of time. AVL-292 is also extremely targeted, meaning it blocks Btk with little effect on healthy processes in the body. That’s important—the drug industry has been interested in Btk inhibition for years, but struggled to achieve the right balance between efficacy and selectivity, Bosley told Xconomy last month. Avila’s co-founder Juswinder “Jus” Singh (pictured above), a computational chemist formerly of Biogen Idec, had the idea to develop a class of drugs that could form covalent bonds with proteins.

AVL-292 is currently in Phase 1 clinical trials for non-Hodgkin’s lymphoma, B cell chronic lympocytic leukemia, and rheumatoid arthritis. In December, Avila presented data at the American Society of Hematology (ASH) annual meeting showing that five out of six patients with chronic lymphocytic leukemia who received AVL-292 remained stable on the drug. Blood tests showed that the largest of the two doses tested inhibited Btk over the long run and was well tolerated.

Celgene has been quite active in the Boston area over the last few months. In October, it extended a partnership with Cambridge, MA-based Agios, adding $20 million to what was already a $130 million deal. And in December, Celgene participated in a $30 million funding of Cambridge, MA-based Acceleron, which is working with Celgene on two drugs to treat anemia.

In today’s announcement, Celgene said Avila’s covalent-drug platform would augment its own research efforts in developing novel drugs for complex disorders. “In particular, we see Avila’s unique approach to protein silencing as an area of great promise for our research initiatives in hematology, oncology and immune-inflammatory diseases,” said Tom Daniel, president of research and early development for Celgene, in the statement.

The deal includes a potential $195 million in milestone payments for the development and approval of AVL-292, as well as up to $380 million in potential milestone payments related to other drug candidates that emerge from Avila’s covalent-drug platform, which it calls Avilomics. In today’s announcement, Bosley lauded Celgene’s leadership in hematology and autoimmune disease. “We believe working together may accelerate the advancement of more innovative medicines from the Avilomics platform,” she said.

[Paragraphs added to provide historical background and input from Polaris Ventures.] Avila board member Amir Nashat said in an e-mail that today’s deal demonstrates the value of betting on unproven and risky new technologies. Nashat is a partner at Waltham, MA-based Polaris Venture Partners, which was an early investor in Avila. Co-founder Singh’s model, Nashat says, “had a number of skeptics. While many of the top selling drugs on the market formed covalent bonds with their targets, the irreversible interactions were serendipitously discovered after the fact. Ironically, no one in industry had thought to develop a platform for discovering covalent drugs, believing the approach to be too risky.”

Avila raised $21 million in a Series A in 2008 from Polaris, Atlas Venture, Abingworth Management, and Advent Venture Partners. The following year, it raised $30 million in a Series B led by the Novartis Option Fund. The company also had relationships with Sanofi and Clovis Oncology. Its research deals had a combined potential value of $1.5 billion, Nashat says. “Avila’s joining with Celgene is a great fit,” he says. “The combination of two great companies and their research and development teams will accelerate the advancement of more innovative medicines.”

Comments | Reprints | Share: