Just came back from the Washington Biotechnology & Biomedical Association’s annual meeting in downtown Seattle, where 500-plus biotechies and distinguished guests (including more than a few local politicians) gathered for a quiche-and-berries breakfast and some keen networking.

The keynote speaker was Elias Zerhouni, the former director of the National Institutes of Health and now a senior fellow at the Bill & Melinda Gates Foundation. Just a few highlights from his talk here:

Zerhouni laid out the top five challenges in public health, as he sees it. Nothing too surprising, but a good way to frame the whole healthcare discussion:

1. The shift from acute to chronic conditions. (“This is a worldwide issue,” he emphasized. “This is the new global health horizon.”)

2. Aging population.

3. Health disparities.

4. Emerging and re-emerging infectious diseases. (Pandemics, for example.)

5. Emerging non-communicable diseases. (Things like obesity and depression, the latter of which the World Health Organization predicts will be the No. 1 cause of disability and dysfunction for people aged 25-44.)

As a world-class radiology researcher, Zerhouni also spoke to the scientific challenges the industry faces. He said the fundamental scientific barrier to doing “translational” research—that which leads to new products like drugs or devices—is the complexity of biological systems involved in diseases. “The explosion of data does not equate to explosion of knowledge,” he said. (This is a common theme across all fields of science and technology.)

On this front, Zerhouni stressed the importance of both external and internal sources of innovation. Meaning, the state of Washington should “find ways of bringing in collaboration on the translation or creation of knowledge.” He pointed out that “building relationships with the Asian Rim is probably your strategic advantage.”

For the politicians in the audience, Zerhouni noted, “Today when you get elected or not elected, the main driver is jobs, jobs, jobs.” He said his dream is that in a few years, biomarkers and healthcare stats will impact political campaigns, to the tune of, “In my district, Body Mass Index has dropped from X to Y.” (Luke previously reported on the issue of jobs being the driver of public support for biotech.)

The last issue Zerhouni addressed was a particularly interesting one: culture wars around science and technology. “Don’t be oblivious to the political, cultural, and moral aspects” of biotech and biomedical work, he said. “Be careful to not assume that everyone in the world believes what you do is holy and good.” Having dealt with the profound issues of evolution vs. creation in Washington DC—most notably in the context of stem cell policy—Zerhouni was sharing some hard-earned wisdom that everyone in the room could take home with them.

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San Diego’s Orexigen Therapeutics looked like just another biotech on the verge of collapse at the beginning of the year. Its CEO was diagnosed with a terminal case of leukemia and soon died. Three other senior executives had just quit. The company halted development of two experimental drugs to conserve cash.

Orexigen (NASDAQ: OREX) sought salvation from a long-running clinical trial, and didn’t find it. Results from a 793-patient study of obese patients on its experimental weight-loss drug fell short of what Wall Street was expecting, and the stock dropped 15 percent the next day to $5.10.

Then Mike Narachi saw something the market didn’t see at the time. Narachi, a former vice president in charge of Amgen’s multi-billion dollar anemia drug business, heard about the Orexigen CEO opening and decided to think about it. He spent six weeks doing his homework on the obesity market, Orexigen’s pipeline, competition, and its clinical trial results.

The market potential is clear. Obesity is one of the nation’s biggest public health problems, with two-thirds of U.S. adults considered overweight or obese. There’s not a lot of great pharmaceutical competition—Big Pharma has been gun shy about this field since Wyeth was burned so badly by the multi-billion legal settlements related to fen-phen heart damage, and Sanofi-Aventis failed to win approval two years ago for a drug that was linked to rare instances of suicidal thinking. In contrast, the Orexigen drug looked like a contender. It was made through a novel combination of two existing drugs with decadelong safety records, with no evidence of heart trouble or suicidal thinking. Orexigen owned 100 percent of the worldwide rights to a drug in the final phase of clinical trials.

He came to a conclusion: I want this job.

“Here was a company that needed leadership for a product in late-stage development that can address a huge unmet medical need,” Narachi says. “Most people misunderstood it. I saw it as a unique opportunity.”

The announcement of Narachi’s hiring crossed the wire March 31, when the company was limping along at $2.61 a share. Since then, Orexigen has looked like a different company. …Next Page »

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Drugs for treating depression have been around for years now, mostly working in similar ways by blocking certain receptors in the brain. So when San Diego-based BrainCells Inc. proposed a clinical trial with a new way of combining a generic anti-anxiety drug with a common dietary supplement that affects people’s sleeping rhythms, this didn’t exactly set the medical field on fire.

“If you had asked psychiatrists beforehand if buspirone and melatonin would work together as a depression drug, they’d say absolutely not,” says Dr. Maurizio Fava, the vice chair of the department of psychiatry at Massachusetts General Hospital.

This combination, which BrainCells has put together under the code name BCI-952, is now getting a second look by those psychiatrists. This drug combination showed promise in a clinical trial of 142 patients diagnosed with major depression, according to results presented by Fava last week at a mental health medical meeting. The drug showed “comparable” effectiveness to what researchers have seen with the standard depression medicines, known as selective serotonin reuptake inhibitors (SSRIs), Fava says.

This result is far from the conclusive evidence the FDA wants to see before it will approve a drug, but it’s tantalizing. An estimated 20 million people in the U.S. suffer from depression—and the existing drugs don’t work for everybody and can cause sexual side effects and weight gain. The BrainCells combination didn’t show those side effects, and it is thought to have a completely different way of working, by stimulating the growth of new neurons in the brain.

“Is it possible that this combination may work better than standard anti-depressants? I’d say, yes, it’s possible,” Fava says.

That said, it’s still quite early in the development of BCI-952, when a lot of things are still possible, not all of them good. Here’s what we know. The BrainCells trial enrolled 142 patients, and randomly assigned about half to get the company’s combination of buspirone and melatonin, while the rest …Next Page »

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BrainCells Inc., the San Diego-based developer of treatments for neurological disorders, said today that its experimental drug for depression showed promising results in a clinical trial of 142 patients. The company’s drug, BCI-952, a combination of low-dose buspirone and melatonin, is designed to work differently than other depression drugs, by stimulating growth of new brain cells. The drug showed statistically significant results on some, but not all measurements of depression. Data were presented at NCDEU, a meeting co-sponsored by the National Institute of Mental Health and the American Society of Clinical Psychopharmacology.

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There are still great voids in understanding the effects of even approved psychiatric drugs. But there’s no doubt that the business of selling antidepressants and the like can be extremely lucrative. Psylin Neurosciences—a joint venture of San Diego-based Amylin Pharmaceuticals and New York drug research firm PsychoGenics—is very much a product of both of those realities. And now Psylin has identified its first potential product, a peptide drug for depression. The company says its drug candidate could help boost peoples’ moods while providing the added benefit of helping them drop weight, which, of course, could be very lucrative.

Psylin plans to complete toxicity and other tests on the drug, dubbed “PSN0041,” with the intent of asking the FDA for permission to start an initial clinical trial in early 2010, says William Rote, the chief operating officer of Psylin, who is also a vice president of business development and New Ventures at Amylin. Amylin and PsychoGenics, which is based in Tarrytown, NY, have together committed $20 million to fund Psylin through the first clinical trial, Rote tells me.

Identifying its first drug candidate is a major step for two-year-old Psylin. Amylin (NASDAQ:AMLN), which markets peptide-based drugs exenatide (Byetta) and pramlintide (Symlin) for Type 2 diabetes, has long suspected that among its vast library of peptide hormones are some with the potential to treat psychiatric disorders. Several years before the formation of Psylin, Rotes says, Amylin contracted PsychoGenics to use its proprietary psychiatric drug screening technology to determine whether its peptides were in fact capable of treating psychological disorders. When the testing showed such potential, Amylin decided that a joint venture with PsychoGenics would be the best way for the company to move into the psychiatric drug market, Rote says.

“With each company bringing very different pieces to the puzzle,” Rote says, “the whole becomes greater than the sum of the parts.”

There’s no shortage of depression treatments already on the market—which is valued at about …Next Page »

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San Diego specialty drugmaker Somaxon Pharmaceuticals, (NASDAQ: SOMX said today the FDA turned down its application to market a new drug for insomnia. Somaxon says the FDA raised a number of issues related to the interpretation of the efficacy data in its new drug application.

The company says the FDA did not specifically ask it to conduct additional clinical trials of its drug candidate, doxepin (Silenor). But the FDA asked the company to address the possibility that the drug may prolong the heart’s QT interval—a key measure of the heart’s electrical rhythm.

Somaxon says it plans to collect additional data from already completed clinical trials that evaluated the drug’s potential effect on the heart’s electrical cycle. Results of the test previously disclosed by Somaxon show doxepin had no effect on prolonging the QT interval when administered at doses of 6 milligrams or 50 milligrams.

The company noted that doctors have been prescribing doxepin for more than 35 years for the treatment of depression and anxiety at dosages of 75 milligrams to 300 milligrams a day. Somaxon is seeking approval for a low-dose oral tablet formulation at 1 milligram, 3 milligrams, and 6 milligrams for treating insomnia.

Somaxon says a discussion with the FDA will be necessary to gain a complete understanding of the concerns raised by the agency. “As we continue to seek approval of Silenor, we will continue to take measures to conserve our cash and will evaluate financing alternatives available to us,” Chief Executive Richard Pascoe said in a statement.

Somaxon shares dropped more than 50 percent after the bell, losing $1.12 in after-hours trading before settling at $1.02 at 6:20 pm ET.

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Fen-phen was the wonder drug for weight loss in the 1990s, until it was found to damage heart valves and yanked off the market. Now the folks at San Diego-based Arena Pharmaceuticals are eagerly waiting clinical trial results that will show whether they have learned something profitable from that colossal failure.

Arena is developing a drug, lorcaserin, which it says should have the same appetite-suppressing ability of fen-phen, without the nasty side effect. Next month, Arena is expected to lift the veil on a pivotal study of 3,182 patients, which it hopes will show its drug can cause weight loss without any damage to heart valves after two years of follow-up.

This is a critical moment for Arena (NASDAQ: ARNA). The company, founded in 1997, has no products on the market yet and has run up an accumulated deficit of $656 million. The risks are huge: Madison, NJ-based Wyeth has coughed up a staggering $21.1 billion and counting in legal liability settlements to date from the fen-phen debacle. Of course, if Arena’s drug is safe and effective, the returns could also be enormous. About two-thirds of U.S. adults in the U.S. are overweight or obese, which makes them more likely to get a litany of other conditions like heart disease, diabetes, high blood pressure, and arthritis. The cost of all this excess poundage is hard to measure because it is so intertwined with other diseases, but a U.S. Surgeon General’s report pegged it at $117 billion in 2000, or about 9 percent of national health care spending.

So, naturally, any drug that helps people lose more than the FDA’s guideline of 5 percent of body weight, can be taken as a convenient oral pill, and have minimal side effects, is going to be big. The opportunity is probably worth $5 billion to $10 billion a year in sales, according to various analyst reports.

“Everybody here is very excited about it, this is a big event for us,” says Dominic Behan, Arena’s chief scientific officer.

Arena has been trying for years to assure investors that lorcaserin is safe for the heart. The Bloom study, which began in June 2006, has already passed a pair of interim analyses by independent safety monitors, who said it appeared safe after six months, and after a year of follow-up, Arena has said. The safety monitors were looking at high-resolution images taken by echocardiograms.

The study was designed to follow these patients for a full two years, and these results from the echocardiograms will be analyzed next month, Behan says. The company will also say whether the drug hit its all-important goal of producing at least a 5 percent loss of body weight for patients on the drug, compared with those on the placebo, after one year of follow-up, Behan says.

If this data turns out positive, a lot of dominos could fall into place. The company will seek …Next Page »

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TheraGenetics, a Cambridge, MA and London-based diagnostics company, said today it agreed to be acquired by UK-based Avacta Group for an undisclosed amount of cash and stock. TheraGenetics is developing diagnostic tests to see how individual patients might respond to drugs for schizophrenia, depression, bipolar disorder, Alzheimer’s disease and attention deficit hyperactivity disorder.

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Cypress Bioscience (NASDAQ: CYPB) shares are up sharply today after the San Diego drug developer and its New York partner announced last night the Food and Drug Administration approved their drug for fibromyalgia. As Luke reported in October, Cypress started down this path in 2001, when it licensed rights to milnacipran, (Salvella) a drug approved outside the U.S. for depression.

Cypress’ stock gained more than $1.90, or 27 percent, and was trading at over $9 a share in the late morning. Its strategic partner, New York’s Forest Laboratories (NYSE: FRX) was up $1.10, or 4.5 percent, and trading above $25.

Fibromyalgia is a chronic condition characterized by widespread pain and decreased physical function, afflicting as many as six million people in the United States. Cypress decided to test the drug for fibromyalgia because of the way it’s designed to block the reaborption of serotonin and norepinephrine, two pain-and-mood signaling chemicals in the brain.

The FDA’s approval of milnacipran (Savella) is a key validation for a strategic change in direction that Cypress CEO Jay Kranzler made in 2001, when Cypress licensed the drug from a French drug company. Cypress formed a strategic partnership around the drug in 2004 with Forest Laboratories, which contributed cash, clinical-trials and regulatory expertise, and marketing expertise.

Kranzler’s move expanded Cypress’s focus beyond developing drugs for treating rheumatoid arthritis, the firm’s original area of expertise. After acquiring Proprius Pharmaceuticals last year, Cypress said it had broadened its capabilities further to provide personalized medicine testing services to help rheumatologists optimize therapies for treating ailments like rheumatoid arthritis and fibromyalgia.

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Northstar Neuroscience is toast. The Seattle-based medical device company, which failed to develop an electrical stimulation machine that would enable stroke patients to regain arm movement, said today its board has decided to shut down the company and liquidate its assets.

The company (NASDAQ: NSTR) will lay off most of its remaining employees as it goes through the steps of an “orderly wind down,” and stock delisting, Northstar said today in a statement. The plan, which will involve paying off remaining liabilities like its lease and clinical trial obligations, as well as distributing cash to shareholders, must be approved by shareholders at a special meeting. Northstar said it had 38 employees left at the end of July, when it made its last round of layoffs.

Northstar has been under pressure to close its doors from one of its largest shareholders, Boston-based RA Capital. Peter Kolchinsky, the firm’s managing member, wrote an angry letter to the company last month urging it to close its doors and fork over its remaining cash to shareholders. The company’s stock crashed 80 percent a year ago when it failed in a trial of its device to help stroke patients regain arm movement. Instead of liquidating, Northstar tried to regroup by cutting costs and switching its priority to using the device to treat severe depression.

Wall Street essentially gave that zero chance of success. Even though Northstar had $70.2 million in cash and investments at the end of September, investors gave the company a stock market valuation of under $27 million in early December. That’s when RA Capital started screaming to shut the company down, and spread the cash among shareholders, while it still had some left.

Northstar was founded in 1999 as Vertis Neuroscience, and the original goal was to develop electrical stimulation for chronic back pain. That product was eventually divested. In the end, the company ended up accumulating a deficit of more than $132 million through the end of September, according to its most recent quarterly report with the Securities & Exchange Commission.

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Pressure is mounting once again on Northstar Neuroscience to fold up its tent and go home. The Seattle-based medical device company got hit today with an angry letter from one of its largest shareholders, Boston-based RA Capital, which urges the board to shut down the company and distribute all of its remaining cash and assets among the shareholders.

“Although you have refused to return capital to shareholders, you have put forth no viable business plan for the company. It would seem that some of you remain content to pay yourselves salaries from cash that belongs to stockholders while contributing nothing of any positive value in return,” said Peter Kolchinsky, managing member of RA Capital, in a letter to the company’s board disclosed today with the Securities and Exchange Commission.

The lack of faith Wall Street has in this company would be hard to overstate. Northstar was developing an electrical stimulation device to help stroke survivors to recover some degree of arm movement, until the device failed in a pivotal clinical trial in January. The stock crashed more than 80 percent that day.

Since then, things have gotten worse. Northstar chose to soldier on, by cutting costs, and trying to develop its device for a different use, among patients with severe depression.

RA Capital, which owns 2.5 million shares, or about 9.7 percent of Northstar, was one of the shareholders that squawked in disapproval, saying the company would be better off liquidating and giving shareholders the cash. But Northstar resisted. It still had $70.2 million in cash and investments at the end of September, and said its cost savings plan should enable the company to still have $53 million left at the end of 2009. Wall Street essentially gives this strategy less than a zero chance of success. It gives the company a market value of just a shade under $27 million-a breathtaking 60 percent less than the cash it has in the bank.

In his letter, RA’s Kolchinsky urges the company to call a special meeting of the board to ask shareholders what to do. If he doesn’t hear a response from the board by Dec. 19 about its plans for a special shareholder meeting, then RA says it will submit proposals for the next annual meeting about whether to distribute the company’s cash to shareholders, or do a share buyback.

Since July, RA Capital says it has gotten “a complete lack of response” from Northstar for its ideas. But judging from the tone of the letter, it doesn’t sound like RA is going to just sell its shares at a loss in frustration and move on.

“The only asset of value that the Company possesses is its cash; this asset should not be wasted and ought to be returned to shareholders as soon as possible that they might invest it more profitably,” Kolchinsky wrote.

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At least in the world of finance, Brain Cells Inc. can make a credible claim that it has a little more going on upstairs than your average biotech company. The San Diego-based startup had flawless timing, by completing a $50 million Series B financing back in April, before venture capital became really hard to come by this fall.

I learned more about the company’s science and business strategy from CEO Jim Schoeneck on a visit to the company’s new headquarters a few weeks ago on General Atomics Court. The company has attracted some big-name investors to the same door, including New Enterprise Associates, Alexandria Real Estate Equities, MedImmune Ventures, Bay City Capital, Oxford Bioscience Partners, Technology Partners, Pappas Ventures, and NeuroVentures.

Brain Cells was formed in December 2004, when technologies from the labs of Fred Gage at the Salk Institute, and Rene Hen and Eric Kandel of Columbia University were merged. Gage’s long body of work debunked conventional wisdom in the 1990s that said adults don’t grow new brain cells. The next step is to show he can coax immature brain cells to become adult brain cells. Hen’s research showed how serotonin (a neurotransmitter) interacts with receptors in the brain, and how that’s connected to depression, anxiety, and other mood disorders. If the work is on the right track, they should be able to sharpen scientists’ understanding of why certain depression treatments work. Then Brain Cells could be off and running, develop new drugs that work better against mood disorders because they stimulate new neurons that grow, migrate, differentiate, and survive in the brain to fight off disease.

“We are at the beginning of understanding the biology that underlies mood disorders,” says Schoeneck. “It’s been a black box for a long time.”

Want to know how little is understood about the basic biology of mood disorders? Something like 11 percent of drugs that enter clinical trials ever make it through all the trials needed to become an FDA approved product, and that number is even lower, about 5 to 6 percent, for psychiatric drugs, Schoeneck says. The only classes with even worse batting averages are cancer treatments and women’s health drugs, he says.

Figuring out the basic biology of these diseases is time-consuming and risky, and venture capitalists certainly don’t like to plunk down that much money for a set of science experiments. So Brain Cells is trying …Next Page »

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Two questions matter most to the financial survival of a biotech company: How much cash does it have in the bank, and how fast is it burning through it? That’s especially true in dark economic days, so I checked on just how well-prepared Seattle’s public biotech companies are to weather this particular storm.

The findings aren’t encouraging. Only two companies in the Northwest—Seattle Genetics and Dendreon—had more than $100 million in the bank at the end of September, according to their filings with the Securities and Exchange Commission. The last time I remember doing a local analysis like this, in February 2004 for The Seattle Times, there were six companies in the $100 million club. They were Icos, Corixa, Dendreon, Cell Therapeutics, ZymoGenetics, and Seattle Genetics.

The economic downturn, of course, is a national problem for an industry that lives and dies based on investors’ willingness to take big risks with big chunks of capital that take years to pay off, if ever. Profitable industry heavyweights like Amgen and Genentech aren’t in trouble, but of the 248 unprofitable biotechs that are publicly traded, about half have less than a year’s worth of cash on hand, according to an October report by Eun Yang, an analyst with Jeffries & Co.

“It looks like 2009 and 2010 will be pivotal years for Seattle biotech,” says Carl Weissman, president of Accelerator, the Seattle-based biotech startup incubator. “These companies have to find great partnerships that will bring in cash, or they need to cut spending, or they have to hope the financial markets turn around.” He added that several companies may have little choice but to sell at a bargain price. “Some of the signs on the front doors may be changing.”

For those of you looking for a silver lining, you can include Amgen. It has about 1,000 employees in Seattle and Bothell, a mind-boggling $9.8 billion in cash and investments in the bank, and another potential blockbuster drug being primed for the market next year. Amgen, for one, has indicated it may scoop up some of these cheap biotechs, according to this Bloomberg report.

So here’s where the 10 publicly-traded, unprofitable, Seattle-based life sciences companies currently stand, in no particular order. I left out Sonosite (NASDAQ: SONO), because it’s profitable, so cash on hand isn’t quite as vital.

—Seattle Genetics (NASDAQ: SGEN). This Bothell, WA-based company is one of the bright spots. It had $187 million in cash at the end of September, and because it generates revenue from technology licenses, it expects to still have $150 million on hand at year’s end. It is also negotiating with the FDA on a pivotal trial design for a drug for Hodgkin’s disease that has produced stellar clinical trial results.

—Dendreon (NASDAQ: DNDN). Dendreon had almost $107 million stashed away at the end of September, and collected another $20 million in a stock offering last month. It has enough cash to operate the business well past the middle of 2009, when it will get critical information on whether its lead drug candidate for prostate cancer is able to extend lives. Still, Seattle-based Dendreon has socked enough away to advance a second candidate into clinical trials, D-3263, early next year.

—ZymoGenetics (NASDAQ: ZGEN). It’s been a wicked year for this anchor of the local scene. Sales of its sole marketed product, recombinant thrombin for surgical bleeding, have been disappointing to say the least, with just $7 million expected in its first year on the market. The Seattle company had $81.1 million left at the end of September, and is burning it very fast with a quarterly net loss of $28.8 million. ZymoGenetics is able to borrow as much as $100 million from Deerfield Management, but its ability to pay off the debt depends on product sales taking off in the future. The company now has cash to last “into 2010,” which is less than its usual two-year cash cushion, says CFO Jim Johnson. To save pennies, ZymoGenetics has cancelled its holiday party and won’t put up lights this holiday season on its famous smokestacks along Interstate-5, says spokeswoman Susan Specht. …Next Page »

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Last week brought another mixed bag of news from Seattle biotech.

—Tysabri. The most effective drug on the market for multiple sclerosis isn’t sold by a Seattle biotech company, but it has its origins in a lab here at the Fred Hutchinson Cancer Research Center.

—ZymoGenetics had yet another good news/bad news week. The Seattle biotech company said its pegylated interferon lambda drug for hepatitis C was able to kill the virus in a trial of 18 patients, without any of the flu-like symptoms associated with standard interferons. But the next day, it said it sold just $1.8 million worth of recombinant thrombin, its only marketed product, in the third quarter.

—We occasionally like to take a close-up look at clusters within the Seattle region, and this week I did a census of the local ultrasound industry. About 5,000 people are now employed at 15 companies in the area we counted. If you know of more, please drop us a line at editors@xconomy.com

—MediQuest Therapeutics passed along some bad news Friday afternoon when it said its drug for Raynaud’s disease was rejected by the FDA. The privately-held Bothell, WA-based company didn’t say what the FDA’s questions were about the Vascana application, but it plans to meet with the agency to determine its next steps.

—Did you know poor people can legally get prescription drugs in this country for half-price? I didn’t know about it until the folks at Portland, OR-based Wellpartner, a mail-order pharmacy, explained how they’ve found a way to help clinics that serve poor people to handle the bureaucratic red tape to get this deal. This is one reason why Wellpartner has tripled in size over the past year, and attracted investments from Seattle-based Integra Ventures and Buerk Dale Victor.

—Northstar Neuroscience announced to investors this week that it doesn’t plan to just curl up and die. The Seattle-based medical device maker, which was under pressure from an activist shareholder this summer to sell itself, says it expects to have $66 million in cash left at the end of the year, and that it will still have $53 million left in reserves at the end of 2009. The company is developing its electrical stimulation device for severe depression, after an earlier trial failed in stroke patients.

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Northstar Neuroscience, a Seattle-based maker of a brain-stimulation device for severe depression, said today it had $70.2 million in cash and investments at the end of September, and that it expects to end this year with $66 million on hand, and close 2009 with $53 million. The company (NASDAQ: NSTR) has cut costs and switched its priorities to studying depression, after a final-stage clinical trial failed to demonstrate its device could help restore arm movement in stroke patients.

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Northstar Neuroscience, a Seattle medical device company, said today the FDA has given conditional approval to run a second study of its brain-stimulation device against depression. Northstar (NASDAQ: NSTR) said it plans to start enrolling the first of 24 patients in the study, called Prospect II, before the end of the year. Preliminary results should be available in the second half of 2009. The company switched its strategy this year to focus on depression after a pivotal study failed to restore arm movement for patients recovering from strokes.

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Here’s a CEO resignation that caught me by surprise this morning. Epix Pharmaceuticals CEO Michael Kauffman stepped down as CEO and as a member of the company’s board of directors, as of last Friday, according to a statement from the Lexington, MA-based company. He left for the proverbial chance to “pursue other opportunities.”

Kauffman, 44, became Epix’s CEO in August 2006, through the company’s acquisition of Predix Pharmaceuticals, the company said. He is being replaced by Elkan Gamzu, an Epix director, who will be interim CEO.

Epix (NASDAQ: EPIX) has had a bumpy ride under Kauffman. Its Vasovist product, designed to help doctors get a clearer picture from magnetic resonance angiography tests that look at blood vessels, has been dealt a series of delays from the FDA since Epix first submitted it for approval in December 2003. An experimental depression drug failed in a mid-stage clinical trial in March. And Epix’s Alzheimer’s drug candidate showed promising results in December in a small clinical trial, yet the company later discovered its contract research organization made errors in data-crunching that ended up making the drug’s cognitive benefit appear more modest. Not surprisingly, the stock has dropped 49 percent so far this year, trading at $2 a share at 12:27 p.m. Eastern today.

Still, Kauffman hasn’t been in hiding. I spoke to him less than two weeks ago, for a feature story about how he was preparing for a big Alzheimer’s conference in Chicago that runs through Thursday. He touted a couple of anecdotal cases of patients who stayed on the Alzheimer’s drug for six months, and showed “profound” improvement. “You don’t have to be a physician to see progress when a patient can suddenly play cards when they couldn’t before,” Kauffman said at the time. The drug, being developed in partnership with pharmaceutical giant GlaxoSmithKline, is currently being tested in larger mid-stage clinical trials.

We put a call in to a PR agency representing Epix, with the two big questions: Why’s Kauffman leaving, and what’s he going to do next. I also wonder what he gets in terms of a golden parachute. The company’s most recent proxy filing with the SEC says he got $1.3 million in total compensation last year, made up of salary, bonus, the value of stock option awards and perks. If we hear back anything, or we see some answers in any new regulatory filings, we’ll let you know.

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