San Diego’s Elevation Pharmaceuticals says today it’s raised $30 million in Series B funding, which is expected to carry the startup through its mid-stage trials for a new aerosol drug for treating chronic obstructive pulmonary disease (COPD). The fresh round was led by Denmark’s Novo Ventures life sciences fund, which keeps an office in San Francisco, and was joined by previous investors Canaan Partners, TPG Biotech, Care Capital, and Mesa Verde Venture Partners.

Just a few months ago, Elevation said it had received $17 million that represented the second tranche in a $30 million Series A round of funding that the company disclosed in early 2010.

Novo Ventures’ Heath Lukatch, a San Francisco-based partner who is joining Elevation’s board, tells me Novo led the current round after begging off the deal when the life sciences startup was raising its Series A funding in 2009. At that time, Elevation had run “a very small trial” of its drug candidate, a long-acting bronchodilator, “that was suggestive of efficacy,” Lukatch says.

Since then, Lukatch says the three-year-old startup has minimized the risks that loomed in his mind a couple of years ago. “They have run a larger trial—that was the biggest point in terms of ‘de-risking’ the deal,” he says. “They were able to hit their costs, and meet their development milestones.”

Lukatch says he also felt reassured by moves the company made recently to beef up its leadership. Elevation announced in September that it had filled two newly created positions with a couple of veteran pharmaceutical executives: Former Zelos Therapeutics President Jaisim Shah was named as a senior vice president and Chief Business Officer, and Pravin Soni, who previously oversaw development of a new inhalable drug delivery system, was named as senior vice president and chief technical officer.

Elevation says its lead drug candidate, designated EP-101, is being developed with an aerosol delivery device developed by PARI Pharma to atomize a liquid drug into a fine mist.

Novo’s Lukatch says Elevation has completed enrollment of a multi-center mid-stage clinical trial to evaluate EP-101 in patients with moderate-to-severe chronic obstructive pulmonary disease (COPD), an umbrella term for emphysema and chronic bronchitis. Smoking often causes COPD.

Lukatch says the $30 million Series B round, which also will be divided into tranches, is sufficient to complete that study as well as a second mid-stage trial planned for later this year to determine the optimal dosage and dosing regimen for late-stage studies.

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PneumRx, a Mountain View, CA-based maker of a medical device that restores elastic recoil in the damaged lung tissue of patients with emphysema, said today that it has raised $33 million in working capital from European venture firms Forbion Capital Partners and Endeavour Vision. The round was also joined by existing investors Adams Street Partners, Alta Partners, Leader Ventures, Silicon Valley Bank, Spray Venture Partners, and Telegraph Hill Partners, as well as an unnamed strategic corporate partner. The company said it plans to use the funds to commercialize the device in Europe and to conduct a pivotal clinical trial to gather data for FDA approval.

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Pearl Therapeutics bagged a whopping $69 million venture round last month, and now it’s pretty clear why.

The Redwood City, CA-based biotech company is reporting clinical trial results today that show its inhalable drug for chronic obstructive pulmonary disease worked better than standard Tiotropium (Spiriva), a $3 billion annual seller for Pfizer and Boehringer Ingelheim. The Pearl Therapeutics product, which uses a combination of two treatments in a standard inhaler, was about 50 percent more effective than other therapies it was compared against in a study of 118 patients with moderate to very severe chronic obstructive pulmonary disease, says Pearl CEO Howard Rosen. The difference was highly statistically significant, but Pearl is saving most of the important detailed results for a scientific meeting and peer-reviewed publication in 2011.

“Being able to increase lung function 10-15 percent can be difference between sitting around all day versus going to work and doing normal activities,” Rosen says. “This is as good as, or better than, what we had hoped for.”

Pearl is racing to be one of the new leaders in field of developing drugs against chronic obstructive pulmonary disease, an umbrella term for emphysema and chronic bronchitis, which is usually brought on by smoking. The disease is now the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation. Emphysema alone is estimated to cost the U.S. health system an estimated $5 billion to $9 billion a year. Treatments on the market today, like Spiriva, are only designed to treat symptoms and aren’t really able to alter the course of the disease.

Pearl made a big splash last month when it scored the large venture round from Vatera Healthcare Partners, Clarus Ventures, New Leaf Ventures, and 5AM Ventures. Those groups rallied behind its concept of creating what’s known as a LAMA/LABA combination, which essentially creates a simple inhalable formulation of two drugs that have two different ways of working to clear up constricted airways. Specifically, the company’s lead candidate combines glycopyrrolate with formoterol in a product that’s dubbed PT-003.

Anytime a $3 billion drug like Spiriva comes along in such a broad potential market for a life-threatening condition like chronic obstructive pulmonary disease (COPD), you know every Big Pharma company has its eye on competing for a piece of the market. It’s true in this case, where GlaxoSmithKline has … Next Page »

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Uptake Medical has closed a financing round worth $17.5 million. The Seattle-based company says it will use the money to get clearance to start selling a device to treat emphysema in Europe, to start marketing it outside the U.S., and to pursue FDA approval.

The Series B financing was led by Maverick Capital, and included Uptake’s existing investors: GBS Venture Partners, Onset Ventures, WRF Capital, Arboretum Ventures and Affinity Capital. Uptake has now raised a  total of more than $30 million since it was founded in December 2004.

Uptake has captured interest because it is developing a new way of preventing air from getting trapped in damaged regions of the lungs of people with emphysema. Other companies, like Redmond, WA-based Spiration (recently acquired by Japan’s Olympus), have spent years trying to accomplish this with minimally invasive implantable devices, as an alternative to surgery. Uptake is pursuing a different way, using a catheter to deliver steam water vapor that scars and seals shut airways that lead to the bad part of the lung. This way, Uptake says, it can allow the remaining healthy lung to expand more fully and function more normally.

Emphysema, a disease that often strikes smokers and makes it difficult to breathe, costs the U.S. health system an estimated $5 to $9 billion a year, making treatments for the condition a huge potential market, Uptake says. An estimated 16 million people in the U.S. (mostly smokers) have what is called chronic obstructive pulmonary disease, COPD, an umbrella term for emphysema and chronic bronchitis. It is the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation.

“Annually hundreds of thousands of severe emphysema patients seek meaningful clinical treatment that is safe and effective only to be disappointed by a limited set of options,” said Eric Kim of Maverick Capital, in a company statement. Uptake’s technology “offers a much-needed solution to help those patients.”

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Seattle-based Uptake Medical has secured $1.2 million in a second closing of an equity financing, meaning it has raised a total of $4.6 million so far in a round that could be worth as much as $13.3 million if the company achieves certain milestones, says CEO King Nelson. The company is developing a minimally invasive technique for treating chronic lung diseases by using hot vapor to seal off damaged parts of lung so air doesn’t get trapped there. The company is starting larger trials to win clearance to start marketing its device in Europe.

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[Update: 1:55 pm, 09/30/09. See below] Spiration, the Redmond, WA-based maker of a device to treat deadly lung diseases like emphysema and chronic bronchitis, has raised $7 million in debt out of a $10 million financing, according to a regulatory filing.

The financing is coming entirely from Spiration’s partner in Europe and Japan, Olympus Medical Systems, according to Spiration CEO Rick Shea. News of the financing was first reported by TechFlash.

[Updated with company comment.] “It’s important to us because this further establishes our relationship with Olympus,” Shea says. “It’s at a point when money is tight, and partnerships are important.”

Spiration won a limited FDA approval last October to start selling its device to a small population of about 4,000 people in the U.S. who have prolonged air leaks after undergoing surgery to remove a diseased part of their lungs. The Spiration device, a tiny implantable valve that doctors use to block off air flow to a diseased region of the lung, is currently being tested in a rigorous trial of 250 patients that will determine whether it is good enough to be used for a much bigger percentage of the 300,000 U.S. patients with chronic obstructive pulmonary disease who might be candidates for the treatment. The market for treating these patients is worth at least $1 billion a year, Spiration has said.

Spiration is looking to complete enrollment in its pivotal clinical trial by the end of this year, Shea says. That study, which directly compares the company’s product to a sham procedure, will follow patients for another six months to see if they perform better on the experimental device. The company is still blinded to results of the study while it is still ongoing, Shea says. He wouldn’t say how long the money should last Spiration.

The company, which has about 50 employees, has raised about $97 million since it was founded in 1999. Its syndicate includes Three Arch Partners, New Enterprise Associates, Sprout Group, InterWest Partners, Investor Growth Capital, GE Capital, Saints Capital, and Japan-based Olympus. Spiration has had a partnership with Olympus since July 2008 to commercialize its IBV Valve System in Europe.

Competition has been following fast behind Spiration in its quest to come up with a minimally invasive alternative to lung surgery for patients with severe emphysema. One of the key technical people from the early days of Spiration, Robert Barry, has since moved on to a cross-town competitor in Seattle called Uptake Medical. Uptake, which raised $3.4 million out of a $13 million equity round earlier this month, uses a method that seals off damaged parts of the lung without leaving behind an implantable device. Uptake hasn’t yet advanced to the final stage of clinical trials.

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Uptake Medical, the Seattle-based developer of a minimally invasive device to treat chronic obstructive pulmonary disease, has raised $3.4 million out of a total equity offering worth $13.3 million, according to a regulatory filing. Uptake is developing a device that’s supposed to seal off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind. It is competing with Redmond, WA-based Spiration, among others. Uptake raised another $3.1 million in debt back in May, according to a regulatory filing.

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Uptake Medical, the Seattle-based company developing minimally invasive technology to treat emphysema, has raised $3.1 million in a debt financing, according to a regulatory filing. Uptake is developing a device that’s supposed to seal off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind. It is competing with Redmond, WA-based Spiration, among others. The latest round is in addition to the $3 million bridge financing the company raised for its clinical trials in December.

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Many life sciences shut down operations between Christmas and New Year’s Day, so obviously they need to cram a lot of work into weeks like the last one. Here’s a rundown of the big news.

—Amgen, the giant biotech with about 1,000 employees in Washington, went before an FDA advisory panel to make an unusual case. It wants permission to market its colorectal cancer drug for fewer patients, because data suggests it might work better in a subgroup of patients with a certain genetic profile. The FDA panel said the data’s not up to snuff, but more trials are ongoing to prove this point, so the story’s not over.

—Seattle-based VLST inked an important drug discovery partnership with Novo Nordisk, the Danish pharma company that is the world’s largest maker of insulin for diabetes. Under the deal, VLST gets $12 million in upfront payments and an equity investment, in exchange for granting Novo right of first refusal to develop some of its most promising drug candidates for autoimmune diseases. More milestone payments will flow to VLST if Novo opts in.

—The state’s Life Science Discovery Fund doled out another round of grants worth almost $19 million. This money will go toward vaccine research, improved delivery of biotech drugs into cells, helping resuscitate people with sudden cardiac arrest, and rural mental health services.

—OncoGenex Pharmaceuticals emerged from obscurity a couple weeks ago when it released data that its prostate cancer drug candidate prolonged lives in a clinical trial, and investors are catching on. The company, based in Vancouver, BC, and Bothell, WA, was the single best performer on the Nasdaq in the week ended Dec. 12.

—Seattle-based Northstar Neuroscience, a maker of an electrical stimulation device for severe depression, got a public dressing-down by RA Capital, a Boston-based hedge fund. RA argues that since investors value its cash balance more than its technology, it ought to just liquidate.

—Uptake Medical, a Seattle-based maker of a minimally invasive technique to treat emphysema, raised $3 million in venture capital to help it finish … Next Page »

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Maybe it’s because everyone is trying to get their deals announced before the holidays, but it was a busy week in the Northwest, with plenty of activity in mobile software, online media, and medical devices.

—Bellevue, WA-based BlueKai, an Internet marketing firm, raised $10.5 million in Series B funding, led by Waltham, MA-based Battery Ventures. Existing investor Redpoint Ventures also contributed to the round. BlueKai is creating a marketplace for online consumer data.

—Luke reported that Seattle-based Uptake Medical, a maker of medical devices, raised $3 million to carry out a pair of clinical trials for a technique to treat emphysema and other deadly lung-obstructing diseases. The capital was raised from all of Uptake’s previous investors, including Prism VentureWorks, Onset Ventures, and WRF Capital.

—Seattle-based mobile startup Zumobi teamed up with outdoor retailer REI to release a free software application, called the REI Snow Report, for getting instant … Next Page »

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Nine years after its founding, Spiration has gotten its first product cleared by the FDA for sale in the U.S. The Redmond, WA-based medical device maker said U.S. regulators approved its device for patients who suffer from prolonged air leaks after surgery to remove a diseased part of their lungs.

This is the first time the FDA has ever approved a minimally-invasive bronchial valve for the market, says Spiration CEO Rick Shea. The agency gave clearance for the device based on results from 58 patients, which demonstrated that the product is safe and may show benefit for a small patient population of less than 4,000 people in the U.S. The FDA cleared it for that segment of patients under what is known as a “Humanitarian Device Exemption” without having to wait for data from a 250-patient trial that’s expected to last another year, Shea says.

“It’s huge,” Shea says. “For a company like ours, a lot of them don’t ever get to the revenue stage. Now we’re at the revenue stage.”

The Spiration IBV Valve System consists of tiny valves that can be implanted in the airway via a catheter threaded down a patient’s windpipe; the valves block off air flow to the diseased lung, so air doesn’t get trapped there and the patient can better use other parts of the lung that still work. The device can be removed if necessary. It is being tested now in a randomized, placebo-controlled study of 250 patients with chronic obstructive pulmonary disease, a much larger potential market than the group of patients who suffer from prolonged air leaks after surgery. An estimated 16 million people in the U.S. (mostly smokers) have COPD.

The FDA noted in a statement that most air leaks heal on their own after surgery, but when they last longer than seven days, they can increase the length of hospital stays and require additional surgeries to repair. “This valve may ease post-operative recovery of patients undergoing certain kinds of lung surgery,” said Daniel Schultz, director of the FDA’s Center for Devices and Radiological Health, in a statement.

This wasn’t the only big news of the month for Spiration. Its partner in Europe, Olympus, began marketing the IBV Valve System in those markets this month, Shea says.

Spiration has been working closely with regulators on the FDA application for months, but it wasn’t exactly banking on getting this approval, since it’s just the third humanitarian exemption the agency has granted this year, Shea says. So Spiration’s management team needs to huddle over the next two weeks to work on its marketing and commercialization plans, he says. For now, the company plans to market the device on its own for use among as many as 4,000 patients, Shea says. Spiration has about 54 employees now, and will need to hire some additional marketing staff, he says.

The company should have enough capital to continue running the clinical trial in the bigger patient population, although it may need to raise more money for the commercial roll-out in that group, Shea says.

Spiration’s approval gives it the first-mover advantage with a minimally-invasive valve approach, ahead of Emphasys Medical of Redwood, City, CA, Broncus Technologies of Mountain View, CA, and Seattle-based Uptake Medical.

Shea said he’s been making a habit for the past several weeks, when he arrives at work in the morning, to ask Linda Rismondo, Spiration’s head of regulatory affairs, “Did we get approval today?” This morning, the answer was “You bet we did,” Shea related. The approval letter from the FDA was sitting there on the fax machine. It will be a much bigger deal if they get another letter like that in 2010 that says they can market broadly to patients with chronic obstructive pulmonary disease, but this should give Spiration a boost of cash flow that will make it easier to get there.

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Spiration can now say it has its first marketed product. The Redmond, WA-based medical device maker said today that its partner, Tokyo-based Olympus, has started selling its device for chronic obstructive pulmonary disease in Europe.

Spiration will manufacture the product, called the IBV Valve System, and Olympus will market it initially to select European physicians and then broaden distribution in coming months. The device consists of tiny valves that can be implanted in the airway via a catheter threaded down a patient’s windpipe; the valves block off air flow to the diseased lung, so air doesn’t get trapped there and the patient can better use other parts of the lung that still work. Financial terms of the partnership with Olympus aren’t being disclosed.

The opportunity is big, with an estimated 16 million people in the U.S. (mostly smokers) suffering from chronic obstructive pulmonary disease, as we wrote back in July. It is the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation. At least 300,000 patients in the U.S. are candidates for the valve implant, making the market worth at least $1 billion a year by almost any financial projection, said Richard Shea, Spiration’s CEO, when I interviewed him in July. The valve will compete with lung-volume-reduction surgery, in which diseased parts of lung are removed. The surgery leaves some patients with air leaks in the lungs afterwards, so Spiration product will be pitched as an alternative to avoid that complication.

“I am excited that this new treatment option is now available in Europe, where there is a significant unmet need for minimally invasive approaches to improving quality of life for people with emphysema,” said Vincent Ninane, of the St. Pierre Hospital in Brussels, Belgium, in a statement released by Spiration and Olympus.

Spiration, founded in 1999, doesn’t yet have the IBV Valve System approved by the FDA for sale in the U.S. The company has started enrolling patients in a randomized, placebo-controlled study of 250 patients, and should be done with that by March, Shea said in July. Patients will be followed for six months after the procedure is done, and success will be determined by both a CT scan to show improvement in the lungs, and a patient questionnaire to verify it. If the trial shows a benefit, the company could have the data it needs to apply for FDA approval later next year, Shea says.

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If a global flu pandemic strikes, public health officials might someday turn to a company emerging from stealth mode called Pulmatrix. The Lexington, MA-based biotech firm is gearing up for its next steps, hoping to show in clinical trials that its inhalable aerosols can prevent any number of viral and bacterial invaders from making people really sick, while also making it much less likely that patients will spread the bugs around.

I got the overview on the Pulmatrix technique from John Hanrahan, who was just hired away from Sepracor (NASDAQ: SEPR) to become the startup company’s chief medical officer. He has loads of experience with drugs for chronic respiratory diseases, having worked on the development of Brovana and Xopenex at Sepracor. He joins a well-known cast of players associated with Pulmatrix, including Robert Langer of MIT, David Edwards of Harvard University, and venture capitalists from Polaris Venture Partners and 5AM Ventures.

This is truly a technology that has big potential, if it’s half as good as the company thinks. Pulmatrix isn’t working on a conventional antiviral drug that kills a specific invader, or an antibiotic that can kill bacteria deep in the lungs. The Pulmatrix method should work for all sorts of pathogens, Hanrahan says. That’s because it takes positively-charged ion-based compounds, such as calcium and magnesium, made into an aerosol, that would be sprayed into the lungs. The idea is that the compounds will change the viscosity of mucus that lines the lungs, essentially making it stickier, so that it can diminish the penetration of bacteria and viruses in the lungs. That should also greatly diminish the production of disease-carrying particles that people breathe out when they are sick, which causes these bugs to spread, Hanrahan says.

“This has the potential for widespread application,” he says. “If you can decrease the transmission or severity of flu, even with episodic use, there’s a lot of upside potential here.”

Like anything in biotech, the proof is in the pudding. So far, Pulmatrix has results from four species of animals to support its claims, and has started an early-stage clinical trial to demonstrate safety. The company is still working on different delivery modes, such as a nebulizer (to deliver a mist to the lungs) that might require frequent dosing, or maybe a more convenient single-puff inhaler. Studies so far suggest that the treatment ought to be safe, and not make mucus so thick that it can’t be removed, which, if you need to clear your throat, can be bad.

The next step will be Phase II clinical trials next year to see what difference the inhaled drugs can make for the common adenovirus and influenza, Hanrahan says. If the company succeeds there, it could set its sights on fragile, elderly patients who are vulnerable to infections, like those with emphysema and chronic bronchitis, or younger people with cystic fibrosis. Of course, if it shows any degree of success in people with a treatment like this, Pulmatrix will go from stealth mode to high profile in a hurry.

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Spiration, a Redmond, WA-based maker of medical devices for lung diseases, said it signed a deal to allow Tokyo-based Olympus to distribute its minimally-invasive device for emphysema patients in Japan. Financial terms weren’t disclosed, although Olympus will pay for clinical trials needed in Japan, and file applications to regulators there, Spiration said. The two companies are already preparing to commercialize the device, called the IBV Valve System, in Europe this fall, as we discussed earlier this month.

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Not many innovations have come along lately for patients with emphysema, a deadly lung disease. There are inhalers, supplemental oxygen, and, if you’re in really bad shape, a risky surgery to cut out damaged lung tissue. Now two competing Seattle-area medical device companies are in the hunt to change the standard of care, with less invasive, and fundamentally different, techniques to help patients breathe better.

Spiration, a privately-held company in Redmond, WA, with 47 employees, has been working on emphysema products since 1999. It is joined in the race by Uptake Medical, a Seattle startup founded three years ago. Spiration’s lead product candidate works by threading a catheter down a patient’s windpipe, and implanting a few tiny valves that block off airways to the diseased lung, so air doesn’t get trapped there, and the patient can better use other parts of the lung that still work. Uptake, which is at an earlier stage of development, is using the same catheter-guided technique, but it delivers steam water vapor that scars and seals shut airways that lead to the bad part of the lung.

The market opportunity for a better treatment is huge. An estimated 16 million people in the U.S. (mostly smokers) have what is called chronic obstructive pulmonary disease, COPD, an umbrella term for emphysema and chronic bronchitis. It is the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation. Unlike heart disease or cancer, the death rate from COPD is climbing worldwide. At least 300,000 patients in the U.S. are candidates for the valve implant, making the market worth at least $1 billion a year by almost any financial projection, says Richard Shea, Spiration’s CEO.

“We are getting close here in the U.S.” Shea says. “We’re excited.”

Spiration’s technology is already approved in Europe, and will be marketed there in the fall by its partner, Tokyo-based Olympus, the maker of tiny cameras on bronchoscopes needed for the procedure. More work still needs to be done to get the FDA’s blessing in the U.S., however. Spiration has started enrolling patients in a randomized, placebo-controlled study of 250 patients, and should be done with that by March, Shea says. Patients will be followed for six months after the procedure is done, and success will be determined by both a CT scan to show improvement in the lungs, and a patient questionnaire to verify it. If the trial shows a benefit, the company could have the data it needs to apply for FDA approval later next year, Shea says.

At least two other companies are vying with Spiration to be the first to the U.S. market with a minimally-invasive device for emphysema: Emphasys Medical of Redwood City, CA, and Broncus Technologies of Mountain View, CA. Emphasys has completed its clinical trial, and is awaiting a public hearing in front of an FDA advisory panel that will be closely watched by all the competitors.

Uptake doesn’t really expect to grab the first-mover advantage. The company, founded by Robert Barry, formerly of Spiration, reported in May that early results from a small study of fewer than 20 patients in Australia were promising enough to prompt investment in further trials in Australia, Europe, and the U.S. The company’s CEO, King Nelson, said one of the procedure’s key advantages is that it is simple and easy enough for doctors to do in as little as 30 minutes.

“Our approach is focused on getting good lung volume reductions, and do it more safely, more quickly and more efficiently,” Nelson says.

I reached Nelson in Washington DC after a day of meeting with the FDA to talk about design of the company’s first clinical trial in the U.S. It will likely be a safety study of about 30 patients, and if it succeeds, then the company will file to do a pivotal study, he says. That will take more cash than the $9 million the company raised two years ago, so the company has just started raising a Series B round, Nelson says.

One of Uptake’s first-round investors, Josh Resnick of Needham, MA-based Prism VentureWorks, said he’s hopeful that Spiration and the other companies succeed in getting their products approved by FDA, and persuade insurers to pay for the groundbreaking procedures. Then, he expects a “second-generation” technique like Uptake’s to capture more of the market, because it will be quicker and easier for doctors to do.

“We are hoping that Spiration and those guys are successful and we’ll be a fast follower,” Resnick said.

Not so fast, says Spiration’s Shea. His company’s procedure is reversible, while Uptake’s isn’t, which could be an advantage for patients who may want the lung valves removed at a later date. It’s also difficult in general to get through clinical trials with a fragile, elderly patient population. “We view Uptake as a young company, we don’t view them as a strong competitor yet. They still have to prove their technology,” Shea says. “We’ve been at this a long time.”

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