San Diego’s Quidel, which signaled it would report better-than-expected quarterly results on Sept. 10, isn’t the only San Diego biomedical company to get a boost from worries about swine flu. At least four other companies with flu-related products or research programs also have seen their share prices surge since June 11, when World Health Organization Director-General Margaret Chan declared the H1N1 swine flu pandemic had begun. So does swine flu present a real opportunity for these companies?

Whether the investor reaction is warranted depends in part on the severity and spread of the swine flu, which right now is far and away the predominant flu virus circulating in the United States, according to the weekly flu update issued by the national Centers of Disease Control and Prevention. With the official Oct. 4 start of the flu season less than three weeks away, here is a quick look at some San Diego companies with a stake in swine flu.

Quidel flu test

—I’ll start with a recap of recent news from Quidel (NASDAQ: QDEL). The diagnostic-test maker said last week the government has granted a special marketing clearance that allows Quidel to revise the packaging inserts for its QuickVue rapid flu test to say the test can detect the H1N1 swine flu strain. But Quidel also said its test can’t differentiate between influenza subtypes, and the company hasn’t established exactly how well QuickVue performs in detecting the specific H1N1 virus.

In the previous week, Quidel, which laid off 10 percent of employees earlier this year, said it has been working seven days a week since April to meet demand from doctors and hospitals for its rapid flu test. Quidel’s shares have leaped 25 percent since …Next Page »

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While San Diego has seen a big decline in VC investments this year, it’s nice to know that Domain Associates, one of the region’s most-active life sciences VCs, has raised a new fund. We’ve got the rundown on that and more news of interest to the life sciences community.

—San Diego’s life sciences community got some encouraging news earlier this week when the venture capital firm Domain Associates said it has closed Domain Partners VIII, a $500 million venture capital fund devoted exclusively to the life sciences industry. While Domain is based in Princeton, NJ, the firm maintains an office in San Diego, and many of its investments are in California.

—Seattle’s Bonnie Ramsey first learned of a cystic fibrosis drug under development by San Diego’s Aurora Biosciences nine years ago, when she was working for the Cystic Fibrosis Foundation’s Therapeutic Development Network. Aurora was later acquired by Vertex Pharmaceuticals (NASDAQ: VRTX), and now the Cambridge, MA, biotech has advanced development of Aurora’s CF drug—now known as VX-770—to the final stage of clinical trials. Luke talked at length with Ramsey, who is a clinical researcher affiliated with Seattle Children’s Hospital, and the University of Washington.

—How long should it take a company’s reconstituted board of directors to elect a new chairman? It’s taken more than two months at San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN), which was subjected to a proxy fight this spring. That’s taxing the patience of Rick Barry, the founder and portfolio manager of Eastbourne Capital Management. Barry, whose firm holds a 12.5 percent stake in Amylin and has been pushing for change at the diabetes drug specialist, told me he wants the new chairman to be chosen from one of the four newly elected directors to the company’s 12-person board.

—SpectraScience (OTCBB: [[ticker: SCIE]]), a San Diego-based maker of optical biopsy technology used to detect cancerous tissue, has raised $930,000 of a planned $5 million investment round among individual investors. The medical diagnostics company plans to use the capital to expand its sales and distribution network for equipment it has developed to search for telltale signs of cancer.

——The National Institute of Neurological Disorders and Stroke has awarded a $3.3 million grant to privately held Ichor Medical Systems of San Diego for development of a DNA vaccine for Alzheimer’s disease. The company makes it easier for cells to absorb its DNA vaccines by using an electroporation delivery system that creates temporary pores in cell membranes.

—Sequenom (NASDAQ: SQNM), the San Diego biotech developing DNA-based diagnostic tests, has maintained radio silence since it first disclosed three months ago it had uncovered R&D test data was mishandled for its much-anticipated genetic test for Down syndrome. In a recent statement, Sequenom says the company is no longer relying on previously announced test data and results, but it’s unclear if that means the company’s planned introduction is slipping further behind schedule. Sequenom had planned to introduce its SEQureDx test in June.

—Avanir Pharmaceuticals (NASDAQ: AVNR), a one-time San Diego biotech now based in Aliso Viejo, CA, said it hopes to submit results of its late-stage drug trial for treating an unusual neurological disorder to the FDA in the first half of next year. The company said this week that its drug passed a final-stage clinical trial, designed to see whether it was effective in treating involuntary bouts of laughter, crying, and other emotional outbursts.

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Ichor Medical Systems, a privately held San Diego biotech, says it’s getting a $3.3 million grant award from the National Institute of Neurological Disorders and Stroke to develop a vaccine for Alzheimer’s disease. Using an electroporation delivery system that creates temporary pores in cell membranes, Ichor has been developing DNA vaccines and drugs for treating an array of diseases, including influenca, hepatitis, HIV, melanoma, and malaria.

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It might be the dog days of summer, but San Diego’s life sciences companies kept up a busy flow of cool news over the past week. Get your update here.

—Isis Pharmaceuticals, the Carlsbad, CA, biotech that specializes in so-called antisense technology, is getting ready to test a new treatment later this year for patients with an aggressive form of amyotrophic lateral sclerosis (ALS), or Lou Gehrig’s disease. Isis (NASDAQ: ISIS) is planning the first clinical trial of a treatment known as ISIS-SODRIX, a drug designed to shut down the genetic RNA machinery that enables the production of disease-causing proteins. Luke reported the treatment also could pioneer a new way of delivering antisense drugs for a variety of neurological disorders.

—San Diego’s TorreyPines Therapeutics (NASDAQ: TPTX) has agreed to a reverse merger with Novato, CA-based Raptor Pharmaceuticals. To pull off the deal, however, TorreyPines must get its shareholders to vote to approve the deal. That sounds easy enough, but TorreyPines was unable to muster enough shareholder votes in July to approve a resolution to dissolve the company.

—A Boston-area researcher said a new drug developed by San Diego’s BrainCells Inc. could someday prove effective in treating depression. The drug known as BCI-952, which combines buspirone and melatonin, was not expected to work. But it’s getting a second look after Dr. Maurizio Fava, of Massachusetts General Hospital, presented promising results in a clinical trial of 142 patients diagnosed with major depression.

—San Diego’s La Jolla Pharmaceuticals (NASDAQ: LJPC) plans to seek shareholder approval for a liquidation plan. As Denise reported, the company disclosed in a recent SEC filing that it has discharged substantially all of its obligations to creditors and is working to satisfy those that remain. The biotech also said it has settled a lawsuit with former partner BioMarin Pharmaceuticals (NASDAQ: BMRN) of Novato, CA.

—San Diego’s Inovio Biomedical (AMEX: INO) has raised $30 million from the direct sale of 11.1 million shares and 2.8 million warrants to institutional investors. Inovio is focused on the development of vaccines to prevent or treat cancers and chronic infectious diseases. The company’s delivery solutions are based on electroporation, which uses brief, controlled electrical pulses to create temporary pores in cell membranes, which makes it easier for cells to take in a useful biopharmaceutical.

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Inovio Biomedical (AMEX: INO), a San Diego company developing DNA-based vaccines against cervical cancer and other diseases, has raised $30 million from the direct sale of 11.1 million shares and 2.8 million warrants to institutional investors. Proceeds to the company will total $28.5 million after fees and other expenses.

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We had some good news, mixed news, and odd news about San Diego’s life sciences companies over the past week. Read on for our full spectrum of coverage.

—San Diego’s Intellikine said in a recent regulatory filing that it had raised $16 million in venture capital, and plans to raise an additional $22.5 million. But that was only part of the story. The startup biotech, which is developing a new class of cancer drugs, said in a statement yesterday it actually has closed on $28.5 million in the current venture round, and up to $22.5 million can be accessed, depending on Intellikine’s ability to meet certain performance goals. The company also identified the four new investors who participated in the round: Novartis Bioventures, which is lead investor in the current round; Biogen Idec (NASDAQ: BIIB); FinTech Global Capital; and U.S. Venture Partners. Three existing investors also put money in: Sofinnova Ventures, Abingworth Management, and CMEA Ventures.

—When an FDA advisory panel recently recommended new restrictions on the pain reliever acetaminophen, Luke checked in with San Diego’s Cadence Pharmaceuticals to see how that would affect its development of Acetavance—the first intravenous form of acetaminophen. Cadence CEO Ted Schroeder said it’s not a concern, however, because clinical trials showed Acetavance the intravenous treatment provided effective pain relief at lower doses than the levels that raised safety concerns for the FDA panel. Cadence, which is awaiting FDA approval for the pain reliever, plans to market it to hospitals as a safer alternative to narcotics for patients who can’t take oral medications.

—San Diego’s Somaxon Pharmaceuticals (Nasdaq:SOMX) says the FDA has accepted the company’s revised new drug application for its insomnia drug doxepin (Silenor). The biotech also raised about $6 million in a private stock placement, which should be enough to carry it through the next 12 months.

—San Diego’s Vical (NASDAQ:VICL), which is developing DNA-based vaccines, said it’s encouraged by early results from a mid-stage trial of a vaccine it’s developing for cytomegalovirus. But Vical said complete results from the study won’t be done until early 2010.

—San Diego’s Lpath (OTC:LPTN), which is developing antibody drugs for cancer, told Denise the dismissal of its outside auditor was an unfortunate case of bad timing. A spokesman for Lpath explained that the company decided to change accounting firms some time ago, but Lpath didn’t have a replacement auditor lined up before proxy ballots were printed. So Lpath asked shareholders at its June 24 annual meeting to vote to approve the retention of LevitZacks—then dismissed the firm five days later.

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Vical (NASDAQ:VICL) says early results from a mid-stage trial of its cytomegalovirus vaccine look promising. The San Diego-based company says that at four months, 30 percent of treated patients had infections compared to 50 percent in the untreated group. Viral load measurements and other data all favor the vaccinated group, according to Vical, which did not provide a statistical analysis of the results. Although complete results from the study are due in early 2010, Vical says it is encouraged enough to plan its late-stage trial of the vaccine and talk with potential development partners. But investors seem unimpressed. Vical shares dipped 23 cents, or almost 9 percent, to $2.44 in afternoon trading.

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We had a mixed bag of bad and good news from the San Diego life sciences industry this week heading into the holiday weekend.

—At least 11 shareholder lawsuits have been filed against San Diego’s Sequenom (NASDAQ: SQNM) since the medical diagnostics company disclosed on April 29 that four employees were suspended for “mishandling” research data supporting a noninvasive prenatal test for Down syndrome. (A Sequenom spokesman told me last night the four employess are still suspended). The SEC also has launched an investigation into the mishandled research data that goes as far back as June 2008, according to regulatory filing from Sequenom earlier this week.

—Some documents filed by Hayward, CA-based Questcor (NASDAQ: QCOR) show that it is the source of an experimental drug now under development by stealthy San Diego biotech Evoke Pharma for treating gastroparesis, a serious digestive ailment. Questcor stopped its development of metoclopramide, which has significant side-effects, in mid-2001, when British drugmaker Shire Pharmaceuticals withdrew from their drug development partnership.

—After raising more than $47,000, a cancer diagnostics startup founded by UC San Diego grad student Raj Krishnan, was one of 16 finalists this week in a global business plan competition sponsored by Cisco Systems and the Draper Fisher Jurvetson venture capital firm. Alas, the top prize—$250,000 in investment capital—was awarded to a team from the University of Virginia who founded Husk Power Systems, a startup developing miniature power plants for rural India.

—San Diego’s Vical (NASDAQ: VICL) says the DNA vaccine it quickly developed for the H1N1 Swine Flu produced “robust immune responses” in animal tests. While the U.S. Navy has supported Vical’s work so far, the company has not been successful in landing additional government funding needed to move to the next stage of vaccine development.

—San Diego respiratory drug developer Amira Pharmaceuticals reported encouraging results from animal tests of its experimental drug for reducing fibrotic lung scarring in mice with pulmonary fibrosis. The biotech hopes to begin human tests of its oral medication during the first half of next year. Andrew Tager, a pulmonologist at Massachusetts General Hospital and adviser to Amira, told Denise that the drug also shows promise against other fibrotic conditions, such as cirrhosis of the liver and some forms of kidney disease.

—Illumina (NASDAQ: ILMN), the San Diego-based maker of genetic analysis tools, said its second quarter sales fell short of the company’s forecasts. It generated about $161 million in sales during the quarter, compared with the expected range of $168 million to $173 million.

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An experimental swine flu vaccine from San Diego’s Vical (NASDAQ: VICL) produced “robust immune responses” in animal tests, the company reports. Vical says it can proceed to large-scale manufacturing and human tests if it receives funding. Getting regulatory approval of the prototype vaccine is another matter. Nevertheless, the company’s shares surged 50 cents, or more than 20 percent, to close at $2.70 in Nasdaq trading that was 14 times Vical’s recent average daily volume.

The biotech says at least 75 percent of mice and rabbits reached or exceeded the protection threshold after a single dose. All animals achieved or surpassed the threshold after two doses. Vical is developing its vaccine under an agreement with the Navy.

Vical produced its DNA-based vaccine after receiving a swine flu sample from the Centers for Disease Control and Prevention on April 30. The vaccine was produced on May 11 and animal tests began May 15. CEO Vijay Samant noted in a statement that Vical was ahead of conventional vaccine developers, which are still working on their initial supplies of swine flu vaccine. Flu vaccine is conventionally made in chicken eggs.

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Vical, (NASDAQ: VICL) the San Diego biotech developing DNA vaccines for cancer and infectious disease, says it has received a $1.5 million milestone payment from Merck for its early stage development of a cancer vaccine based on Vical’s technology. In a statement, Vical CEO Vijay Samant says, “We have leveraged our technologies through license agreements for the development of cancer vaccines and gene-based angiogenesis for cardiovascular diseases.” Vical, which was profiled recently by Denise, said last week it had reached milestones in its own development of RapidResponse, a platform intended to produce millions of doses of vaccines in a few days to fight pandemic diseases.

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