—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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News of FDA drug approvals shone the spotlight on some New England biotechs this week.

—Waltham, MA-based Alkermes (NASDAQ: ALKS) and San Diego-based Amylin Pharmaceuticals(NASDAQ: AMLN) won FDA approval for their injectable diabetes drug exenatide once-weekly (Bydureon). This was their third time seeking clearance for the drug, which uses technology from Alkermes to last long enough in the bloodstream to turn it into a once-weekly injection

—Additionally, the FDA cleared a drug developed by Lexington, MA-based Curis and its partner Genentech as treatment for a common form of skin cancer called basal cell carcinoma. The drug, vismodegib (Erivedge), is the first approved product for Curis.

—They say good news comes in threes. Cambridge-based Vertex Pharmaceuticals also got a faster-than-expected FDA OK to start selling its drug ivacaftor (Kalydeco) as a treatment for a rare form of cystic fibrosis. That’s the second drug approval for Vertex (NASDAQ: VRTX), which also sells a treatment for hepatitis C. Bonnie Ramsey, one of the key people involved in developing the drug, talked to my colleague Luke about the implications of the approval.

—But there was some bad news, too: A week after reporting data that its pancreatic cancer treatment saridegib (IPI-926) showed some success in a small study, Infinity Pharmaceuticals (NASDAQ: INFI) halted a bigger, mid-stage clinical trial of the drug when it showed patients were living longer in the placebo group. The Cambridge, MA-based company’s shares fell more than 30 percent after the news last Friday.

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[Updated: 3:47 pm] Amylin Pharmaceuticals and Alkermes have gone to the FDA twice before to seek approval of their new diabetes drug, and been turned back, but now the persistence has paid off. The FDA has cleared their once-weekly injectable diabetes drug for sale in the U.S.

San Diego-based Amylin (NASDAQ: AMLN) and Dublin- and Waltham, MA-based Alkermes (NASDAQ: ALKS) today won clearance to start selling exenatide once-weekly (Bydureon) in the U.S., according to a letter posted on the FDA website. The approval came after the agency held up the application twice before—first in March 2010, and again in October 2010, saying it needed further assurance that the drug doesn’t cause an irregular heart rhythm known as QT prolongation. The companies expressed confidence back in July that the issue had been resolved, based on results of an additional clinical trial. The drug won approval in Europe back in June.

[Updated with added detail on Alkermes royalty] The long-awaited U.S. approval is vital to future of Amylin, as it started investing back in 2005 in a $500 million Ohio factory to mass-produce the new drug. Amylin’s fortunes have become even more tied to Bydureon since November, when longtime partner Eli Lilly bowed out of a collaboration to co-market the drug. Alkermes, which provided technology that made the drug last long enough in the bloodstream to turn it into a once-weekly injection, will pick up an 8 percent royalty on sales of the first 40 million units sold in a single year, and a 5.5 percent royalty once sales exceed 40 million units in a single calendar year. While there is competition from Novo Nordisk’s liraglutide (Victoza) as a once-daily injection for diabetes, and various other oral pills and injectable insulin, the new drug from Amylin and Alkermes is the first treatment that can be injected as little as once a week. Amylin has been marketing the original form of exenatide (Byetta) as a twice-daily injectable since 2005.

About 25 million people in the U.S. have the disease, and numbers are growing fast as the nation’s obesity rate continues to surge. The new Amylin drug could generate $1.25 billion in peak U.S. sales in 2018, said Cory Kasimov, an analyst with JP Morgan, in a note to clients on Nov. 11.

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Novo Nordisk, the world’s largest maker of diabetes treatments, is increasing its bet on Seattle’s biomedical research community.

Denmark-based Novo said today it is establishing a new center with 20 scientists in Seattle who will conduct research into type 1 diabetes. This new group will be housed in South Lake Union alongside Novo’s team of autoimmune/inflammatory disease researchers. Matthias von Herrath, the director of the Type 1 diabetes research group at the La Jolla Institute for Allergy and Immunology, will lead the new Novo research center, which is expected to open this summer, the company said in a statement.

“My dream has always been to see some of the treatments that my and other research teams have tested in animal models translated into better treatments for type 1 diabetes,” von Herrath said in a company statement. “As head of the research center, I hope to pursue this dream, while also forging new public-private collaborations within this field.”

Novo Nordisk has a long history in Seattle, partly through its past ownership of ZymoGenetics, and more recently through its own autoimmune and inflammatory disease research team. Novo announced its intent in the summer of 2008 to build an 80-person research team dedicated to the study of diseases in which the immune system goes haywire and starts attacking healthy tissue. Type 1 diabetes is thought to be one of these disorders, in which the immune system attacks the pancreas, making it unable to produce enough insulin to control people’s blood sugar. Type 1 is a different condition than the more common form of diabetes, type 2, in which people—typically once they become overweight—gradually lose the ability to use insulin properly.

For more on Novo’s plans to tap into Seattle’s immunology talent pool, see this feature story from January 2009, and another post from its Seattle research center’s grand opening in September 2009.

Novo tends to keep a pretty low profile in the pharma industry, but it generated controversial headlines earlier this month when it was revealed that celebrity chef Paula Deen, famous for cooking high-fat foods, has developed diabetes and become a spokesperson for Novo. The relationship rankled critics, because poor diets have led to a rapid increase in incidence of type 2 diabetes. About 25 million people in the U.S. are thought to have type 2 diabetes, and the total cost to the U.S. health system is estimated at about $3.4 trillion in the 10 years through 2020, according to UnitedHealth, the nation’s largest health insurer.

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Mark Twain used to toss around a saying about three kinds of lies. There are lies, damned lies, and statistics. This week in biotech, we saw some statistics that could lead some people to get a false impression that everything is just peachy in biotechland.

If you measure the state of life science innovation by the amount of money flowing in, things look swell. Venture capitalists poured $4.73 billion into 446 biotech companies last year, according to the MoneyTree report by the National Venture Capital Association and PricewaterhouseCoopers, based on data from Thomson Reuters. The venture industry association’s press release cheerily noted that overall venture funding jumped 22 percent last year. While software is still the No. 1 and faster-growing sector of the two, biotech held its own, with a solid 22 percent gain in dollars invested compared with a year earlier.

You have to dig deeper to see what’s really going on. There is still a good amount of money going toward late-stage development of drugs people started working on 10-15 years ago. But there is an alarming drop in support for today’s cutting-edge biotech startups. Last year, just 153 U.S. biotech and medical device startups got their first round of financing, the lowest amount of seed investment activity in 15 years, as reported by Ryan Flinn of Bloomberg News.

There’s something really wrong with this picture. Most any biologist will tell you we are living in a golden age of discovery, at a time when we will soon be sequencing entire human genomes for $1,000 in one day. We are able to ask questions about how life works that nobody could even imagine asking a few years ago. It ought to be the time to charge ahead with basic research, and early-stage R&D to test exciting new concepts in diseases like cancer, diabetes, Alzheimer’s, HIV, and more.

But everywhere you look, the story is about cuts, cuts, cuts. The National Institutes of Health, the primary government agency that supports basic biomedical research, used to write checks for one out of every three grant applications, but it’s now down to about one out of every six, NIH director Francis Collins said earlier this month at the JP Morgan Healthcare Conference. Pharma companies are cutting back on R&D, firing workers left and right, and leaning on cheaper outsourced vendors everywhere they can. As many as one-fourth to one-half of biotech venture capitalists are thought to be slowly going out of business, as they are unable to raise new investment funds. The same IPO investors that want to buy Facebook shares look at biotech stocks like a four-year-old looks at lima beans.

There are good reasons why we see all those things happening. Pharma companies have created enormous inefficiencies for themselves through mega-mergers, and now they need to spend years trying to get their houses in order. Biotech as an industry has overpromised and underdelivered, and many investors are tired of it. The FDA, stung by various drug safety scandals, has been cautious about approving new drugs (although there are signs that FDA leadership wants a more balanced approach). And of course, our society is still struggling to come to terms with healthcare reform, and the realization that it’s unsustainable to spend infinite amounts of money on healthcare.

John LaMattina

All that said, an entrepreneur or a bold Big Pharma executive is the kind of person who looks at that picture and believes he or she can overcome the hurdles, and form a plan to turn vision into reality. But there aren’t that many people out there with the can-do spirit, or guts, to put down real money behind really talented teams devoted to the discovery of new drugs. And because everybody’s talking about how to go from Phase I to Phase II with drugs people invented years ago, there’s a real possibility that once those projects run their course, we’ll all look around in 2020 and wonder where all the wonderful new drugs are going to come from.

“You can really get into a vicious cycle when you have to eat your own seed corn,” says John LaMattina, a senior partner with PureTech Ventures, and the former president of R&D at Pfizer.

There are exceptions, of course, with a few people trying creative new ways to plant seed corn. Third Rock Ventures and Atlas Venture are a couple of VC firms that have remained active, continuing to bet big on the edgiest stuff coming out of the labs. Most every Big Pharma company has set aside cash for corporate venture firms that are seeking to help fill the void being created by the shrinkage of traditional VC. Pfizer, Johnson & Johnson, Sanofi, Bayer, and deserve credit for working on creative new collaborations with top biomedical universities and research centers, which seek to minimize some of the problems with the fruitless alliances of the past. J&J made news this past week when it unveiled an incubator for 18-20 startups in San Diego which looks to fill up some lab space it had vacated through its own internal R&D cutbacks.

Right now, we are in an age of experimentation with new organizational structures for supporting biomedical R&D. The hope is that these new organizations can reduce the time, money, and high-risk profile that has made life sciences such a hit-or-miss investment over the years. Pharma companies know they don’t … Next Page »

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There was a whole lot of life sciences news over the past week. Here’s my roundup.

—Carlsbad-based Life Technologies (NASDAQ: LIFE) said it’s taking orders for a benchtop genome sequencer that can to decode an individual’s DNA within 24 hours and at a cost of roughly $1,000. The company priced its new Ion Proton Sequencer at $100,000 to $150,000, which also represents a dramatic reduction compared with the cost of existing DNA sequencers, and might even entice some practicing physicians to buy into the idea of personalized medicine. A cross-town rival, San Diego-based Illumina, also introduced an improved version of its gene-sequencing machine capable of same-day service, although Forbes’ Matthew Herper says Illumina’s HiSeq 2500 is priced at $740,000.

—A $1 million gift to the Tech Coast Angels from the family of slain TCA member and life sciences investor John G. Watson has enabled the angel group to establish a nonprofit foundation to support entrepreneurism in the San Diego region. A financial adviser, who awaits sentencing following his conviction two months ago, murdered Watson in his La Jolla town home. Watson’s sister, Gillian Ison, told the TCA, “John loved investing, innovation, and the entrepreneurial spirit that he discovered when he arrived in San Diego. We believe that a foundation supporting entrepreneurism is the best way to honor his memory and his life.”

—San Diego’s AnaptysBio said it has established strategic alliances with Novartis and an undisclosed pharmaceutical company. The company plans to use its proprietary technology to discover and develop new therapeutic antibodies with multiple cancer-related therapeutic targets. AnaptysBio said the two deals provide global rights to develop and commercialize a limited number of antibodies against each cancer target that AnaptysBio generates.

—In his BioBeat column, Luke previewed the five myths likely to make the rounds at this week’s JP Morgan Healthcare Conference in San Francisco. You could say that Luke inoculated readers from excessive optimism by writing, “Hope and hype are a couple essential ingredients in this business, and every year both are on display at this conference. Sometimes the wishful thinking can congeal into conventional wisdom.” Is that good, or what?

— Wylie Vale, a Salk Institute scientist, renowned expert on brain hormones, and founder of San Diego’s Neurocrine Biosciences (NASDAQ: NBIX), died on Jan. 3 while vacationing in … Next Page »

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San Diego’s Cebix, founded in 2008 to develop a new supplemental treatment for complications arising from type 1 diabetes, intends to raise more than $20 million in a Series B round needed to fund pivotal trials, according to VentureWire. Cebix CEO James Calloway told VentureWire the startup raised $28.5 million from Sofinnova Ventures, InterWest Partners, and Thomas McNerny & Partners in its first round of funding.

At the American Diabetes Association’s annual scientific conference in San Diego last summer, Cebix presented data on its C-peptide replacement therapy to address microvascular damage associated with type 1 diabetes.

As we reported at the time, C-peptide has been shown to play a role in keeping the smallest blood vessels healthy in different tissues. The deficiency of C-peptide, which is produced naturally in the body during the process that forms insulin, leads to nerve damage and a variety of other complications in patients with type 1 diabetes.

Diabetics using insulin often experience a circulatory-related decline in nerve function, kidney function, and vision from a deficiency of the peptide. Callaway said Cebix is completing a 30-patient study of C-peptide replacement therapy, and plans to conduct a pivotal trial with 600 patients.

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[Editor's note: We asked a group of Xconomists to answer the following question: "If you could patent one thing, what would it be?"]

If I can only pick one, I’d patent a functional cure for diabetes—whether it’s an artificial pancreas, a treatment to spare beta cells, or a means to prevent insulin resistance. However it can be done, this is the largest unmet need out there, and therefore an opportunity to improve the lives of tens of millions of people worldwide. We all know the statistics, but it is an enormous threat to our country—chronic, expensive, and debilitating.

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For decades, people with Parkinson’s disease have been taking L-dopa pills to keep symptoms of the neurodegenerative disease under control. But now the Michael J. Fox Foundation is betting that a new form of the drug can be inhaled into the lungs to provide fast relief when the old standby isn’t getting the job done.

The New York-based Michael J. Fox Foundation for Parkinson’s Research is announcing today it is providing an undisclosed grant award to help Chelsea, MA-based Civitas Therapeutics develop an inhaled form of levodopa (L-dopa) for Parkinson’s disease. Civitas plans to use the Fox Foundation support, along with its $20 million Series A investment from earlier this year, to run a pair of clinical trials over the next year that will seek to prove that an inhalable L-dopa can be a viable alternative to the pill form. The first clinical trial of the drug, CVT-301, is set to begin before year’s end, says Civitas CEO Glenn Batchelder.

Patients with Parkinson’s tend to take L-dopa pill about three times a day, to try to keep a steady amount of the drug in the bloodstream. Take too much, and it won’t do much good, and it can cause side effects. Too little means that the telltale symptoms like tremors and stiffness start to appear. Various companies have tried other ways to deliver steady doses of the drug, through skin patches or infusion-based medicines, with little to show for it. If Civitas, a spinoff from Waltham, MA-based Alkermes (NASDAQ: ALKS), can create an inhalable form, it could end up providing a quick and steady dose for those instances when the pills don’t work. The demand for such a treatment could be big, since about 1 million people in the U.S. suffer from Parkinson’s.

“People have been trying to deliver L-dopa, the gold standard treatment, for 40 years,” says Batchelder. “We believe this is the technology that will really make a difference.” Todd Sherer, the CEO of the Michael J. Fox Foundation, added in a statement that L-dopa delivery challenges “represent a critical unmet need in Parkinson’s disease.”

Civitas CEO Glenn Batchelder

Civitas has a lot more resources than the typical venture-backed startup might have to pursue this kind of challenge. The company is housed in a Chelsea, MA, facility that represents more than $100 million of investment, which Alkermes built up years ago to make inhalable insulin for diabetics through a partnership with Eli Lilly (NYSE: LLY). Lilly scrapped that program in 2008, which got people thinking about what other inhalable drugs could be made there. By January, the assets were spun out into a new company, Civitas Therapeutics, which secured $20 million in a financing co-led by Canaan Partners and Longitude Capital.

The key challenge that Civitas is facing is with what you could call drug transportation. The existing L-dopa pills are swallowed and make their way into the intestines, where they get absorbed into the bloodstream. Sometimes the amount of drug concentration that actually gets into the blood can be erratic, however, because L-dopa can get blocked in the digestive tract when there are large protein molecules from food that get in the way, Batchelder says.

“Orally, it goes in, and it may get into your blood in 30 or 60 or 90 minutes, or maybe not much will get in at all,” Batchelder says. “Through the lungs, you can get precise dose.”

Civitas will have to prove … Next Page »

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Yesterday, we ran the first installment of an interview with Eli Lilly CEO John Lechleiter, in which he says the pharmaceutical industry is breaking out of its current rut, and is beginning to get more productive at pumping out more innovative new drugs.

Today, we follow up with the second half of the interview, which includes some interesting thoughts on “open innovation” that were prompted by a question from Twitter.

Xconomy: Is it possible to get too big as an organization to innovate? Is this partly why you’ve resisted the urge to do a mega-merger like some people have said they want to see?

John Lechleiter: We’ve done lots of studies, several huge studies in the late 1990s that date back to the pre-Prozac patent expiration. We fail to see a connection between size and innovativeness. I’m not smart enough to say that it’s best to be this size or that size, but obviously if you’re a $50 billion-a-year company or a $70 billion-a-year company, growing 10 percent a year means you have be a lot more innovative in an absolute sense than a company of Lilly’s size at $23 billion in revenue. We study this question of how to create a company that’s really innovative. I don’t think there’s an easy answer, otherwise the industry would have locked and loaded on it.

I do think there are things that matter. I think co-location is important. Hiring talented people and keeping them. There are cycle times of 10-15 years in this industry. I’ve been at Lilly for 32 years, and I’ve only been around the horn two or three times.

We still think we hire people for careers. That may sound corny to some people, and fly in the face of what we hear. I think we heard today (from University of Washington president Michael Young) that people can expect to have three different careers. But we aim to give people a reason to want to stay and want to be productive at Lilly, and that they can stay and realize their career ambitions. Obviously there are lots of other things that go into the equation. Things like what kind of leadership and management is most conducive to innovation. I can tell you when I talk about commitment to innovation, this is what our scientists want to hear. They want to know they have a CEO who is committed to what they do. I think it matters a lot. I’m betting on them, and they know it. And I think it’s a good bet.

Eli Lilly CEO John Lechleiter

X: You made a reference earlier today about the pharma industry’s need to better communicate what it does to the broader public. But I have to challenge that, and bring up some of the major ethics problems this industry has had over the years, and which the public hears a lot about. Whether it’s hiding bad data, or bribing clinical researchers overseas to get good data, or pay-to-delay agreements with generic companies, tax evasion, off-label marketing, and on and on and on. My question to you is what are one or two things that the industry can do, that are legitimate things, that could restore some public confidence?

JL: First of all, transparency. We were the first company, in 2004, to post our clinical trial results online, whether they are positive or negative. Now everybody does that. It’s interesting to me that you don’t hear much anymore about concerns over clinical trial data not being shared. Or about negative results not being shared. It doesn’t mean, Shazam!, the problem goes away. But I think most people are reasonably assured now, through clinicaltrials.gov, and through other disclosure mechanisms, that the light in the room is on, and there is widespread knowledge of what trials have been started, which ones are running, and what the results are.

It’s interesting to me to think back 10-15 years ago, about all the reasons we didn’t want to share that information, and most of that revolved around concerns about proprietary information. We have shareholders to think of, and competitive issues to manage. It turns out that wasn’t such a problem. Transparency around clinical trials is something we have been able to manage, and we’ve been able to maintain necessary protection around the intellectual property that we need.

Secondly, we have to show we can be trusted. We need to recognize that some people’s view of pharma is going to be colored by past transgressions. People can point to a failure here or there, but in the long run we have shown we can be trusted partners, based on our behavior. We put in a state-of-the-art, robust, and effective program within Lilly to ensure it’s more than words. We have an assurance that all 35,000 people across the company who work for us understand how it is we do business, and how the way we do business reflects on who we are, and how we are seen by the public.

The other thing I was talking about before (during the WBBA conference) is about doing a better job over time, putting in understandable terms, what we do, how we do it, and why we do it. Our business is very complex. It doesn’t lend itself to sound bites. When you say to people it takes $1 billion to bring a medicine to the market, can I explain that in 15 seconds? It’s very difficult to do. It’s hard to talk about why intellectual property is important. Some will say it keeps medicines from being widely available in countries where people can’t afford to pay for them. There’s a great discussion around that. The answer is IP doesn’t preclude that automatically. But having those debates, and being out in public as I was here today, and being willing to engage on tough and sensitive topics is something all of our leaders and all our companies frankly need to be more engaged in.

X: You also spoke earlier about the need to modernize the FDA to help improve innovation. What do you have in mind specifically? … Next Page »

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The FDA has cleared the first commercial product from San Diego’s Tandem Diabetes Care, a wearable insulin pump, according to a statement today from the medical device startup. Tandem Diabetes says its “t:slim” insulin pump represents an advance in terms of practicality and ease of use for managing type 1 diabetes—particularly for people who manage their diabetes with multiple daily injections.

As I reported in August, when Tandem Diabetes raised $12 million in venture funding, the company applied for FDA clearance under 510(k), a section of the Food, Drug, and Cosmetic Act that allows the regulatory agency to determine if a medical device is equivalent to existing technology already cleared for use.

Tandem Diabetes says its insulin pump enables patients to get insulin continuously throughout the day using a catheter, instead of giving themselves periodic injections. In a seeming homage to Apple’s simplicity of design, the San Diego company also emphasizes the t:slim’s thin design—”the smallest insulin pump system currently available,” user-oriented features, and “vivid color touch screen.” The device also features an “eco-friendly rechargeable battery” and can be connected via a USB port to a Web application so users can upload as much as 90 days of insulin pump data or blood glucose meter data.

In its statement, the company says, “Of approximately 1.5 million people in the U.S. with type 1 diabetes, industry estimates indicate that only 20 to 30 percent use an insulin pump, despite clinical evidence that pump use can improve glycemic control and quality of life.”

A Tandem Diabetes spokeswoman declined to say how much venture capital the company has raised since it was founded in 2006. By my reckoning, it is at least $77.3 million. The company’s investors include Delphi Ventures, Domain Associates, HLM Venture Partners, Second Technology Capital Investors, and TPG Biotech.

Tandem Diabetes is entering a market where many insulin pump makers already are established, including Minneapolis-based Medtronic; Bedford, MA-based Insulet; Switzerland’s Roche; New Brunswick, NJ-based Johnson & Johnson; South Korea’s Sooil; and Japan’s Nipro.

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When Ashleigh Palmer joined Boonton, NJ-based biotech company Unigene Laboratories as CEO in mid-2010, he faced a turnaround challenge that others might have considered way too daunting. The 30-year-old company was struggling to make money from a disjointed set of assets, which included a promising but, in Palmer’s view, under-marketed technology that could be used to turn injectable peptides—or protein-based drugs—into easy-to-swallow pills. Unigene was in debt and in need of a rescue. Furthermore, says Palmer, it had been managed by the two scientist-founders, who were brothers. “There’s the first warning sign,” Palmer says. “Family and business often don’t go well together.”

Wall Street has yet to be convinced that Palmer has what it takes to turn around Unigene’s fortunes. Unigene (NASDAQ: UGNE), which went public in 1985, was delisted in 1999 and pretty much left for dead by investors. On November 9, Unigene announced a net loss of $7.2 million for the third quarter ended September 30, on $3.4 million in sales. The company’s revenues included royalties from a nasal spray it developed to treat the degenerative bone disease osteoporosis—a product that that Unigene licensed to Maple Grove, MN-based Upsher-Smith Laboratories but that hasn’t been selling well due to competition.

The stock, as usual, barely budged—edging down 2 percent to $1 after the earnings announcement.

Palmer has been doing his best to get investors to focus on the good news. In conjunction with its earnings announcement, Unigene announced positive Phase 2 trial results on an osteoporosis drug it is developing with European drug giant GlaxoSmithKline (NYSE: GSK). The drug is an oral form of parathyroid hormone (PTH), the protein that’s the basis of Eli Lilly’s blockbuster osteoporosis injection teriparatide (Forteo). In the trial, Unigene’s drug produced a statistically significant increase in bone mineral density in the lumbar spine—a measure used to predict fracture risk. It was the result the companies were hoping to see.

Wall Street’s reaction? Crickets.

Then, yesterday, the company announced that an osteoporosis drug it was manufacturing as part of a partnership with Novartis (NYSE: NVS), Danish drug developer Nordic Biosciences, and Cedar Knolls, NJ-based Emisphere performed poorly in a late-stage clinical trial. Unigene has already received $13.7 million out of $18.7 million in potential payments from Novartis under a 2004 licensing agreement, and Palmer said in a statement that the setback would make little difference to the company’s turnaround effort. Still, it was enough to knock Unigene’s stock down by a dime.

As far as Palmer is concerned, the company’s relationship with GSK is the key element of his turnaround plan. GSK first partnered with Unigene in 2002 with the intention of developing a synthetic, oral form of PTH. But the first generation product didn’t work, and GSK lost confidence in Unigene, Palmer says. So shortly after he joined the company, Palmer and his team went to GSK and presented new data on … Next Page »

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The price of shares at San Diego’s Gen-Probe, Amylin Pharmaceuticals, and Optimer were clipped for various reasons over the past week, but several local startups successfully raised capital. Our good news, bad news briefing begins here.

—Rempex Pharmaceuticals, a San Diego biopharmaceutical startup developing a new approach to antibiotics resistance, said it raised $67.5 million in Series B venture funding—bringing total funding for the company to $76 million since its founding less than five months ago. The startup is on a fast track, and plans to use the capital to accelerate the commercialization of its therapies for treating gram-negative bacterial infections. Rempex said it plans to file a new drug application for its first drug candidate in the second half of 2012. New investors Frazier Healthcare Ventures and Vivo Ventures joined existing investors SV Life Sciences, OrbiMed Advisors, and Adams Street Partners in the latest round.

—Cambridge, MA-based Vertex (NASDAQ: VRTX) has held the high ground in hepatitis C therapies since the FDA approved its protease inhibitor drug telaprevir (Incivek) last year. But two rivals are gaining ground. The price of Vertex shares have fallen with the rise of Alpharetta, GA-based Inhibitex (NASDAQ: INHX) and Princeton, NJ-based Pharmasset (NASDAQ: VRUS). Vertex, which has operations in San Diego, hit a 52-week high of $58.87 on May 12, but it has been trading around $31 in recent days.

—Adding to the competition in hepatitis C drugs, San Diego-based iTherX Pharmaceuticals raised almost $3.2 million to advance its development of a prophylactic treatment for Hepatitis C, according to a regulatory filing earlier this week. The startup said in March that its drug candidate TX-5061 appears to prevent the hepatitis C virus from entering liver cells, and has shown “potent preclinical antiviral activity against all HCV genotypes.” Former UCSD virologist Flossie Wong-Staal is a co-founder and chief scientific officer. The company raised $2.8M in 2010.

—San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) agreed to pay Eli Lilly more than $1.5 billion as it gradually reassumes responsibility for global commercialization of its best-selling diabetes drug in a deal that ends its 10-year partnership with Lilly. Under their agreement, which also ends litigation with Lilly, Amylin will take over sales of exenatide (Byetta) in the U.S. by the end of this month—and global sales of both Byetta and an experimental, extended release version (Bydureon) over the next two years. Amylin shares, which hit a 52-week high of $16.65 on Jan. 27, have been trading around $10 a share over the past few weeks.

—Xconomy east coast biotechnology editor Arlene Weintraub profiled PharmaSecure, a four-year-old startup in Lebanon, NH, with operations in San Diego, Michigan, and India. The company provides machines to drug-makers that print unique bar codes and serial numbers on drug packaging. PharmaSecure raised $3.9 million last month from Innovation Endeavors, Gray Ghost Ventures, Healthtech Capital, and angel investors. The Tech Coast Angels (TCA) participated in … Next Page »

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Merck (NYSE: MRK) outlined progress on several of the drugs in its pipeline today during its annual R&D and business briefing for Wall Street analysts and investors, which was held at the drug giant’s Whitehouse Station, NJ headquarters.

CEO Kenneth Frazier began the day by acknowledging that Wall Street has been impatient with the company’s progress in advancing novel drugs to market. Despite the fact that the company has won FDA approval for five new products this year—including boceprevir (Victrelis) to treat hepatits C—the company’s stock has been declining over the last six months, dropping from $36 in May to $33.80 yesterday. “We recognize we can’t ask you—our investors—to wait for us to achieve our long-term aspirations,” Frazier told the audience at R&D Day.  ”I want you to know we intend to perform in the short term.”

Merck’s R&D chief Peter Kim started by highlighting several drug candidates in Merck’s late-stage pipeline. Kim reviewed recent data on a range of drugs to treat such conditions as osteoporosis, atherosclerosis, and chronic insomnia. Kim vowed to submit eight new drugs to the FDA for approval in 2012 and 2013.

During R&D day, Merck outlined recent progress on six novel drug candidates, including two the company detailed for the first time. First is MK-3102, an oral drug to treat … Next Page »

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Merck veteran Keith Gottesdiener will become the new CEO of Boston-based Rhythm Pharmaceuticals, a Boston startup developing experimental drugs for the treatment of metabolic conditions such as obesity and diabetes, according to an announcement today.

Gottesdiener oversaw pivotal clinical trials as Merck’s former vice president and late-sage therapeutic group leader, and is joining Rhythm as it pushes two drug programs through clinical development. The biotech is navigating the crowded therapeutic field with two drug compounds it has licensed from the French biotech company Ipsen.

Rhythm’s compound RM-131 could enter a Phase 2 clinical trial early next year as a treatment for a complication of Type 1 and Type 2 diabetes called gastroparesis—a digestive disorder involving the abnormal emptying of the stomach. Rhythm is also aiming to file an FDA application by the end of this year to begin human testing of its compound for curbing food intake in severely obese populations who suffer from diabetes or are at risk of developing the disease.

Rhythm is backed by MPM Capital, New Enterprise Associates and Third Rock Ventures.

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San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN)) and Eli Lilly today called a cease-fire to litigation that began earlier this year, and outlined an agreement to end the alliance they formed in 2002 to commercialize exenatide (Byetta), Amylin’s diabetes drug. A replay of Amylin’s conference call with analysts about the deal is available here.

Amylin sued Lilly in federal court in May, alleging that Lilly had violated their agreement to develop and market exenatide after Lilly agreed to work with a new partner, Boehringer Ingelhiem, to commercialize linagliptin (Tradjenta), a competing diabetes drug.

The deal reflects just how much a drug development partnership with a Big Pharma is worth to a small biotech. Amylin agreed to take over the development and commercialization of exenatide, beginning with the U.S. market on Nov. 30, and to make a one-time, upfront payment of $250 million to Indianapolis, IN-based Lilly. Amylin also agreed to share 15 percent of its worldwide exenatide revenue until Amylin has made aggregate payments of $1.2 billion, plus accrued interest.

The deal makes no mention of a third party in the drug development partnership, Waltham, MA-based Alkermes (NASDAQ: ALKS). In an e-mail this morning Amylin spokeswoman Anne Erickson says, “Our relationship with Alkermes does not change because of today’s announcement.  Alkermes has provided the microsphere drug delivery technology for Bydureon and will receive a royalty on global sales.”

Under their agreement, Amylin will gradually assume responsibility for marketing exenatide as well as a long-lasting version of exenatide (Bydureon) in foreign markets over the next two years. The former partners agreed to work together, market-by-market, to make the transition, and Amylin agreed to pay Lilly as much as $60 million to ensure that Lilly won’t lose money on “exenatide-related activities” during the transition period.

Dan Bradbury

Just over a year ago, the U.S. Food and Drug Administration said the once-weekly version of exenatide required additional data to determine what effect, if any, the drug might have on a particular heartbeat arhythmia in patients enrolled in the the clinical trials. That data was collected and the new drug application was re-submitted to the FDA in July. If the one-injection-weekly version of exenatide fails to win FDA approval by June 30, 2014, the companies agreed that Amylin’s global revenue-sharing obligations will end, and Amylin will continue to pay Lilly a flat 8 percent of global net sales of all exenatide products.

In their joint statement, Amylin CEO Dan Bradbury says, “We anticipate working with one or more partners outside the U.S. in order to maximize the global potential of this innovative molecule and achieve greater operational flexibility and efficiency. This clarity of focus will provide us with an enhanced opportunity to increase shareholder value.”

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It was a meaty New England life sciences week, with clinical advances, new funding, CEO hires, and acquisitions headlines.

—Sanofi hired David Meeker as the new CEO of its Cambridge, MA-based Genzyme unit. Meeker, who got started at the company in 1994, will move into his new role on November 1 and will lead the rare diseases and multiple sclerosis divisions. Other Genzyme units have already been integrated into Sanofi’s global operations.

—My colleague Arlene took a closer look at Cambridge-based Rhythm Pharmaceuticals, a startup developing diabetes and obesity drugs. Rhythm is navigating a crowded but struggling drug space with licensed compounds from the French biotech company Ipsen.

—Lexington, MA-based Cubist Pharmaceuticals (NASDAQ: CBST) will acquire Adolor for $4.25 per share in cash ($190 million total), plus milestones for Adolor’s experimental drug for treating chronic opioid-induced constipation, ADL5945. That pushes the total value of the deal to $415 million. The transaction was made possible, Cubist says, when pharma giant GlaxoSmithKline (NYSE: GSK) dropped out of a co-promotion deal with Adolor (NASDAQ: ADLR) after their drug for accelerating healing after bowel surgery ran into safety issues and was only cleared for in-hospital use.

—Weston, MA-based Biogen Idec (NASDAQ: BIIB) met its goals in a second clinical trial of its first pill for multiple sclerosis. In the study, Biogen’s pill reduced MS flareups by 44 percent when patients took it twice a day, and by 51 percent when they took it three times a day. The company’s stock shot up 7.6 percent to $115.07 per share at 10:06 Eastern time after the news. Biogen also announced it would pay $45 million upfront to South San Francisco-based Portola Pharmaceuticals to collaborate on autoimmune disease drugs.

—Atreaon, a new Newton, MA-based biotech company, raised $8 million of a potential $20 million equity round, according to an SEC filing. And Watertown, MA-based Arsenal Medical, a developer of biomaterial-based treatments, said it was spinning out a new company called 480 Biomedical. It also announced it had raised $3 million and 480 had raised $15 million, from return Arsenal investors return investors Polaris Venture Partners, North Bridge Venture Partners, and Intersouth Partners. The new spinout will focus on developing scaffold and delivery technology for treating a form of peripheral vascular disease known as SFA occlusive disease.

—Cambridge-based BIND Biosciences and Watertown-based Selecta Biosciences each received $25 million from Rusnano, a $10 billion Russian federation fund focused on nanotechnology startups. Each company, which will establish Moscow subsidiaries, also took in another $22.25 million from new and existing investors.

—Cambridge-based Vertex Pharmaceuticals (NASDAQ: VRTX) announced revenues of $659 million for the quarter ended September 30, its first ever profitable quarter from its own product sales. (Vertex turned a profit once before due to a one-time milestone payment.) The $221 million ($1.02 a share) profit last quarter was drive in part by Vertex’s new FDA-approved drug telaprevir (Incivek) for patients with hepatitis C that was cleared by the FDA in May.

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Two Boston-area startups—both of which emanated from the lab of MIT bioengineer and entrepreneur Bob Langer—announced today that they secured $25 million a piece in funding from Rusnano, a $10 billion Russian Federation fund that supports nanotechnology startups. The money went to Watertown, MA-based Selecta Biosciences and Cambridge, MA-based BIND Biosciences. Each company also added $22.25 million from current and new investors. Total it all up and it’s a huge haul: $94.5 million in the two companies combined.

Rusnano was founded in March of this year and is owned by the Government of the Russian Federation. The organization’s mission is to co-invest in nanotech projects that it believes will offer substantial economic and social benefits to Russia. As part of the deal, BIND and Selecta will each establish subsidiaries in Moscow. “They’ll be able to leverage the scientific and technical expertise, the clinical resources, and even the manufacturing resources in Russia,” says Noubar Afeyan, CEO of Flagship Ventures, which was a founding investor in both BIND and Selecta. “We see it as a multi-pronged opportunity.”

The seeds for the Rusnano deal were planted about three years ago, when Afeyan met some of the professionals who would ultimately come to manage the Russian fund. At the time, Afeyan says, he was serving on the board of the Skolkovo School of Management in Moscow. He arranged for his Russian contacts to tour Langer’s lab at MIT, as well as other institutions working on nanotechnology. “They were impressed with the potential of nano-medicine, especially in cancer,” Afeyan says.

The nanotechnology at the heart of this deal originated at labs directed by Langer and by Omid Farokhzad, a professor at Harvard Medical School. BIND and Selecta are pursuing different applications for the invention—nanoparticles that can hone in on specific targets in the human body and deliver drugs to them without … Next Page »

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When Boston-based Rhythm Pharmaceuticals started up in 2010 with a plan to develop drugs to address diabetes and obesity, the biotech world was littered with companies struggling to make a mark in those disease areas. San Diego based Arena Pharmaceuticals was fighting to produce data for the FDA showing its obesity drug was safe. Phenomix, also based in San Diego, could no longer afford the FDA-mandated trials for its Type 2 diabetes drug and had to shut down. But the folks at MPM Capital, which started Rhythm by leading a $40 million Series A that closed in September 2010, were undeterred. They licensed two compounds from French biotech company Ipsen that had been tested extensively in animals. “The clarity of the efficacy and safety from those studies—the strength and consistency of the data—led us to believe we could clearly be best-in-class,” says Bart Henderson, co-founder and president of Rhythm.

Rhythm, which is also backed by New Enterprise Associates and Third Rock Ventures, is now completing Phase 1 human trials of its lead compound, RM-131, in patients with Type 2 diabetes. The drug is derived from ghrelin, which is commonly called “the hunger hormone.” Ghrelin is produced in the gut and regulates functions such as food consumption, nutrient absorption, and gastrointestinal motility—the movement of food through the digestive tract.

Several drug companies have tried targeting ghrelin to treat diseases that range from growth-hormone deficiency to muscle degeneration, with limited success. Rhythm is instead going after a common but largely untreated complication of both Type 1 and Type 2 diabetes called gastroparesis, a digestive disorder marked by an abnormal emptying of the stomach. Normally, ghrelin receptors in the gut prompt a well-synchronized handoff of food from the stomach to the rest of the digestive tract. “In diabetes, that process seems to be attenuated, so many patients complain of abdominal pain and bloating,” says Elizabeth Stoner, co-founder and chief development officer of Rhythm. “It causes their glucose control to go amiss, because they’re not really emptying the stomach as expected.”

According to figures Rhythm has collected, about a third of the 25.8 million people with diabetes in the U.S. suffer from gastroparesis, costing the economy $3.5 billion a year. The primary treatment, a generic drug called metoclopramide, can only be taken for a short time because of the risk that it could touch off a potentially dangerous muscle disorder.

If all goes well, Rhythm will start a Phase 2 gastroparesis study in early 2012, Stoner says. Henderson adds that because ghrelin is such an essential hormone, RM-131 could someday prove useful in a range of other diseases, including anorexia and cachexia, or wasting syndrome.

Rhythm’s second compound, RM-493, could address an equally broad population: severely obese people who suffer from diabetes or are at risk of developing it. RM-493 targets melanocortin type 4 receptor (MC4R), which when mutated, is estimated … Next Page »

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After Jill Milne and Michael Jirousek left their positions at Sirtris Pharmaceuticals in 2008, they decided to pursue a titillating but still largely unproven idea: that fighting inflammation might help control Type 2 diabetes. On October 5, their startup, Cambridge, MA-based Catabasis Pharmaceuticals, began to test that theory in humans for the first time, with the initiation of a clinical trial of the company’s lead drug, CAT-1004.

Catabasis created the drug by combining two well-known types of anti-inflammatory compounds: salicylate and omega-3 fatty acids, which are typically found in fish oil. While the founders don’t expect their drug will replace commonly used diabetes treatments such as metformin, they believe it could be an important add-on. Inflammation has been linked with insulin resistance and the spiraling complications of diabetes such as heart diseases and blindness. “Inflammation in Type 2 diabetes is one of the hottest areas being looked at today, because if you were able to safely and effectively target it, you would produce disease modification,” says Jirousek, chief scientific officer of Catabasis.

The company’s first study is designed to measure the safety of CAT-1004, as well as its “pharmacokinetics,” such as how its absorbed and distributed in the body. If all goes well, the company could initiate a Phase 2 study next year, says Joanne Donovan, Catabasis’ chief medical officer. Although the earliest studies will test CAT-1004 in isolation, later studies will likely include patients who are taking metformin and other therapies, but still don’t have their glucose under control, she says.

Catabasis raised $39.6 million last spring from SV Life Sciences, Clarus Ventures, Advanced Technology Ventures (ATV), and Medimmune Ventures. Milne, who is Catabasis’ CEO, says that’s enough to take CAT-1004 … Next Page »

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