Not many pharmaceutical executives can say with a straight face that if they are successful, they will really help millions of people live significantly longer and healthier lives around the world.

Julie Gerberding, the former director of the U.S. Centers for Disease Control and Prevention, has been in one of those rare positions for about the past 18 months as president of Merck’s vaccine unit. At Merck (NYSE: MRK), she has been learning the ins and outs of a $5-billion-a-year operation that makes 14 of the 17 vaccines the CDC recommends for children, and nine of the 10 recommended for adults. It would be an understatement to say this job carries a huge social responsibility, both to insure steady supplies of vaccines already on the market, and to develop new ones.

I met with Gerberding earlier this week while she was in Seattle for the Pacific Health Summit, an invitation-only gathering of health leaders in academia, industry, and government. She was there to discuss the next big challenges in the field of vaccines. Part of what brings Merck, Pfizer, GlaxoSmithKline, and other major vaccine companies into the conversation is the realization that vaccines are no longer just a low-margin, high-liability corporate backwater. New technologies propelled the vaccine market to more than $22 billion in sales in 2009, and projections are that it will keep growing by 10 percent a year over the next five years, according to Kalorama Information, a market research firm. For a diversified company like Merck, with $46 billion in total sales in 2010, vaccines are a sizable business segment.

Here’s what Gerberding had to say about the opportunities she sees in the vaccine business, plus a bit about what she’s learned in making the switch from the public sector to the private sector. The interview is edited for length and clarity as always.

Xconomy: Can you talk a little about what kind of scope you have in Merck Vaccines, in terms of people, facilities, and the R&D portfolio?

Julie Gerberding: Vaccines have been in Merck’s DNA forever. We have a tradition of being the scientific source of many of today’s modern vaccines. It’s been a core part of the company, and it will remain a core part of the company. It’s just one of those things Merck has been committed to, and it’s one of the ways we bring value to people. We have a very strong pediatric portfolio, and one of our unique strengths is our adult portfolio. We have a very broad spectrum of vaccines available for adults, either manufactured by Merck or licensed for sale by Merck.

Julie Gerberding

Where we haven’t traditionally focused is in the global environment. The company was very focused in the U.S. and Europe, and now in the last few years has initiated a very broad expansion into new markets. I don’t refer to them as emerging markets. They are new markets that have certainly emerged. We see tremendous unmet need, and tremendous opportunity for Merck to leverage our innovations in ways that bring these products to the kids who need them most.

X: You occasionally hear market research reports say the vaccine market is poised to grow, and build on the success of Gardasil and Pfizer’s pneumococcal vaccine (Prevnar). Do you see that phenomenon happening? Are vaccines taking on increasing importance, or a higher priority, within Merck? And if so, is there a tension between building up a market with high-value vaccines, and some of what these people here [health officials] are looking for, which is low-priced vaccines that are used for a lot of people in the developing world?

JG: It’s very synergistic. No matter what market you are in, we want to deliver value at the best possible price. The fastest way to achieve a price improvement is through volume. So, the more … Next Page »

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[Updated. 5:15 Eastern time, 01/03/11. See editor's note.] Genocea Biosciences has found some new investors as well as new executives. The Cambridge, MA-based vaccine discovery and development firm has raised $35 million in a Series B funding round, according to a press release. And the company has recently seen some changes in its top executive positions.

The new financing round will help the Harvard spinout to fund development of its lead vaccine for herpes, which is now in preclinical development. New backers in the deal include Johnson & Johnson Development Corporation, MP Healthcare Venture Management, and Skyline Ventures, according to the press release. They join Genocea’s previous venture benefactors Auriga Partners, Cycad Group, Lux Capital Management, Morningside Ventures, Polaris Venture Partners, and SR One. SR One, a venture unit of drug giant GlaxoSmithKline, led Genocea’s $23 million Series A round in February 2009. The firm says it has now raised $61 million.

A Genocea representative says that Staph Bakali, a biotech and vaccine industry veteran, ended his tenure as the firm’s CEO in September, and is serving on the board of directors. Genocea has also added Seth Hetherington, a former senior vice president of the Research Triangle Park, NC-based biotech Icagen (NASDAQ:ICGN), as its chief medical officer. Hetherington is also a former employee of Glaxo. (Editor’s note: This story originally cited outdated information form Genocea’s website this morning that said Russell Greig was serving as the firm’s acting CEO. He is no longer acting CEO, the company says.)

In these lean times for biotech startups, Genocea has managed to generate a lot of investments without having a drug in human testing. The firm has turned many heads in the drug industry with its technology for rapid development of vaccine candidates. Vaccines have been enjoying an upswing in recent years because of global demand for staples of the business such as flu vaccine as well as sales of newer products like Whitehouse Station, NJ-based drug powerhouse Merck’s (NYSE:MRK) human papillomavirus vaccine Gardasil. In 2009, preventive vaccine sales reached $22.1 billion, according to the research firm Kalorama Information.

My colleague Luke Timmerman has written in greater depth on Genocea’s vaccine antigen discovery technology, which has generated potential vaccines for herpes, malaria, chlamydia, and other diseases.

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[Updated: 11:05 am Pacific] Scientists have been dreaming for a century about therapies that actively harness the power of the body’s immune system to kill cancer cells like an invading virus or bacteria. Today, Seattle-based Dendreon has made history by winning the first-ever FDA approval for this kind of cancer-fighter. Shares climbed 15 percent to $45.50 after the news broke.

The good news for Dendreon (NASDAQ: DNDN) came today when it received clearance from the FDA to start selling sipuleucel-T (Provenge) to men in the U.S. with terminal prostate cancer that has spread, even after prior rounds of standard hormone-deprivation therapy, according to a statement on the FDA website. The agency gave the green light after Dendreon showed in a trial of 512 men that patients lived a median time of 25.8 months if they got Provenge, compared to 21.7 months for those on a placebo. Patients on the drug had minimal side effects of fever and chills that lasted a couple days.

The FDA’s decision will have far-reaching impact for years. The drug is the first marketed product for Dendreon, which has piled up a deficit of more than $700 million in its 18-year development quest. The product is forecasted by analysts to exceed $1 billion in U.S. sales after a couple years on the market. Dendreon could morph into the regional anchor Seattle’s biotech community has lacked since Immunex was acquired by Amgen in 2002. For the 27,000 men in the U.S. who die each year from prostate cancer, the drug represents some hope for a longer life, and a higher quality of life alternative to chemotherapy. And for researchers, it offers new possibilities for a mode of treatment beyond surgery, chemotherapy, radiation, and targeted biotech pills and antibodies that must be taken chronically.

“This is a huge advance,” said Dr. John Corman, a urologist at Virginia Mason Medical Center in Seattle, and an investigator in Provenge clinical trials for eight years. “This is the first immunotherapy agent that’s been shown to provide a survival benefit for prostate cancer patients. And it’s a completely new class of therapy that provides remarkable opportunities for R&D.”

[Update with company statement.] Dendreon said the drug will be made available initially at about 50 medical centers in the U.S. The company didn’t say in its statement today how much it will charge for the drug, although it plans to hold a conference call with analysts and investors at 2:30 pm Eastern/11:30 am Pacific.

“The approval of Provenge is a significant step towards realizing our mission of transforming the lives of patients with cancer, and it also marks Dendreon’s transformation into a commercial enterprise,” CEO Mitchell Gold said in the statement.

While today’s FDA approval is groundbreaking, it’s worth being precise about what this means, and what it doesn’t. Treatments like Dendreon’s are most accurately referred to as “active immunotherapies,” although scientists sometimes loosely call them “cancer vaccines” in the media. Just to be clear, Dendreon’s product is a treatment that people get after they’ve already been diagnosed with prostate cancer, so it isn’t a vaccine in the traditional sense that prevents people from getting a disease. Because Dendreon’s treatment “teaches” the immune system to recognize certain cancer cells and fight them on its own, for months or even years, it’s considered an “active” immunotherapy. That’s also different from what researchers sometimes call “passive” immunotherapy. It’s fair to consider an intravenous-delivered antibody drug, like Roche’s rituximab (Rituxan), a “passive” immunotherapy because it works in part by stimulating the immune system to fight cancer cells, at least while the drug is active in the blood. It’s also fair to call Merck’s human papillomavirus vaccine (Gardasil) a cancer vaccine, because it prevents women from getting infected with a virus known to cause cervical cancer.

Whatever you choose to call Provenge, the anticipation of today’s FDA approval has already transformed Dendreon. A few weeks before the defining clinical trial data arrived in April 2009, the company’s stock was trading around $2, cash was running low, and it had about 200 employees. After the data arrived and was presented at a urology meeting in Chicago, Dendreon raised $630 million from investors, announced plans to grow to 600 employees, added two more drug factories, and saw its stock climb to more than $40 a share.

Plenty of questions remain about … Next Page »

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My list is brief, but the innovations that stood out for me in the past decade were first-in-class drugs that can treat or prevent major unmet medical needs.

1. Genentech’s ranibizumab (Lucentis)—The first treatment of its kind for the “wet” form of macular degeneration. It has high efficacy rates and low side effects, has saved vision for people with this common disease.

2. Novartis’ imatinib (Gleevec)—An effective and safe treatment for various leukemia syndromes, saving countless lives. It set off massive searches in the industry for kinase inhibitors like it.

3. Merck’s sitagliptin (Januvia)—The first-in-class DPP4 inhibitor for diabetes. It may be the last new mechanism for diabetes for a while.

4. Genentech and OSI Pharmaceuticals’ (erlotinib) Tarceva—An effective non-chemo approach to solid tumors.

5. Merck’s human papillomavirus vaccine (Gardasil)—The first vaccine for the prevention of cervical cancer caused by HPV.

[Editor's Note: As the decade comes to an end, we've asked Xconomists and other technology leaders around the country to identify the top innovations they've seen in their fields the past 10 years, or predict the top disruptive technologies that will impact the next decade.]

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[Updated, 3:15 pm Sept. 11 with added "burst" from Immune Design.]

Seattle biotech has taken its share of lumps lately, but beyond the next quarter or next year, what kind of life sciences potential really exists here in the Northwest? Over the next 20 years, will this area have grown as a world leader in university and corporate research, venture financing, and entrepreneurial activity in the life sciences—and, if so, in what fields? Those are the questions Xconomy is seeking to answer at our next event here in Seattle on Oct. 19.

I’m excited to announce today that we have assembled a panel of some of the most accomplished life sciences entrepreneurs and visionaries in the world, all of whom happen to live here in Seattle. They are: Leroy Hood, president of the Institute for Systems Biology; Steve Gillis of Arch Venture Partners; Ben Shapiro, former executive vice president at Merck and now a partner with Boston-based PureTech Ventures; and Stephen Friend, co-founder and CEO of Sage Bionetworks and formerly of both Merck and Rosetta Inpharmatics.

It’s hard to imagine a group more qualified to speak on the region’s future. Hood is a legendary entrepreneur who has co-founded 13 companies, including Amgen, and is best known for inventing high-speed gene sequencing machines that made the Human Genome Project possible. Gillis co-founded Seattle-based Immunex, where he led the team that created a breakthrough for autoimmune disease that now generates more than $7 billion a year in worldwide sales. Shapiro, a former chairman of the University of Washington’s biochemistry department, was executive vice president of basic research at Merck during its 1990s heyday when it did the early development of Gardasil, the vaccine to prevent cervical cancer. And Friend was co-founder and CEO of Rosetta Inpharmatics before that company was sold to Merck for $620 million, and he stayed with Merck for eight years to integrate its personalized medicine approach through the company’s global operations.

Chris Rivera, the president of the Washington Biotechnology & Biomedical Association, will lead off with introductory remarks about the WBBA’s effort to secure more support for the local biotech cluster. The star-studded panel will be moderated by Carl Weissman, CEO of Accelerator and a managing director of OVP Venture Partners.

After that discussion, Bob Nelsen, co-founder of Arch Venture Partners, will introduce startups from the Seattle area with the potential to transform their respective fields of biotech—Calistoga Pharmaceuticals, VLST, and Immune Design. Executives from those companies will deliver “bursts,” or brief introductions of their work, before the networking portion of the evening.

The event will be held from 5:30 pm to 8 pm on Oct. 19 at the Seattle Biomedical Research Institute in the heart of Seattle’s South Lake Union neighborhood. You can get more information on how to register here. We expect this to be a highly interactive conversation with the audience, with yours truly running around with a microphone—so be ready with your questions. We look forward to seeing you there on Oct. 19.

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Vaccines get the credit for some of the biggest public health gains of the past century, but they are notoriously tough to develop. The required clinical trials take years, cost many millions, and even the slightest safety warning will attract droves of litigators. That’s all for a product that can’t usually command monopoly prices, like, say, a cancer drug.

So why exactly did Cambridge, MA-based Genocea Biosciences raise $23 million in venture capital earlier this year, before it even has a single vaccine candidate showing value in clinical trials? Why would people largely responsible for the two best-selling vaccines ever—Merck’s human papillomavirus vaccine (Gardasil) and Wyeth’s pneumococcal vaccine (Prevnar)—get involved with this startup in its early days? That’s what I delved into with Genocea CEO Staph Bakali when we talked the other day.

There are financial reasons why venture capitalists have suddenly gotten more interested in vaccines like those promised by Genocea, and it isn’t all about impulsive reactions to the latest scary headline on swine flu. Vaccines, which once languished in the pharma industry backwaters, made up a $13 billion market in 2007, according to Lehman Brothers. Sales of vaccines are expected to grow at an 18 percent annual clip through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Both Gardasil and Prevnar have proven that vaccines don’t have to be commodities anymore—they can garner high prices and create new billion-dollar markets.

“It’s the fastest growing segment of the pharmaceutical industry,” Bakali says.

Looking through that lens, the work of microbiologist Darren Higgins at Harvard Medical School suddenly appeared to have more than academic interest when the company was started in 2006. Genocea has built its foundation on a technology that’s supposed to mimic the human immune system in a lab dish, which helps researchers identify the most important antigens for inclusion in vaccines, Bakali says. These antigens—substances that spark an immune reaction—are supposed to help the body do more than just stimulate the production of the usual antibodies, or B-cell response, that traditional vaccines are known to provoke.

Staph Bakali

Instead, Genocea, with the help of proprietary computer algorithms, is looking for antigens that can stimulate the second major element of the immune system—T-cells—that are widely predicted to be necessary players if researchers hope to develop effective vaccines for major sexually transmitted diseases, or infectious agents like tuberculosis and malaria, Bakali says.

To uncover ways to alert these T-cells, Genocea is drilling deep … Next Page »

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Just three months ago, San Diego-based Inovio Biomedical looked like one of the many biotechs with big ambitions that were headed for the dustbin of history. The company has been burning cash for 15 years and it was down to its last $5 million in working capital. Inovio tried to merge with another little biotech company from Pennsylvania for 11 months, before finally closing the deal on June 1.

Investors didn’t give it a New York minute of attention: Shares closed at 63 cents that day.

But Inovio wasn’t done. The company (AMEX: INO) pounced on a new opportunity to treat the latest public health scare. On July 29, Inovio said its “universal” DNA-based vaccine was able to protect pigs and mice who were directly exposed to current circulating strains of the H1N1 “swine” flu. That evidence added heft to an earlier finding, which said Inovio’s approach offered the same blanket immunity to mice that were exposed to the deadly strain of flu that killed 40 million people around the world in 1918.

This time, Inovio struck a nerve. The obscure little company’s stock more than quadrupled in value, rising that day from 74 cents a share to $3.18 a share on huge volume of 32 million shares. Inovio cashed in that exact same day—raising $28.5 million of new capital—enough to keep its doors open until the second half of 2011, according to its latest quarterly report.

While Wall Street reacted on the usual primal emotions—fear and greed—I wanted to dig a little deeper into the fundamentals when I spoke recently with Inovio’s new CEO, J. Joseph Kim.

J. Joseph Kim

Time will tell whether Inovio really deserves its lofty new market valuation (currently about $92 million), but it’s worth noting that the vaccine field as a whole is hot—and H1N1 vaccines are incandescent. The vaccine industry made up a $13 billion market in 2007, according to Lehman Brothers. What’s more, vaccine sales are expected to grow at an 18 percent annual rate through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Merck’s human papillomavirus vaccine, Gardasil, as well as Wyeth’s pneumococcal vaccine, Prevnar, have proven that new generations of vaccines can sell at high prices-and create new billion-dollar markets.

So there’s a business case for a lot of vaccine companies. But what about the science at Inovio, or the newly-combined Inovio to be more precise, That might give the San Diego company a new lease on life?

The rationale for the merger … Next Page »

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Vaccines produced some of the biggest advances in medicine over the past two centuries, but for most of that time, scientists couldn’t say for sure how they worked to rev up the immune defenses. “You would close your eyes and hope,” says Rick Klausner.

That era is coming to a close, says Klausner, a former global health leader at the Bill & Melinda Gates Foundation and former director of the National Cancer Institute. Vaccines in coming years will be specifically designed to do what scientists want, Klausner says. They will stimulate certain cell types that you want to prevent an illness, fight off an existing infection, or possibly kill tough cancer cells.

The vaccine wave is one of several big ideas Klausner, 57, is pursuing in the latest chapter of his career as a venture capitalist. He’s now a managing partner with The Column Group, a San Francisco-based venture firm with about $260 million under management, and a team that includes three Nobel Laureates dreaming up the best ways to apply cutting-edge biology to vaccines and other areas. Klausner helped get the firm started from his home base in Seattle, but I spoke to him last week by phone from San Francisco. He moved to the Bay Area this month to be closer to his fellow partners, and most of his portfolio companies. But he insists he’ll be back on a plane once a month to the Northwest to keep tabs on his firm’s hot vaccine prospect, Seattle-based Immune Design.

“For the first time I’ve seen, we have a path forward to use vaccines against chronic diseases and as therapeutics,” Klausner says.

Immune Design, as we have written about in these pages, was born at an auspicious moment in both the science and business of vaccines. This business is pretty straightforward: these products, which once languished in the pharma industry backwaters, made up a $13 billion market in 2007, according to Lehman Brothers. What’s more, vaccine sales are expected to grow at an 18 percent annual rate through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Merck’s human papillomavirus vaccine, Gardasil, as well as Wyeth’s pneumococcal vaccine, Prevnar, have proven to the industry that newer vaccines can sell at high prices—and create new billion-dollar markets.

But when we spoke, Klausner mostly wanted to talk about why the science will lay an important foundation for this industry in the future.

Immune Design, albeit still in its early days, represents some of the exciting new advances in immunology that will make for better vaccines, Klausner says. The company was formed by combining two fundamental technologies. One was a delivery system, known as a vector, from the lab of Nobel Laureate David Baltimore at Caltech. That new tool makes it possible to precisely stimulate dendritic cells, which are known for sending sentinel warning signals about pathogens to other cells of the immune system, Klausner says.

The other component came from the lab of Steve Reed at the Infectious Disease Research Institute in Seattle, Klausner says. That’s where scientists have developed … Next Page »

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It was another busy week in Seattle’s life sciences scene, with a mix of stories from biotech, medical devices, diagnostics, and biofuels.

—Xconomy had the exclusive feature story on how the University of Washington is reaping a windfall of royalties because one of its inventions from the 1980s is used for manufacturing Merck’s billion-dollar vaccine, Gardasil. UW is now getting more than $40 million a year from the Washington Research Foundation, about triple the amount of three years ago, which is helping the university revitalize its technology transfer program under Linden Rhoads.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) needed to do something fast to raise the cash to keep the doors open past the end of February, so it sold the remaining 50 percent stake it owned in the cancer drug Zevalin for $18 million. Now it still has the pesky matter of finding a way to free itself of a suffocating debt load of $124 million.

—Trubion Pharmaceuticals (NASDAQ: TRBN) laid off 25 workers, about one-fourth of its staff, yesterday in order to stretch its cash reserves into the second half of 2010. The Seattle company, a developer of drugs for cancer and autoimmune diseases, will have to deal with a load of uncertainty this year as Pfizer aims to acquire its partner, Wyeth, which would put a whole new crew of decision-makers across the table.

—Redmond, WA-based Bionavitas pulled back the curtain on its secret recipe for making algae biofuels. The company is using what it calls “light immersion technology” to help algae grow efficiently in deeper pools of water, where the sun it needs to thrive usually doesn’t shine. This is still a long way off from commercial reality, but worth watching since investors like Bill Gates and Arch Venture Partners see algae as a more efficient source of renewable material for fuel than corn or soybeans.

—The Zino Society organized its first Life Sciences Investment Forum for angel investors. This event drew 12 companies to make their best pitch in 7 minutes to a room of investors. Here’s who caught the eye of the judges.

—Protein AI, a Seattle-based diagnostic startup, won a $700,000 Small Business Innovation Research grant to develop a fast new test to detect leprosy infections. The test should be on the market by the end of 2009 or early 2010, says CEO Darrick Carter.

—Seattle Genetics (NASDAQ: SGEN) checked off another goal on its list for 2009, by completing enrollment of 210 patients in a clinical trial of its SGN-33 drug for acute myeloid leukemia. This trial, which seeks to answer whether the drug can help people live longer, should provide an answer by the first half of 2010. The company also said it has begun enrollment in a pivotal study of its lead drug candidate, SGN-35, for Hodgkin’s disease.

—Here’s a scoop we had this week from San Diego-based Ambrx that has implications for its Seattle-based competitor, Allozyne. Ambrx signed a partnership to develop a new drug for multiple sclerosis with one of the big players in that disease category, Germany-based Merck KGaA. Ambrx was coy about what advantages its drug has, although it has disclosed in the past that it is working on a longer-lasting form of interferon beta drugs that would allow MS patients to take fewer injections, and suffer fewer side effects—the same goal as Allozyne.

—ImaRx Therapeutics, the Redmond, WA-based developer of a drug-device combination treatment for stroke, presented data last week at a medical meeting that it hopes will spark some interest in keeping its SonoLysis treatment alive. CEO Bradford Zakes hasn’t reported any new support from investors or partners, although he says the ImaRx presentation at the International Stroke Conference was one of the best-attended at the meeting.

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It was a quiet week for deals in the Northwest, with just a trickle in the biotech, business software, and gaming arenas.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) sold its remaining 50 percent stake in its cancer drug Zevalin to its partner, Irvine, CA-based Spectrum Pharmaceuticals (NASDAQ: SPPI) for $18 million, Luke reported. The cash will buy some time for the struggling biotech to maximize the value of another of its drugs, pixantrone for non-Hodgkin’s lymphoma.

—Luke uncovered the fascinating story of a licensing deal with Merck that’s now providing a windfall for the University of Washington. Indeed, sales of Merck’s Gardasil, one of the world’s best-selling vaccines (for cervical cancer), have helped triple the UW’s licensing revenues from the Washington Research Foundation in the past three years to $38 million in 2008. It’s all thanks to some contentious patent litigation from the 1990s that strengthened and extended the lifespan of a piece of UW intellectual property.

—Seattle-based Visualant (OTCBB: VSUL) is in the process of acquiring TransTech Systems, a Wilsonville, OR-based maker of identification and security products. Financial terms were not disclosed. The deal is expected to close before the end of June. Visualant makes light-based authentication and security technologies.

—Digini, a video-game tool developer based in Issaquah, WA, merged with Shanghai, China-based Vyk Games to form a new company called Blade Games, which will make game development software. Financial terms of the deal were not disclosed. Blade Games will be based in Bellevue, WA, and headed by former Digini CEO Tony Garcia.

—Redmond, WA-based Concur led a $4.6 million Series B investment in RideCharge, a mobile taxi-booking service based in Alexandria, VA, that lets travelers arrange for ground transportation using their mobile device. Concur makes corporate expense management software.

—Seattle-based Madrona Venture Group led an $8.5 million Series B financing round for Yieldex, an inventory management startup based in New York. Amazon, Sequel Venture Partners, and First Round Capital also participated in the funding. Yieldex won the $100K Amazon Web Services startup challenge in November.

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One of the world’s best-selling vaccines, Merck’s Gardasil, is quietly producing some serious money for an unexpected beneficiary—the University of Washington.

Thanks to some hard-fought patent litigation from the 1990s that ended up strengthening and extending the lifespan of a critical piece of UW intellectual property, the university is now raking in a windfall of royalties on Merck’s cervical cancer vaccine. This product’s success has been a driving force that has caused the licensing income UW gets from the Washington Research Foundation to more than triple in the past three years, to $38 million in 2008 from $12 million in 2006.

I learned about this story from Ron Howell, the CEO of the Washington Research Foundation, the Seattle-based organization that manages some critical UW intellectual property from the 1980s. While $40 million a year might sound trivial to an institution that has a $1 billion-a-year research enterprise, it is actually a critical resource to the UW because the cash doesn’t come with a lot of strings attached, and can be used for things like recruiting and retaining star faculty, supporting entrepreneur-in-residence programs to commercialize university inventions, and purchasing state-of-the-art equipment, Howell says. It’s all been a boon to Linden Rhoads and her team at UW TechTransfer, who are on a mission to make UW better at spinning off innovations into the business world.

“What it means is that we’re going to be able to support more scholarship and research,” Howell says. The WRF particularly wants to aim its gifts toward faculty that are approaching “tipping points” where they just need a little more research support to enhance intellectual property that could be the basis for a company, Howell says.

So how did WRF come to be in this enviable position? The tale begins in the early 1980s, when UW researcher Benjamin Hall discovered a technique for making complex peptide molecules in yeast, one of the founding innovations of the modern biotech industry. This technique is today licensed to more than 50 companies, who use the method to make insulin, enzymes for detergents, proteins to make cheese creamier, or for modern vaccines.

This lucrative method was the subject of intense patent lawyering in the early 1990s, when a group of 10 companies from around the world challenged its validity in Europe, Howell says. The opponents included Novo Nordisk, the world’s largest maker of insulin for diabetes, Seattle-based ZymoGenetics, and Japan-based Takeda Pharmaceutical. “They knew the technology was valuable, and they scoured the earth to dig up dirt,” Howell says, to try to suggest that Hall and the UW didn’t really have a valid claim.

After about five years and millions of dollars of lawyering from both sides, the patent was overturned in Europe. But it was only a “pyrrhic victory,” Howell says, because all the investigation uncovered evidence that buttressed the UW’s claim in the U.S. to the point of making it “bulletproof,” Howell says. And, importantly, since this proceeding dragged on in legal limbo for so long, it meant … Next Page »

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Old-school vaccines like shots for tetanus don’t add up to good business anymore for doctors who give them, according to a report this week in the Associated Press. Then again, the market for a new breed of vaccines against all sorts of other diseases is booming, on a trajectory from an estimated $10 billion in 2007 to some $24 billion globally by 2012, according to a research report from Kalorama Information.

We’re planning to take a closer look at the changes to the science and business of vaccines in our first Xconomy Seattle event, to be held next Thursday at the Institute for Systems Biology. Here’s a brief rundown of the perspectives our panelists will bring to the conversation:

Todd Patrick (moderator)

Todd Patrick is the former president of ID Biomedical, a Vancouver, BC-based vaccine developer that was sold to GlaxoSmithKline for $1.5 billion in 2005. Patrick is now the CEO of Vaxent, a Memphis, TN-based biotech company that is working to develop the first strep throat vaccine.

Steve Reed

Steve Reed is CEO of Immune Design, a Seattle-based biotech startup that raised $18 million in venture capital in June. The company is working on adjuvant compounds that when combined with a specific antigen, are supposed to stimulate a more effective immune system defense against a particular invader like HIV—possibly with a single shot. Reed is also the founder of the Seattle-based Infectious Disease Research Institute, which recently licensed technology to his new company. IDRI is working on multiple vaccines to protect people from tuberculosis, leishmaniasis, malaria, leprosy, and chlamydia.

Denise Galloway

Denise Galloway is head of the Program in Cancer Biology in the Human Biology and Public Health Sciences Divisions of the Fred Hutchinson Cancer Research Center. She did pioneering work with researchers in Australia and at the National Institutes of Health on getting a key viral gene to assemble into particles that look like human papillomavirus, the virus that causes cervical cancer. This discovery led to the development of Merck’s Gardasil, which has pumped new life into vaccine research, partly because it exceeded $1.5 billion a year in sales in 2007, its first full year on the market.

Chris Elias

Chris Elias is CEO of PATH, an international non-profit that works to alleviate disparities in health worldwide. PATH is the lead organization running a $168.7 million Malaria Vaccine Initiative financed by the Bill & Melinda Gates Foundation. The organization also sponsors work toward developing next-generation pneumococcal vaccines—to prevent childhood pneumonia and meningitis. This week, PATH also announced it is investing $3 million in a vaccine candidate in development by Gaithersburg, MD-based Lentigen that may protect against “bird flu.”

It’s a stellar lineup and a great evening of insight and networking. You can register here, and we hope to see you there.

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The big news of the past couple weeks came before Thanksgiving, when one of Seattle’s biotech pioneers, Bruce Carter, decided to exit stage left. Here is that and other highlights of the past two weeks:

—ZymoGenetics’ charismatic CEO Bruce Carter, 65, has decided to retire at year’s end, and promote Doug Williams to take his place. Carter’s going to stay on as Zymo’s chairman, and serve on the boards of the TB Alliance and Dr. Reddy’s Laboratories, so local biotechies shouldn’t expect him to vanish.

—Targeted Genetics said it is cutting its payroll by 25 percent, through a combination of seven layoffs, deferring salaries of executives, and cutting some of their pay by half. The Seattle biotech company (NASDAQ: TGEN) is actively shopping some of its assets in a bid to stay alive, with just enough cash to operate into the first quarter of 2009.

—Some bona fide good news emerged this week from OncoGenex Pharmaceuticals, the cancer company with headquarters in Vancouver, BC, and Bothell, WA. It said a mid-stage clinical trial of 82 men with prostate cancer found its experimental drug in combination with standard treatment was able to boost median survival times by 10.6 months when compared to the standard drugs alone. Shares of OncoGenex (NASDAQ: OGXI) rocketed up 75 percent on the news.

—University of Washington epidemiologist Laura Koutsky gave a fascinating talk about the pros and cons of HPV vaccines, as part of the local “Science on Tap” discussion series. Koutsky played a pioneering role in the development of Merck’s Gardasil, and she had a few choice words for the evangelicals who argue that the vaccine encourages young girls to be sexually promiscuous.

—Scout Medical Technologies never did much to blow its own horn, but in a where-are-they-now feature piece, I discovered that this medical device incubator (which no longer exists) gave birth to three successful emerging companies in Seattle. Click here to read updates about its descendants—Archus Orthopedics, EndoGastric Solutions, and Cardiac Dimensions.

—Accelerator, the best-known incubator of life sciences companies on the local scene, unveiled its game plan for its latest creation, GPC-Rx. The company aims … Next Page »

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Everyone has human papillomavirus (HPV) crawling all over our skin. This usually doesn’t cause us any harm, but in about 11,000 cases a year in the U.S., sexual activity leads to an infection that causes cervical cancer, which kills about 3,800 women a year.

This basic fact is at the root of a revolution in the world of vaccines. New understanding of various strains of HPV has unleashed a multi-billion dollar vaccine from Merck marketed as Gardasil, paved the way for a new generation of vaccines in development, and sparked controversy about the ethics of mass vaccination among young girls before they become sexually active.

Vaccines have been on my mind lately because I’m preparing for Xconomy’s Vaccines 2.0 event coming up next week. So I decided to get a dose of the subject by going to a talk by University of Washington epidemiologist Laura Koutsky last night. She spoke at T.S. McHugh’s at a meeting of Science on Tap, a group that aims to make science accessible to the public with informal talks over a beer.

Koutsky’s talk was titled “The Pros and Cons of HPV Vaccines.” although she didn’t really spend much time on the cons. She has reason to be an enthusiast—she’s credited with playing a key role in the development of the Merck vaccine, through UW trials that date back to the late 1980s. The fruit of the labor is a vaccine that’s been found 100 percent effective at building immunity against infection with four strains of HPV that cause 70 percent of cervical cancers, and about 90 percent of genital warts, she says. This has prompted the American College of Obstetricians and Gynecologists to recommend that all 11 and 12-year-old girls get the vaccine before becoming sexually active, a recommendation that has sparked a bit of outrage among evangelicals who claim this is promoting promiscuity. This is clearly not Koutsky’s favorite group of folks.

“You can go online and find out all about why this is a horrible vaccine, it’s a horrible company, and why you should be worried,” Koutsky said. “In reality, it’s not true.”

Much of the bad publicity has been generated by 27 deaths reported among girls on the vaccine. What many people fail to appreciate is that 20 million injections have been given worldwide, and none of the deaths have been attributed to the vaccine, Koutsky said.

The other controversy—one that Koutsky doesn’t dismiss as easily—is the debate over pricing. Gardasil sells for $375 for a three-shot regimen spread over six months. That’s a big reason why the vaccine generated a whopping $1.5 billion in sales in 2007, its first full year on the market.

My question to Koutsky was whether this high price creates too big of a barrier to usage in the developing world, where about 80 percent of the world’s cervical cancer occurs. She deferred on that question to Vivien Davis Tsu, a senior program adviser for reproductive health at Seattle-based PATH, who was in attendance. Tsu’s answer was that it’s a big challenge getting people vaccinated around the world because of price, and because public health authorities are most accustomed to vaccinating babies, not young girls, and so systems need to be set up in schools or community centers. The Global Alliance for Vaccines and Immunization considered whether to put a lot of its money into purchasing HPV vaccine for people in the world’s poorest 72 countries, with per capita annual incomes of less than $1,000, but a vote … Next Page »

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Not many people in the world have played a leading role in delivering 23 new drugs and vaccines to the U.S. market. Bennett Shapiro is the only person living in Seattle who can say it.

Shapiro, 69, spent the first chapter of his career as a biochemist at the National Institutes of Health, followed by a 20-year run at the University of Washington. He left the chairmanship of UW’s biochemistry department in 1990 to become a leader at Merck. He was executive vice president of basic research during a golden age for the company, and oversaw the emergence of the ill-fated pain reliever Vioxx, and a vaccine to prevent cervical cancer, Gardasil. When he left, he was in charge of global in-licensing, where it was his job to identify the most exciting biomedical research in the world happening outside of Merck and bring it in.

He rarely does interviews, but I spoke with Shapiro in a fascinating 45-minute phone conversation last week while he was in New York. The point wasn’t to reminisce. It was to get up to speed on all the leading-edge science Shapiro has his fingers on right now. For starters, he’s a partner with one of Boston’s leading life sciences venture firms, Puretech Ventures. He’s also on at least a dozen boards to lend his advice to a younger generation of scientists and entrepreneurs at places like Celera, Fate Therapeutics, Ikaria, and the Mind & Life Institute.

“This is a wonderful time in life for me, having both experience and energy,” Shapiro says. “I try to be useful. That’s the name of the game in life.”

If you look carefully at which organizations Shapiro has joined, it shows he has omnivorous interests in a wide variety of life sciences. He has a view of more precise genetic diagnostics (Alameda, CA-based Celera), adult stem cell therapies (San Diego-based Fate), and hibernation-on-demand that could save people from bleeding to death (Ikaria, which has significant operations in Seattle). Another company, Tel Aviv, Israel-based Vascular Biogenics, is developing a novel pill to tamp down the inflammation that causes heart disease to turn deadly. He also has a taste for global health, through the nonprofit Geneva, Switzerland-based Drugs for Neglected Diseases Initiative, which has developed two new drugs for malaria in Africa as well as Asia and Latin America, with only about $70 million of investment. The drugs cost 25 cents for kids, and 50 cents for adults, he says.

I get the impression that a few more Seattle companies would like to tap into Shapiro’s experience more of the time, but he’s careful about how he doles it out. Carl Weissman, president of the Seattle-based startup incubator Accelerator, said that Arch Venture Partners’ Bob Nelsen has had the most success getting Shapiro to lend his advice to young companies. “Ben’s years of experience in developing drugs is not something you find in very many people in Seattle. There aren’t many people around here hanging out at Starbucks who have experience of taking 20 drugs onto the market,” says Weissman, who served with Shapiro on the board of Cambridge, MA-based Elixir Pharmaceuticals.

All this activity requires that he spend a lot of time on airplanes, but Shapiro still spends about one-third to one-half of his time at a waterfront home in Seattle’s Magnolia neighborhood. It’s a refuge, with inspiring views of Puget Sound and the Olympic Mountains, where he likes to read and host friends for dinner. He still skis and hikes in the Cascades, and says one of his favorite things to do is sail on the Sound by the San Juan Islands. “I love Seattle,” he says.

While he was at the UW, Shapiro told me, he never thought he’d leave Seattle. When Merck came calling, he said he had “leftist” ideas about price-gouging pharmaceutical companies, and he wasn’t very interested. “I didn’t think working in the pharmaceutical industry would be a noble undertaking,” he says. … Next Page »

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If San Diego-based Adnavance Technologies plays its cards right, it won’t be long before it’s selling a simple DNA test that will tell doctors within a couple hours whether their patients have a potentially deadly MRSA bacterial infection. There will be no more need to send samples to a highly-skilled technician running an expensive DNA amplification machine for half a day, or wait three to four days to get results back from an outside contract laboratory.

I heard this vision for a faster, cheaper way to detect MRSA infections from Adnavance’s CEO, V. Randy White. He’s a 35-year veteran of the diagnostics business, who previously led San Diego-based Nanogen (NASDAQ: NGEN) and Xenomics.

MRSA, or drug-resistant bacteria, is a fast-growing problem in U.S. hospitals. It represents almost two-thirds of hospital-acquired infections, and is fatal about 18 percent of the time, White says. Only about one-third of U.S. healthcare facilities have labs certified and staffed to run DNA amplification tests needed to identify these bugs, so most of the time, doctors ship out a sample to a contract lab like Quest Diagnostics or LabCorp of America. Then they wait three or four days for the result. While they wait, fearing the worst, many doctors put patients on vancomycin antibiotics even if it isn’t necessary, which contributes to resistance, White says.

“If you suspect MRSA, you can’t just sit around and wait,” White says.

Adnavance’s approach is different from the traditional amplication process, known as polymerase chain reaction, in favor of what it calls “direct detection.” This involves looking directly at the DNA sequence of a bug to see if it carries a genetic hallmark of drug resistance. This machine can work faster because it can get a definitive reading based on a small amount of sample from a patient, without having to go through amplification steps, White says. A couple other companies, Nanosphere of Northbrook, IL, and Nanomix of Emeryville, CA are also working on direct DNA detection methods. “There’s a race to be first, and I hope we’re it,” White says.

Adnavance was founded in Vancouver, BC, in 2002 based on discoveries of Jeremy Lee, a researcher at the University of Saskatchewan. It is backed by a trio of Canadian venture firms—GrowthWorks, JovInvestment Management, and the Business Development Bank of Canada. White joined the company in February to lead it out of research and into the commercial phase, on the condition that it be based in San Diego, where he lives. That also enables him to recruit from a deeper talent pool of people with skills in regulatory affairs and product development for diagnostics. The company now has 12 employees, he says.

The Adnavance test still isn’t completely ready for prime time, and its team is finishing up modifications before it goes ahead with full-bore product development, White says. … Next Page »

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Steve Reed sums up his goal for Immune Design, his new vaccine company, in a few bullet points: Better protection, fewer doses, less raw material.

The Seattle-based company got started last month with $18 million in first-round financing from The Column Group, Alta Partners, and Versant Ventures. The idea is to make vaccines loaded with immune-boosters called adjuvants. They’ll be made to stimulate dendritic cells, which are sort of like conductors telling other cells in the immune system which foreign invaders to fight.

I caught up with Reed down the hall from our new Xconomy office, at the the Infectious Disease Research Institute (IDRI), the nonprofit institute he founded in 1993 to tackle diseases of the developing world.

Reed isn’t ready yet to reveal Immune Design’s first vaccine candidate. But he said it should be ready for clinical trials within a year. The company has licensed the technology from IDRI, which has already done most of the animal tests and manufacturing work.

Immune Design is licensing potential commercial applications like flu, HIV, hepatitis C, or certain types of cancer. Other uses of the adjuvant more practical for diseases of the developing world, like tuberculosis or malaria, will stay within the nonprofit IDRI. If any of the commercial applications are a hit, Immune Design will plow a royalty stream back into the IDRI.

“It’s a Robin Hood approach,” Reed says.

One example that symbolizes room for improvement is the DPT vaccine, Reed says. Infants in the U.S. have to take the vaccine—short for diphtheria, pertussis, tetanus—in four doses, because it stimulates a generalized immune reaction, not a specific one, against the pathogens in its name. Immune Design would stimulate a more specific defense, using a synthetic adjuvant hitched to an engineered virus or snippet of protein. The result could be a single-shot vaccine. That’s highly useful in the developing world, where it’s difficult to get people to show up for multiple doses, and highly convenient for patients in the United States.

“It really shouldn’t have to be four shots,” Reed says. “There needs to be more innovation there.”

It’s just an example, because DPT is a cheap, relatively effective commodity vaccine that Immune Design isn’t looking to improve upon. The company is busy building up a staff of three into a team of 35 scientists to do the early development work on new vaccine candidates.

Reed is visibly excited about the new-generation adjuvants. No currently marketed vaccine contains this form of synthetic adjuvant. The adjuvant will be combined with an engineered virus, licensed from the Caltech lab of David Baltimore, that efficiently spreads the immune-booster through the body. In other cases, Immune Design may use key snippets of protein to train the immune system to fight without having the potential to actually make people sick, like weakened live-virus vaccines can.

Reed plans to spend 80 percent of his time at the new company, and the rest of his time at the nonprofit institute, where he will continue to oversee grant work sponsored by the National Institutes of Health and the Bill & Melinda Gates Foundation. Steve Davis, the former CEO of Seattle-based digital media company Corbis, has been brought in as interim CEO of IDRI to keep that institute on track.

Immune Design isn’t the only company trying to develop next-generation vaccines, particularly since Merck showed last year it could sell $1.5 billion worth of Gardasil, a $150-per-vial vaccine for cervical cancer, proving that vaccines don’t have to be cheap commodities. Other competitors include Pfizer, the world’s largest drugmaker, VentiRx, a San Diego-based startup company, and VaxInnate of Cranbury, NJ.

Clinical trials for new vaccines need to enroll thousands of patients to demonstrate safety—too costly for any venture-backed startup to do single-handedly. Rather than cut a deal with a pharmaceutical company right away, Immune Design plans to partner with academic labs for early-stage tests to show a vaccine’s value. It’s a departure from Reed’s experience at Corixa, the Seattle biotech company, where the mantra was “partner early, partner often.” Corixa got someone else to pay for its research, Reed says, yet retained slim royalty rights to potentially valuable products.

By waiting longer to sign a deal with a pharmaceutical company, Immune Design shoulders more of the risk in clinical trials, but could stand to get much richer if they pan out. That could bode well for Reed’s “Robin Hood” strategy.

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Vaccines are coming back in a big way. Immune Design, a Seattle-based startup vaccine company, made that clear today when it said it raised $18 million in an initial round of venture capital.

The names involved are some of the biggest in immunology. The founders include Nobel Laureate David Baltimore of Caltech, Steve Reed of Infectious Disease Research Institute in Seattle, and Larry Corey of the Fred Hutchinson Cancer Research Center, an expert in efforts to develop HIV vaccines. The company is backed by Alta Partners, The Column Group, and Versant Ventures.

Reed, an immunologist who earned his biotech stripes as a co-founder of Seattle-based Corixa, will be the founding CEO. (He’s also one of the inaugural Xconomists in Seattle.) Baltimore is an adviser to The Column Group. So is Richard Klausner, the former head of the National Cancer Institute and former leader of global health at the Bill & Melinda Gates Foundation, who is joining the company’s board. Immune Design’s board chairman is Ed Penhoet, a partner at Alta Partners and the former CEO of Chiron. Penhoet’s earlier company, also a vaccine maker, was sold to Novartis in 2005 for $5.1 billion.

The new company’s goal is a lofty one. It wants to design vaccines that coax the immune system to mount more specific, effective responses to infectious diseases than those prompted by traditional vaccines. Immune Design plans to do that with improved adjuvants. The adjuvants—compounds that boost the immune response—will be aimed at what are known as dendritic cells, which present bits of signature material from a foreign invader, like a virus, to other immune system cells. That’s sort of like waving a red cape in front of a bull, inciting immune cells to attack just the right targets, scientists say. Most vaccines now work by triggering a more generalized stimulation of the immune system, a less efficient approach, Immune Design says.

The company’s release doesn’t say specifically what disease it is tackling first, although it says it expects its first vaccine candidate to reach clinical trials within 12 months.

Clearly, the technology is following a business opportunity. The vaccine business, shunned as a backwater for cheap commodities as recently as five years ago, is suddenly booming. Vaccines generated $16 billion in sales in 2007, according to Immune Design’s press release. Merck’s Gardasil, for a virus that causes cervical cancer, generated $1.5 billion in sales in 2007, its first full year on the market.

While at Corixa, Reed worked on vaccine adjuvants that helped spur London-based GlaxoSmithKline to acquire the company for $300 million in 2005. His new company is down the hall from our new Xconomy Seattle office on First Hill, so you can be sure I’ll be poking my head in there soon to learn more and tell you about it.

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