San Diego-based Histogen became something of a high-wire act on the local biotech scene last year after a cross-town rival filed a patent infringement lawsuit against the startup—upending Histogen’s plans to develop a variety of regenerative medical treatments.

The patent suit, which was filed a year ago by Carlsbad, CA-based SkinMedica, hit just as Histogen was preparing to report early results of its experimental treatment to stimulate hair regrowth among 24 men with male-pattern baldness. As we reported at the time, the prospect of costly litigation prompted a group of angel investors to withdraw their planned $2.4 million investment, and Histogen was forced to lay off all 36 employees.

At that time, it seemed likely that the teetering startup was headed for a fall, and Histogen would soon be history.

That still could be the outcome. Lawyers for Histogen filed a request for a summary judgment last August that would dismiss the case. Lawyers for SkinMedica filed their response in September, arguing to keep the lawsuit on track and headed for trial. I reviewed the filings in San Diego federal court yesterday, and U.S. District Judge Thomas J. Whelan has yet to rule on the arguments over Histogen’s bid for an early dismissal.

Meanwhile, as I reported in an end-of-the-year summary, many Xconomy readers continue to root for success in Histogen’s experimental treatment for male pattern baldness.

But we haven’t heard much from Histogen since July, when the startup reported final results of its early study. In the experiment, a single injection of the company’s hair regrowth product—formerly known as ReGenica, now called Hair Stimulating Complex, or HSC—was made just beneath the scalp. Histogen says nearly 85 percent of the two dozen balding men had more hair three months after being treated, and they experienced an increase in hair thickness and density.

To get an update, I recently spoke by telephone with Histogen CEO Gail Naughton, who highlighted the company’s latest plans for … Next Page »

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Our last installment concerning Histogen ended in a cliffhanger. As I reported in February, Histogen CEO Gail Naughton was scrambling to raise funding after a patent infringement lawsuit was filed against her biotech company by SkinMedica, a rival based in nearby Carlsbad, CA. The lawsuit led a group of angel investors to back away from their planned $2.4 million investment in Histogen, which forced Naughton to lay off all 36 Histogen employees at the end of January.

Undeterred, Naughton is forging ahead. Today a cosmetics division called Histogen Aesthetics is launching its line of ReGenica skin care products for use in anti-aging and to promote healing following chemical peels, dermabrasion, and phototherapeutic laser skin treatments. The company plans to market its new products through dermatologists and plastic surgeons, as well as direct sales from Histogen’s website.

I left a message for SkinMedica CEO Mary Fisher after business hours Friday, after I had learned of Histogen’s plans, but Fisher didn’t get back to me over the weekend. SkinMedica also has targeted the skin care market and sells its TNS Recovery Complex through physicians’ offices. In a statement issued in January, SkinMedica says it acquired two patents in the bankruptcy liquidation of Advanced Tissue Sciences, Naughton’s previous company, that encompass SkinMedica’s NouriCel technology. SkinMedica’s patent infringement lawsuit seeks damages and a court order preventing Histogen from developing aesthetic and therapeutic products that infringe on its patented conditioned cell culture media technology.

Naughton contends that ReGenica products are not infringing on the patents SkinMedica acquired from her previous company. The skincare market must be a lucrative business. A 1.5 oz bottle of Regenica Advanced Rejuvenation System is priced at $99 on the Histogen Aesthetics site.

ReGenica, which is the key ingredient in Histogen Aesthetics’ products, was developed from Histogen’s laboratory expertise in culturing and growing fibroblasts, the cells that form connective tissue. ReGenica is made from fibroblast-secreted proteins, growth factors, and other products. Histogen, meanwhile, is focused on developing therapeutic products, and has been studying whether ReGenica injected into the scalp will stimulate hair regrowth.

Meanwhile, Naughton says she’s managed to raise about $350,000 for Histogen over the past few weeks. But the company still needs about $2 million to resume normal business operations. Naughton says about 18 people who were on Histogen’s payroll in January continue to work almost full-time, even though they’re not getting paid.

In coming weeks, Naughton says, Histogen also plans to report the final results of an early-stage clinical trial that tested ReGenica’s potential to regrow hair on the pates of balding men. In February, Naughton reported preliminary results of the five-month study, which was conducted outside the United States.

“The rest of us are submitting grants and trying to raise money,” Naughton told me Friday evening. “We’re riding out this time until we can get this business going again. Basically, we’re back in startup mode.”

Stay tuned to this Xconomy site for our next episode of the Histogen saga.

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A patent infringement lawsuit filed last month against Histogen has triggered a funding crisis at the San Diego biomedical startup, which was forced to lay off all 36 of its employees at the end of January.

Histogen founder and CEO Gail Naughton told me this afternoon the suit filed by rival SkinMedica of Carlsbad, CA, prompted a group of angel investors to withdraw their planned $2.4 million investment in Histogen at the end of January. The ensuing funding crisis has been playing out behind the scenes at Histogen, even while Naughton reported promising findings on the startup’s experimental hair regrowth treatment last week at the 4th Annual Stem Cell Summit in New York.

“The lawsuit really took us by surprise, particularly because it was an infringement suit that was filed when we don’t even have a product on the market,” Naughton told me. “It really cut us off at the knees.”

Since then, Naughton says she has been working on two fronts to find new funding for Histogen. But losing the early stage funding, which had been set to close on Jan. 29, necessitated the immediate layoff of all Histogen employees, she said. About 20 employees have volunteered to continue working despite the layoffs, which were first reported today by The San Diego Union-Tribune.

“I’m not trying to take advantage,” Naughton told me. “They are an unbelievably engaged and passionate group of people who really believe in what we’re doing, and I’m very grateful.”

Privately held SkinMedica provides both prescription-based and cosmetic skin-care products to dermatologists and others to improve the health and appearance of skin. SkinMedica’s suit alleges that Naughton, Histogen, and its cosmetics subsidiary, Histogen Aesthetics, are infringing on two SkinMedica patents covering its “NouriCel” product line and related proprietary technology for culturing human cells in growth media. SkinMedica acquired the patents in 2003 from Naughton’s previous company, San Diego-based Advanced Tissue Sciences, which filed for bankruptcy in 2002 after spending 14 years developing living tissue skin patches.

Naughton denied that Histogen or its subsidiary are infringing on SkinMedica’s patents.

Naughton says she’s been meeting over the past four weeks with a whole new group of investors, whose primary interest is in the potential use of ReGenica, Histogen’s lead product in development, as a hair regrowth product. Histogen says ReGenica is made from proteins and other molecules secreted by human fibroblast cells grown in proprietary bioreactors that mimic the embryonic environment. Last week, Naughton reported early results from a clinical trial that suggests that injecting ReGenica into the scalp promotes hair growth. She says she also has been having simultaneous discussions with four pharmaceutical companies about forming a partnership to help bring certain Histogen products to market.

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It was the best of times and worst of times for the life sciences in San Diego last week. Stalwarts Cadence Pharmaceuticals and Vertex Pharmaceuticals raised cash to expand their businesses, while La Jolla Pharmaceutical and 4-D Neuroimaging basically went in the opposite direction. Biofuels also were back in the news, along with the unmanned Predator surveillance aircraft, so read on!

—San Diego-based Histogen CEO Gail Naughton was the “mane” attraction when she presented preliminary results of a hair re-growth study last week at the 4th Annual Stem Cell Summit in New York. In early results from a five-month trial, Naughton says the biotech’s injectable ReGenica compound stimulated new hair growth in men after 12 weeks.

—Cadence Pharmaceuticals (NASDAQ: CADX) said last week it’s raising $86.6 million in a private sale of 12 million shares, which will be used to build its sales force and to market its new drug candidate, Acetavance. The San Diego biotech is working on an application for FDA approval of the drug, which is a form of the painkiller acetaminophen (the main ingredient in Tylenol) developed for intravenous use in hospitals.

—Vertex Pharmaceuticals (NASDAQ: VRTX), which has 200 employees in San Diego and 1,300 at its headquarters in Cambridge, MA, is raising $320 million in a secondary offering of stock. The biotech is in the final, extremely expensive phase of developing new drug candidates for treating hepatitis C and cystic fibrosis.

—In a subsequent interview, Vertex chief financial officer Ian Smith told Luke the offering also marks a shift to “blue-blood” investment firms that prefer … Next Page »

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San Diego-based Histogen CEO Gail Naughton is presenting encouraging preliminary results today at a stem cell conference from the startup’s first human trial of its hair regrowth treatment, ReGenica.

The company says it is in the midst of conducting a five-month clinical trial somewhere outside the United States to assess the safety of ReGenica. After 12 weeks, the company says, patients using the treatment show increased, thicker hair growth, with no adverse reactions. ReGenica is an injectable liquid product made by culturing cells from newborns and collecting growth factors, so-called wnt proteins, and other molecules that the cells secrete. In mice, wnt proteins are involved in triggering stem cells in the skin to form hair, according to Histogen’s press release.

About 25 subjects enrolled in the Phase 1 trial. They are all men, from 18 to 45 years old, with varying stages of male-pattern baldness.

Naughton is reporting the results at the 4th Annual Stem Cell Summit in New York. Histogen says its goal in conducting the study outside the country is to obtain human safety data for the under-the-scalp injections more rapidly, and thereby speed development of the product. Naughton told me in November her early focus is developing products for cosmetics, dermatology, and plastic surgery industries to generate revenue needed to support long-term development of living tissue skin grafts and other products.

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