[Corrected 2/8/12. See below.] The Bill & Melinda Gates Foundation has joined with 13 pharmaceutical companies and leading public health organizations as part of a massive $785 million drive to wipe out—or at least better control—10 historically neglected tropical diseases by the end of the decade. [Edited to reflect that the total value of the initiative is $785 million not, as originally reported, $785 million. We apologize for the error.]

The initiative will focus on diseases that affect one out of every five people on Earth (1.4 billion people), but don’t get effectively treated because there isn’t a strong enough market to sell drugs to people who can’t afford them. The Seattle-based Gates Foundation is contributing $363 million over five years for research into the neglected diseases, while other money from groups like the U.S. Agency for International Development and Britain’s Department for International Development will finance better distribution of existing medications that are effective. The initiative was announced today in a press briefing in London.

“It used to be that people would commit to a donation but nobody would order the drug because there wasn’t money to do the delivery,” Bill Gates told Bloomberg News in an interview. “Here, because you’ve got delivery money being committed and manufacturing money being committed, every year the amount of people who get this mass drug administration is going to be 10 times what it’s been.”

GlaxoSmithKline CEO Andrew Witty added in a statement that, “Many companies and organizations have worked for decades to fight these horrific diseases. But no one company or organization can do it alone. Today, we pledge to work hand-in-hand to revolutionize the way we fight these diseases now and in the future.”

Here’s who is participating in the initiative, and what they are contributing, according to today’s statement. You can also check out reports from Bloomberg News and the Wall Street Journal.

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Yesterday, we ran the first half of the Seattle life sciences year in review, which focused on biopharmaceutical companies and global health organizations. Today’s rundown will cover the medical device, diagnostic, and health IT side of the local life sciences cluster.

Medical devices may not fare so well in a glamour contest, but this year the Seattle device community had more success stories, more acquisitions, upheaval, and even a couple of controversies. SonoSite was the biggest acquisition of the year, and although terms weren’t disclosed, it was almost surely followed by Pacific Bioscience Laboratories (the maker of the Clarisonic skin brush you see prominently displayed at Nordstrom). Calistoga Pharmaceuticals, you had a great year, but your deal is probably the third-biggest of the year in Seattle biotech. Sorry.

For the highlights from Seattle med-tech, diagnostics, and various Bio-IT operations, read on:

Sonosite (NASDAQ: SONO): The maker of portable ultrasound machines has been relatively stable, and modestly profitable as an independent company for some time, so I was surprised to see it get acquired for $995 million earlier this month by Japan-based Fujifilm. Shareholders can’t complain, given the price represents a 50 percent premium over SonoSite’s prior closing stock price. This is the biggest deal of the year in local life science, by a long shot.

NanoString Technologies. This was a big year for NanoString. The company, a spinoff from the Institute for Systems Biology, developed a second-generation version of its digital nCounter instrument, which measures the extent to which multiple genes are turned on or off in a biological sample. This was part of a bold plan to turn this scientific instrument into a diagnostic tool. By the end of the year, NanoString had raised another $20 million from GE, former Genzyme CEO Henri Termeer, and others, and it presented some important data that suggests it could compete with Redwood City, CA-based Genomic Health (NASDAQ: GHDX) in the breast cancer diagnostic market.

Clarisonic. Terms weren’t disclosed, but this could be the second-biggest acquisition of the year in Seattle’s life sciences community (although this company is hard to really categorize). Pacific Bioscience Labs, the maker of the Clarisonic skin brush, was acquired by cosmetics giant L’Oreal last month. The Clarisonic surpassed the $100 million sales mark in 2010, was highly profitable, and growing by leaps and bounds. My best guess is that Clarisonic sold for about $500 million. It’s the second home run for the same entrepreneurial team who developed the Sonicare toothbrush.

Geospiza. The Seattle-based developer of software … Next Page »

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This was a great year for Seattle biotech if you measure success through sheer number of acquisitions. But if you prefer to measure the health of an innovation community by the number of exciting new startups it hatches, then this was most certainly a down year.

That’s the mixed bag of returns that I saw when looking back at the news of 2011 from the Seattle life sciences scene. This was the year of the acquisition for Calistoga Pharmaceuticals, Pathway Medical Technologies, Calypso Medical Technologies, SonoSite (NASDAQ: SONO), Amnis, Geospiza, and Pacific Biosciences Labs (the maker of the Clarisonic skin brush.)

While those companies got harvested, not a whole lot of new seeds got planted. The list of notable Seattle biotech startups this year includes Cardeas Pharma, Oncofactor, Blaze Bioscience, Aquedect Neuroscience and Cardiac Insight.

Who else made headlines in Seattle biotech in 2011? Seattle Genetics emerged. Dendreon crashed. Marina Biotech, Omeros, and AVI Biopharma all had years they’d like to forget. Cell Therapeutics somehow managed to stay in business. New leaders emerged at the global health nonprofits, as Alan Aderem moved in to run the Seattle Biomedical Research Institute, Stewart Parker took over at the Infectious Disease Research Institute, and Chris Elias created a vacancy at the top of PATH by leaving for a new gig at the Bill & Melinda Gates Foundation. The foundation’s head of global health, Tachi Yamada, left for a new venture capital gig, and was replaced by a former Novartis executive, Trevor Mundel.

Here’s a company-by-company rundown of the major events at Seattle biopharmaceutical and global health organizations we keep tabs on here at Xconomy. Tomorrow, I’ll follow up with the rundown of rundown of medical device, diagnostic, and others in fields like Bio-IT or Health IT.

Seattle Genetics (NASDAQ: SGEN). This was a transformative year for Seattle Genetics. The company broke through in August by winning FDA approval of its first product, a souped-up antibody for rare lymphomas. The drug validated a new target on the surface of cancer cells, CD30, and provided hard proof that Seattle Genetics’ proprietary chemistry can successfully link toxins to antibodies—a feat that has eluded scientists for 30 years. Big Pharma companies have beaten a path to Bothell to get licenses to the antibody-drug linking technology, and Seattle Genetics has exceeded Wall Street expectations in the early days of its drug rollout.

Dendreon (NASDAQ: DNDN). Dendreon was the star of local biotech in 2010, and this year it fell flat on its face. The company failed to live up to its first full year sales forecast with its immune-boosting drug for prostate cancer, and burned its shareholder base in the process. The company lost more than $3.5 billion in market valuation, and had to cut 500 jobs, largely because it sparked controversy and confusion by pricing its cancer drug too high—at $93,000 per patient. It remains to be seen this year whether Dendreon can pick up the pieces, as the disastrous screw-up of 2011 has created a gaping opportunity for emerging competitors like Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100.

Amgen (NASDAQ: AMGN). The Thousand Oaks, CA-based biotech company, which has significant R&D in Seattle, said at the end of the year that longtime CEO Kevin Sharer … Next Page »

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Melinda Moree, the Seattle-based CEO of a group that serves as a liaison between for-profit biotech and nonprofit global health organizations, is moving on.

Moree is stepping down as CEO of BIO Ventures for Global Health, a nonprofit seeks to help develop biotech innovations like drugs, vaccines and diagnostics that can be applied in poor countries where they otherwise wouldn’t be developed. Moree, who has been in the job for about two and a half years, is being replaced on Feb. 1 by Don Joseph, the organization’s chief operating officer. Moree, who had been CEO of the organization since July 2009, will stick around as a part-time executive chair of BIO Ventures for Global Health.

The move by Moree is the latest in a string of executive comings and goings in the global health community. PATH president Chris Elias announced three weeks ago that he’s resigning after 11 years at the helm of the Seattle-based nonprofit to run anti-poverty programs at the Bill & Melinda Gates Foundation. And Christian Loucq, the director of the PATH-supported Malaria Vaccine Initiative, is also leaving his position.

Moree didn’t immediately respond this afternoon to a request for comment about her departure. But Robert Chess, the chairman of Nektar Therapeutics and former chairman of the board at BIO Ventures for Global Health, said in a statement the executive moves were part of a planned process.

“My decision has been made much easier knowing that Don Joseph, with his passion and drive for solving global health problems, will be taking over as CEO,” Moree said in a statement. “I am very pleased to continue my involvement with BIO Ventures for Global Health through this new position on the Board.”

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Pharmaceutical giant Eli Lilly is increasing its bet on a small team of TB drug hunters in Seattle.

Indianapolis-based Lilly (NYSE: LLY) said today it has agreed to provide $4.2 million over the next four and a half years to the Seattle-based Infectious Disease Research Institute to continue its efforts to discover drugs for tuberculosis.

The research support is the latest step in Lilly’s efforts to support TB drug development, which started in 2007. That was when Lilly acquired Bothell, WA-based Icos for its hit erectile dysfunction drug, and found that it didn’t really want the scientists or cutting-edge drug discovery equipment that was at the core of the biotech company. So a team of former Icos scientists—Ed Kesicki, Allen Casey and Joshua Odingo—migrated to IDRI to pursue their interest in TB in collaboration with Tanya Parrish. Lilly donated $9 million worth of Icos’s drug screening equipment, joined Merck in donating hundreds of thousands of potential TB drug candidates from proprietary chemical libraries, and agreed to fork over $6 million in cash over five years to support the Lilly TB Drug Discovery Initiative.

Tuberculosis, an airborne infectious lung disease, has never been much of a priority of the pharmaceutical industry since it was largely eradicated from wealthy countries like the U.S. decades ago. But the World Health Organization estimates that 1.7 million died from TB in 2009, with most of the cases in Southeast Asia and Africa. Currently used TB drugs were developed more than 40 years ago, Lilly says, and about half a million people a year now develop cases that resist drugs that used to be effective.

The Lilly TB Drug Discovery Initiative, which includes philanthropies and government agencies as well as IDRI, doesn’t appear to have yet delivered a new TB drug candidate into clinical trials. Today’s statement didn’t say what the goals are for the next phase of the program.

As it so happens, Lilly CEO John Lechleiter will be in Bellevue, WA tomorrow to give a keynote talk at the Washington Biotechnology & Biomedical Association’s annual meeting. I plan to interview Lechleiter while he’s in town, and will ask about the local TB efforts. If you have other questions you’d like to pose to him, just send me a note at ltimmerman@xconomy.com.

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This was a week of volatile ups and downs in Seattle biotech. Yeah, I know, what’s new?

—Seattle-based Dendreon (NASDAQ: DNDN), the cancer drug developer that so many people love to hate, gave its critics some more ammunition in its quarterly financial report. The company reported $64.3 million in third quarter sales, which slightly edged Wall Street expectations. But the company still only projects “modest” quarter-over-quarter sales growth for its prostate cancer drug—which isn’t what investors expected earlier this year when they gave Dendreon a market valuation of more than $5 billion. And the company is burning capital like a Ferrari goes through fuel. Dendreon vaporized $106 million of cash in the third quarter, and had $568 million left on the books at the end of September. Dendreon stock fell 20 percent in after-hours trading.

—Bellevue, WA-based Cardiac Insight is the latest University of Washington spinoff to leave the nest, with a technology license and $700,000 in a Series A financing. We had the inside scoop this week on how this company, led by CEO Tom Clement, seeks to detect a common cause of stroke with a low-cost, disposable adhesive device.

—Did you know that Al Gore came this close to being a VIP scientist for a day at Immunex? That was one of the fun bits of trivia I discovered as Immunoids have been coming forward with bits of memorabilia to display at our next big Xconomy event in Seattle on Dec. 1. If you’ve got some piece of Immunex swag, photos, papers, etc. that you think would be fun to share with the wider biotech community, please let me know at ltimmerman@xconomy.com. And please, tell me the backstory, which is always more fun than just looking at an old lab coat.

—Seattle Children’s Hospital had some big news: a $50 million anonymous donation to support its research efforts. The hospital also got another $15 million donation from Jean Reid to support nursing education and clinical care.

—PATH CEO Chris Elias, the guy who led the global health nonprofit to prominence over the past decade, is moving on to a new challenge. Elias said this week he’s resigning from his job at PATH to become the new president of the Bill & Melinda Gates Foundation’s anti-poverty efforts. Elias starts the new job in February. PATH is now looking for a successor.

—”The Cancer Drug Dark Ages are Coming to an End.” That was the optimistic headline I slapped on this week’s BioBeat column, which talked about big leaps forward in personalized cancer medicine that all came in succession back in August. I think there’s strong evidence to support being optimistic, but for those of you out there who think I’m missing the boat, please post a comment at the end and let me know.

—Emerald Biostructures, which I think is the first and only company from Bainbridge Island, WA to get covered in these pages, had some good news to report. Emerald got a three-year contract extension from UCB, its largest customer, to deliver 3-D structures of biological targets that UCB wants to develop drugs against.

—Last but not least, we had a guest post from Stewart Lyman about how “Biopharma Industry Meetings Could Use Some Fresh Voices.” Lyman points that if the pharma industry is in crisis, it’s odd that everybody still looks to the same old folks from Merck, Pfizer, Novartis et al. for answers on how to get out of the mess.

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Seattle Children’s Hospital probably has more fun than most hospitals every year on Halloween, but this year it has something really big to celebrate.

The hospital said today it has secured a pair of charitable donations worth a combined $65 million to support its research programs, nursing education, and clinical care. One $50 million gift is coming for research from an anonymous donor, while the other $15 million donation was made by Jean Reid of Bellevue, WA to support nursing education and clinical care.

The $50 million anonymous donation—the largest in Children’s history—will be used to provide an endowment for research at Seattle Children’s Research Institute. It will go toward critical infrastructure, recruiting and retaining top scientists, and investments in treatments for early stage treatments for childhood diseases, the hospital said.

Seattle Children’s established its research institute in 2006, and currently occupies the life sciences building at 9th and Stewart that was originally built for Seattle-based Corixa. One of the more visible projects at the hospital is a low-cost ventilator for premature infants that is being developed by a team led by Seattle Children’s CEO Tom Hansen, with support from the Bill & Melinda Gates Foundation. Seattle Children’s got nearly $53 million in federal grants to support its research in 2010, according to its website.

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PATH president and CEO Chris Elias, who led the global health nonprofit to prominence over the past decade, is stepping down to become the president of global development at the Bill & Melinda Gates Foundation.

Elias joined PATH in 2000, when it had an annual budget of $44 million and a staff of 297 employees, according to a statement today from the Seattle-based global health nonprofit. PATH now has an annual budget of $295 million and more than 1,100 employees around the world, the nonprofit organization says.

PATH, as I described in it a February 2009 feature, essentially seeks out clever, affordable technologies, and partnerships with companies to help improve the health of have-nots around the world. The organization has grown rapidly in parallel with the Gates Foundation over the past decade, and it has received more than $1.3 billion from the foundation in its history for efforts to develop low-cost health interventions with big potential impact, like a malaria vaccine.

“Developing and delivering global health solutions with my colleagues at PATH has been an honor and a privilege. It isn’t easy to leave such a talented and committed team. But I leave knowing that PATH is an exceptionally strong organization with an even brighter future ahead,” Elias said in a statement. “I look forward to watching PATH continue to innovate and improve the lives of people around the world.”

In his new job, Elias will help lead the Gates Foundation’s efforts to fight poverty in developing countries. He will stay at PATH through January. PATH chair Molly Joel Coye will lead a board committee that will search for Elias’ successor, PATH said in a statement.

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This week we had a so-small-it’s-scary acquisition of a local medical device company, along with some more encouraging news of a local biotech company entering its first clinical trial.

—Seattle-based Calypso Medical Technologies agreed to be acquired by Palo Alto, CA-based Varian Medical Systems this week for $10 million upfront, plus undisclosed future milestone payments. This will amount to a big write-off for Calypso investors, including Seattle-based Frazier Healthcare Ventures, who have poured more than $150 million into the company since its founding in 1999. The Calypso system, which enables medical pros to deliver prostate cancer radiation therapy with pinpoint accuracy, generates $15 million in annual sales, the company says.

—Theraclone Sciences, a Seattle biotech company that has pulled in the more modest sum of $41 million since its founding in 2005, reached a key milestone. Theraclone said it has started its first clinical trial of an experimental antibody it believes has potential to treat or prevent a wide variety of types of influenza. This first trial will assess safety at a variety of doses, and future trials will have to sort out whether it’s more useful as a hospital-based treatment for severe flu patients, or whether it can help protect first-responders in the event of a flu pandemic.

—I announced our next big Seattle biotech event this past week, called “The Immunex Impact.” This event, timed for the 10th anniversary of Amgen’s acquisition of Immunex, will bring together a number of prominent Immunoids still doing their thing in Seattle. Steve Gillis, Chris Henney, Doug Williams, Stewart Parker, and Dave Urdal will all be there, among others. Tickets are going super-fast for this one, and I’m really looking forward to seeing a lot of readers there at the Institute for Systems Biology on December 1. For info on how to register, click here.

—Cocrystal Discovery, the Bothell, WA-based startup led by Icos veterans Gary Wilcox and Sam Lee, pulled in $7.5 million last week through an investment from Israel-based Teva Pharmaceutical. Teva, the generics company seeking to invent new drugs, is betting on Cocrystal’s experimental polymerase inhibitor against hepatitis C, as well as other antiviral programs.

—This week in the BioBeat column, I chose to stir the pot about how more biotech industry leaders should stir the pot. Essentially, an industry like biotech that relies on broad support from the public and investors needs to work hard to keep people engaged. And being outspoken every once in a while about industry issues is definitely one way to do it.

—This week, I had the good fortune of being one of about five guys who attended a networking event with 200 professional biotech women. It was the kickoff event for the Seattle chapter of Women in Bio, which seeks to help women advance their careers in biotech. There was a lot of enthusiasm in the room, and for proof, check the handful of photos I snapped there.

—Lastly, I had some national news about how pharma giant Merck has decided to join the long list of Big Pharma companies that are now investing in biotech companies. Merck is getting its start with a $250 million fund for biotech startups, and another $250 million fund for global health innovations.

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[Updated with Merck comment 1:25 pm ET, 9/16] Just about all the major pharmaceutical companies have their own venture capital funds to invest in biotech startups, and now one of the real biggies, Whitehouse Station, NJ-based Merck, has joined the club.

Merck (NYSE: MRK) has established the new Merck Research Venture Fund (MRVF) with $250 million to invest around the world, according to a report today by In Vivo, an industry publication. The new venture operation is led by Merck senior vice president David Nicholson. The company also has set up a separate Global Health Innovation Fund with another $250 million.

[Updated Merck comment.] “Presently, MRVF is making strategic LP investments in a small number of geographically diverse life-science venture firms. While we expect to make direct investments in biotech companies in the future, we are not yet doing so,” says Merck spokesman Ian McConnell.

Big Pharma companies, as everyone who follows the industry knows, are struggling like crazy to come up with innovative new products to replace aging blockbusters that are losing patent protection from generic competitors. That need has helped create an opening in recent years for Big Pharma VC firms to invest in biotech startups, particularly as traditional biotech VC firms have been stuck by the lack of an IPO market to provide a reward for their efforts. Pfizer, GlaxoSmithKline, Novartis, Eli Lilly, Roche, J&J, and AstraZeneca have all found themselves in position to fill some of the void in early-stage biotech investing the past few years.

According to In Vivo, the Merck Research Venture Fund will enable Merck to invest in early-stage startups, offer its scientists up as advisors to the smaller companies, and provide Merck’s dealmakers with an inside track in negotiations when it’s time for the small company to strike a co-development partnership.

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The Bill & Melinda Gates Foundation has a new boss for its multi-billion dollar global health division. Trevor Mundel, the former global head of development for Novartis, the Switzerland-based pharmaceutical giant, will start at the Seattle-based foundation on December 1, according to a statement.

Mundel will oversee the foundation’s $14.7 billion global health grant portfolio that seeks to have an impact against a variety of scourges like HIV, tuberculosis, and malaria. Mundel replaces another Big Pharma veteran, Tachi Yamada, a former head of R&D at GlaxoSmithKline who spent five years overseeing the foundation’s global health work until he stepped down in June.

“We are very pleased that Dr. Mundel has agreed to lead our global health program,” said Bill Gates, co-chair of the foundation, in a statement. “He brings tremendous scientific and medical credentials, in the lab and in the clinic. We look forward to working with him to help improve the health of people in the world’s poorest countries.”

At Novartis, Mundel oversaw some 140 clinical projects, a budget of $3 billion, and more than 7,500 employees. He is also on the boards of the Genomic Institute of the Novartis Research Foundation, and the Novartis Venture Fund, the Gates Foundation said in its statement.

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Thane Kreiner, in the prime of his professional life at 50, could be doing pretty much whatever he wants in Silicon Valley’s biotech industry. But about a year ago, he took a job that offered him a big cut in salary, no stock options, and no performance bonuses.

The lure? The chance to help build businesses in the developing world with the potential to make a difference for 1 billion people.

“When I applied for this job, I went to the provost and said, ‘Look, I won’t give you new theories on how to change the world. I actually want to do it,” Kreiner says.

Kreiner has been pursuing this bold goal over the past year as the executive director of the Center for Science, Technology & Society at Santa Clara University, about 40 miles south of San Francisco. The signature program he’s been working on there, in its ninth year, recruits entrepreneurs from the developing world for an 8-month mentoring program to help them figure out how to turn an already good tech-based small business into a great big one. Ideally, Santa Clara wants to help amplify ideas for things like rural electrification or clean water, which could help hundreds of millions of people lift themselves out of poverty.

Plenty of people have caught the bug for social entrepreneurship, but few people come at this emerging field with a background like Kreiner’s. He’s got a Ph.D in neuroscience from Stanford University, plus a Stanford MBA. He spent almost 15 years rising through the ranks at Santa Clara, CA-based Affymetrix (NASDAQ: AFFX), the gene-chip pioneer. The last few years, he co-founded or served as CEO of four different leading-edge biotech startups, including San Francisco-based Second Genome, Seattle-based Presage Biosciences, and South San Francisco-based iPierian. With his network of contacts in the venture world, he easily could have done the next hot thing in stem cells, personalized medicine, cancer diagnostics, you name it.

Corey Goodman, the prominent biotech entrepreneur and longtime friend and mentor of Kreiner, said he’s keeping an eye on Kreiner’s new nonprofit endeavor. “It is a very important program, and Thane is the perfect person to lead it. He has the passion and ability to make it a success,” Goodman says.

The program at Santa Clara University goes back to 1997, and its signature program, the “Global Social Benefit Incubator” got its start in 2003, before many universities had sought to tap into the growing interest in social entrepreneurship, Kreiner says. The idea of the incubator is essentially to identify entrepreneurs with proven technologies, and proven business models, who need some mentorship to scale up their companies to make a bigger difference, Kreiner says. The program matches up about 20 of these entrepreneurs from around the world with Silicon Valley VCs and entrepreneurs who help the startups define their value proposition, define target market segments, etc., over the course of an 8-month program. The program culminates in a 2-week boot camp in August every year, in which the entrepreneurs make their pitch for additional capital in front of an audience of 300 people, and a panel of judges that provide “American Idol” style instant feedback.

Results, like in many socially minded nonprofits, can be pretty squishy and subjective, unlike the hard reality of an audited for-profit income statement. Still, the program has racked up … Next Page »

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Seattle Genetics made waves both locally and nationally this week with an FDA approval that’s a historic step for the antibody drug business, and raises some interesting questions about the economics of cancer.

—Seattle Genetics (NASDAQ: SGEN) nailed down FDA approval of its first product on Friday. The drug, brentuximab vedotin (Adcetris) is designed to treat people with a couple of rare diseases, Hodgkin’s lymphoma and anaplastic large cell lymphoma. After 14 years in business and more than $500 million of R&D investment, Wall Street was betting this highly effective drug would command a premium price of about $110,000 per patient. And sure enough, Seattle Genetics came out with a high price of $13,500 per dose. It could end up costing anywhere between $108,000 per patient or $216,000 per patient, depending on how many doses patients get in the real world. CEO Clay Siegall did his best to defend the price when he was interviewed on Monday by CNBC. I argued in the BioBeat column this week that Seattle Genetics is in the rare position where it can justify a six-figure price tag. But if it really ends up costing $216,000 per patient … that might be worth another column.

—Seattle-based Dendreon (NASDAQ: DNDN), another cancer drug developer that knows all about the consternation surrounding high-priced therapies, had a small but noteworthy personnel announcement. Dendreon added John H. Johnson, the CEO of Savient Pharmaceuticals (NASDAQ: SVNT) and the former CEO of ImClone Systems, to its board of directors. Johnson was the CEO who turned ImClone around in the late 2000s, as its cancer drug became a $1 billion hit, and the company was acquired by Eli Lilly for $6.5 billion.

—Before all that news hit, I dug up an Xconomy exclusive on how Bayer’s Medrad unit has bid $125 million to acquire Kirkland, WA-based Pathway Medical Technologies. The deal still needs shareholder and regulatory approval before it can be finalized.

—Seattle-based Theraclone Sciences has been toiling away the past few years on broadly neutralizing antibodies against the HIV virus, and last week we saw some fruits from that labor. Theraclone, with support from the International AIDS Vaccine Initiative, was part of a national scientific collaboration that discovered 17 new broadly neutralizing antibodies which could become important new tools for AIDS vaccine R&D. The research was published in Nature.

—Seattle Children’s Hospital CEO Tom Hansen is deeply passionate about a simple, low-cost ventilator that he thinks can save the lives of premature infants around the world, and now he’s got some more support to take this idea through critical early tests. The Bill & Melinda Gates Foundation agreed to pump $2.3 million into the ventilator program.

—Lastly, we had an Xconomist Forum guest post from Steve Dickman at CBT Advisors in Boston, who argues that the latest social networking platform, Google+, has the potential to transform healthcare in ways that Google Health couldn’t. As always, your own trenchant observations about various biotech topics are welcome here. If you have an idea you’d like to write about for the Xconomist Forum that’s either local or national in scope, ping me at ltimmerman@xconomy.com.

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Scientists have never been able to make an effective AIDS vaccine, largely because the HIV virus is crafty, always finding ways to mutate and escape the body’s immune defenses. But now a national team of scientists has found antibodies that zero in on newly identified weak spots in the virus, potentially opening up promising new pathways for the development of an AIDS vaccine.

Researchers are reporting today in the journal Nature that they have discovered 17 novel antibodies that are all capable of neutralizing a broad spectrum of HIV strains, by hitting precise regions on the virus that are genetic common ground, no matter how many wily mutations the virus may make. The findings are being published by a team of scientists from Theraclone Sciences, a private biotech company in Seattle; The Scripps Research Institute in San Diego; South San Francisco-based Monogram Biosciences, a unit of Lab Corp of America (NYSE: LH); and the New York-based International AIDS Vaccine Initiative (IAVI).

The latest findings build on work this same team published two years ago in Science, when they identified two genetically engineered antibodies to hit two weak spots on the HIV virus. By finding so many more structural vulnerabilities in the virus, researchers now hope to take the next step by crafting compounds that can spur the body to make these antibodies, hitting the viral equivalents of Achilles’ heel. If this idea can be proven in future clinical trials, it could pave the way for the first vaccine against a disease that still kills an estimated 1.8 million a year around the world, according to UNAIDS.

“The more you understand the virus and characterize it, the better you can do at designing immunogens [ingredients for vaccines],” said Kristine Swiderek, the vice president of research at Theraclone. “It’s very exciting.”

Dennis Burton, a professor of immunology at Scripps and a lead author of the study, added in a statement that, “because of HIV’s remarkable variability, an effective HIV vaccine will probably have to elicit broadly neutralizing antibodies. This is why we expect that these new antibodies will prove to be valuable assets to the field of AIDS vaccine research.”

Theraclone's Russ Hawkinson and Kristine Swiderek

The far-flung collaboration of scientists got its start in a pretty basic observation from sub-Saharan Africa, where AIDS causes the most damage. Scientists there have long noticed that a few rare people can get infected with HIV, yet somehow retain robust immune defenses so they never get sick. IAVI and its collaborators have worked on clinical protocol to identify these special people and collect blood samples from them, which served as the essential raw material of this research collaboration.

IAVI, a global nonprofit supported by the Bill & Melinda Gates Foundation, provided the financial support for the collaboration with Scripps, Theraclone, and Monogram. Each of those parties played a distinct role, Swiderek says. Theraclone used its proprietary technology to produce the novel antibodies that could bind specifically with regions on the virus known as epitopes. The team at Monogram ran the screening tests of those antibodies against various strains of HIV in the lab. And the scientists at Scripps and IAVI worked together on characterizing those precious regions of the virus that are now thought to have potential as vaccine targets.

In the early days of the collaboration, Swiderek says the team worked on samples from just one individual donor, which yielded the first two antibodies described two years ago in Science. Emboldened by that progress—which marked the first time in a decade that any broadly neutralizing antibodies had been discovered—the team continued … Next Page »

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Seattle Children’s Hospital said today it has received a two-year, $2.3 million grant from the Bill & Melinda Gates Foundation to continue development of its low-cost ventilator for premature infants that need help in order to breathe. More than 1 million infants die every year because of inadequate lung function, and the Children’s device aims to reduce that figure by offering a ventilator that is simpler to run and cheaper than the ventilators used in developed countries. I last wrote an in-depth feature on this technology, developed by Seattle Children’s CEO Tom Hansen and colleagues, last August.

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Just when I thought things were going to quiet down in August, and I’d catch up on planning for the fall, all hell broke loose on the Seattle biotech beat.

—Seattle-based Dendreon (NASDAQ: DNDN), the region’s most valuable biotech company of the past couple years, started last week worth more than $5 billion, and ended up yesterday worth about $1.5 billion. Some of this is because there’s panic selling in the overall market, but mostly, investors ran for the exits after Dendreon said it is falling short of its sales forecast of $350 million to $400 million this year because it has had trouble convincing doctors that they can get Medicare reimbursement in a consistent and timely manner. Dendreon said it is now planning to make layoffs to conserve its cash. Shareholder activist Brad Loncar posted an open letter to chairman Richard Brewer about what he would like to see happen. I followed up the whole Dendreon blow-up with a BioBeat column that essentially says the company has no one to blame but itself.

—The other prostate cancer drug developer in town, Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI) also got taken to the woodshed by investors after it disclosed that it has run into delays enrolling patients into a pivotal clinical trial. OncoGenex has bounced back some in the several days since this disclosure.

—One other bad news item crossed the desk this week. Epigenomics, the Germany-based diagnostics company with its U.S. headquarters in Seattle, said it is cutting almost half of its workforce, and moving its U.S. headquarters to the East Coast, as it prepares to introduce a new colorectal cancer test next year.

—Not everything on the site this week was so bad. Seattle-based Presage Biosciences said in a regulatory filing that it has raised $1.6 million out of an equity financing that could be worth as much as $10.5 million over time. Presage, a spinoff from the Fred Hutchinson Cancer Research Center, has some cool technology for helping separate the winners from the losers in the early stages of drug development. It has previously raised at least $4 million.

—Cooley, the national law firm, added a trio of high-powered patent attorneys this week to its Seattle office when it added three partners who came over from Seed IP. They are Bill Christiansen, Emily Wagner, and Carol Laherty.

—Don Rule, the founder of Seattle-based Translational Software, offered up an interesting guest post on “How Seattle Set Out to Create a Biotech Hub, and Fostered a Global Health Nexus.” Just as a reminder, Xconomy readers with insights into our local innovation community are welcome to offer up posts like this when you have something you want to get off your chest. I like these posts to have a conversational writing style, a clear opinion that isn’t complete conventional wisdom, relevance to our innovation community audience, and for them to run 800 words or less. As our more regular guest editorialists know, I will help with copy editing and can help craft a headline that will make your post irresistibly clicky.

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I recently organized a MOHAI walking tour of South Lake Union to begin to explore the roots of the museum’s new neighborhood. My original intent was to explain the importance of South Lake Union as a biotech hub but a different theme emerged in the course of my research. It is true that Seattle has some success attracting biotech organizations to the city, and the prospects for our region are promising, but not stellar. Where our city, and the South Lake Union neighborhood in particular are “punching above our weight” is in our contribution to global health.

The most important asset for the city has been the University of Washington, which generates the intellectual feedstock that might foster either biotech or global health. Beginning in the 1960s, the school transformed itself from general education university to a formidable research institution. While the conventional wisdom is that Warren Magnuson funneled money to the school when he was head of the Senate appropriations committee, Lee Huntsman makes the distinction that Magnuson championed the growth in the National Institutes of Health and then informed the UW of what they had to do to compete for those funds. Needless to say, they learned to compete very effectively. UW is consistently among the top recipients of NIH funding.

The relative significance of global health may say more about our culture than our competence. While the UW is adept at winning grant money, it is less well known for launching companies. The saying is that “if you work at Stanford and get an idea, you call a VC. If you work at UW, you write a paper.”

Still, biotech is an attractive economic engine and the idea that biotech should congregate in South Lake Union goes back as far as 1985, according to The Seattle Times. But there is no evidence that when the Fred Hutchinson Cancer Research Center (the Hutch) moved to Fairview Avenue in 1994 they were influenced by the potential for the neighborhood. Most important to them was finding a site that was large enough and inexpensive enough to bring together their research groups. Likewise, when ZymoGenetics moved to the city’s former Steam Plant that same year (the “mother of all fixer-uppers”) it was for flexible space at a low price.

But by the time of the debate over the Commons project in 1995, Paul Allen envisioned the park surrounded by a collection of high-tech and biotech companies. After the failure of two referenda, Allen’s Vulcan Inc. redoubled its efforts to attract biotech facilities and it seemed logical to funnel software profits into the next big knowledge industry. It wasn’t until 2002 that the movement of Merck’s Rosetta Inpharmatics to Terry Avenue provided some validation for the skeptics.

In 2003 the city actively encouraged biotech by altering zoning regulations to allow for the higher ceilings and extra rooftop equipment necessary for laboratories. Yet in 2004, when Seattle BioMed moved to South Lake Union, the community was still less than alluring for many employees. The lingering decay and lack of lunch alternatives made the neighborhood unappealing.

But by the time that PATH was moving from Ballard in 2010, the neighborhood had reached a tipping point. The change was in part because … Next Page »

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Amid all the comings and goings and CEOs changing jobs in the past week—see Rick Reidy of Progress Software (NASDAQ: PRGS), Mara Aspinall of On-Q-ity, and others—one person flew under the radar in Boston.

He is Stéphane Bancel, and until last month he was the CEO of bioMérieux, the microbiology and diagnostics firm based in France. Don’t let the French accent (and fashion sense) fool you, though. Bancel is a Boston guy, he’s been in town since 2007, and he’s here to stay—which is a big deal for the biotech community.

Last week, for example, BG Medicine (NASDAQ: BGMD), a Waltham, MA-based diagnostics company, said it appointed Bancel executive chairman of its board of directors. Bancel also serves as chairman of Cambridge, MA-based Knome, a personal genomics startup co-founded by Harvard’s George Church, which raised some new money this week. (bioMérieux is an investor in Knome.) Bancel is also involved with Cambridge-based ModeRNA, a stealthy therapeutics startup backed by Flagship Ventures.

Bancel had been chief executive of bioMérieux since the beginning of 2007. The billion-dollar company, which has been around since 1963, specializes in molecular diagnostic systems for healthcare, food safety, and industrial applications—like detecting salmonella in food preparation areas or bacterial infections acquired in hospitals. The firm has about 1,500 workers in the U.S., including a small office in Cambridge’s Kendall Square.

“After five years I wanted to move to the startup world,” Bancel told me this week.

Beyond that, Bancel hasn’t said much specifically about his future plans. Bancel is the kind of guy who’s involved in dozens of far-flung projects, but it wouldn’t be surprising if he spent the next part of his career focused on a new startup at the intersection of diagnostics and pharmaceuticals. (He worked for drug giant Eli Lilly from 2000 to 2006.)

Last month, before he left bioMérieux, he sat down with me to talk about the future of diagnostics, and I got the sense that that’s where his heart is. Molecular diagnostics is evolving rapidly, he said, thanks to faster and cheaper genetic sequencing and analysis and new testing approaches. And it’s changing the whole business, he said.

As Bancel put it, diagnostics used to be (and to some extent still is) a “me too” business, full of commoditized offerings from many companies. It also used to require scale—a big testing platform to do lots of similar tests, employing lots of scientists and staff. But now diagnostics is moving “closer to a pharma business,” he said. What’s more, he thinks advances in diagnostics and life sciences … Next Page »

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The Seattle-based Infectious Disease Research Institute said today it has hired Erik Iverson, a former associate general counsel for global health at the Bill & Melinda Gates Foundation, to fill a newly-created position of executive vice president of business development and external affairs. Iverson will work to create proprietary programs, and form partnerships, to advance the institute’s work on new vaccines, drugs, and diagnostics. Iverson “brings tremendous experience and relationships, along with a deep commitment to our global health mission,” IDRI CEO Stewart Parker said in a statement.

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This was the week Seattle Genetics passed an important milestone on its way to bringing its first product to the U.S. market.

—Seattle Genetics (NASDAQ: SGEN) won unanimous endorsement from an FDA advisory panel for its new drug for rare lymphomas, brentuximab vedotin (Adcetris). The FDA’s committee of cancer drug experts voted 10-0 in favor of approving the drug for Hodgkin’s disease, and voted 10-0 again later in the day for its use against anaplastic large cell lymphoma. The stock traded down after the votes, however, partly because of some hostile comments from the panel, and from FDA’s Richard Pazdur, who said an ongoing study known as Aethera isn’t designed properly to confirm the benefit seen in prior trials. The FDA, which will make the final decision, has a deadline of August 30 to complete its review of the Seattle Genetics applications.

—Ken Stuart, the founder and president of Seattle Biomedical Research Institute, sat down for an extensive interview for a profile that ran here yesterday. Stuart’s life journey is a fascinating one. Growing up in a working class home in Boston, he wasn’t sure he was even college material in his senior year of high school. He got hooked on biology in college, and went on to build a mini-global health empire over 35 years at Seattle Biomed, which now has 365 employees and a $52 million annual budget.

—This week in the BioBeat column, I wrote about how people should stop obsessing about the next big biotech company to get acquired. A Reuters story featured Seattle-based Dendreon (NASDAQ: DNDN) and Seattle Genetics as a couple prime takeover candidates, and I took the occasion to point out that while this might benefit investment bankers and shareholders in the short term, it would hurt this region’s biotech cluster, just like other regions would be hurt if their leading companies were taken out.

—Lastly, we had a thought-provoking guest editorial from Thane Kreiner, who leads the Center for Science, Technology, and Society at Santa Clara University. Kreiner, the former CEO of Seattle-based Presage Biosciences, is urging investors to work on setting up a VC-style investment framework to tackle what he calls “stubborn social problems like food security, safe drinking water, or energy access.”

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