Mark Twain used to toss around a saying about three kinds of lies. There are lies, damned lies, and statistics. This week in biotech, we saw some statistics that could lead some people to get a false impression that everything is just peachy in biotechland.

If you measure the state of life science innovation by the amount of money flowing in, things look swell. Venture capitalists poured $4.73 billion into 446 biotech companies last year, according to the MoneyTree report by the National Venture Capital Association and PricewaterhouseCoopers, based on data from Thomson Reuters. The venture industry association’s press release cheerily noted that overall venture funding jumped 22 percent last year. While software is still the No. 1 and faster-growing sector of the two, biotech held its own, with a solid 22 percent gain in dollars invested compared with a year earlier.

You have to dig deeper to see what’s really going on. There is still a good amount of money going toward late-stage development of drugs people started working on 10-15 years ago. But there is an alarming drop in support for today’s cutting-edge biotech startups. Last year, just 153 U.S. biotech and medical device startups got their first round of financing, the lowest amount of seed investment activity in 15 years, as reported by Ryan Flinn of Bloomberg News.

There’s something really wrong with this picture. Most any biologist will tell you we are living in a golden age of discovery, at a time when we will soon be sequencing entire human genomes for $1,000 in one day. We are able to ask questions about how life works that nobody could even imagine asking a few years ago. It ought to be the time to charge ahead with basic research, and early-stage R&D to test exciting new concepts in diseases like cancer, diabetes, Alzheimer’s, HIV, and more.

But everywhere you look, the story is about cuts, cuts, cuts. The National Institutes of Health, the primary government agency that supports basic biomedical research, used to write checks for one out of every three grant applications, but it’s now down to about one out of every six, NIH director Francis Collins said earlier this month at the JP Morgan Healthcare Conference. Pharma companies are cutting back on R&D, firing workers left and right, and leaning on cheaper outsourced vendors everywhere they can. As many as one-fourth to one-half of biotech venture capitalists are thought to be slowly going out of business, as they are unable to raise new investment funds. The same IPO investors that want to buy Facebook shares look at biotech stocks like a four-year-old looks at lima beans.

There are good reasons why we see all those things happening. Pharma companies have created enormous inefficiencies for themselves through mega-mergers, and now they need to spend years trying to get their houses in order. Biotech as an industry has overpromised and underdelivered, and many investors are tired of it. The FDA, stung by various drug safety scandals, has been cautious about approving new drugs (although there are signs that FDA leadership wants a more balanced approach). And of course, our society is still struggling to come to terms with healthcare reform, and the realization that it’s unsustainable to spend infinite amounts of money on healthcare.

John LaMattina

All that said, an entrepreneur or a bold Big Pharma executive is the kind of person who looks at that picture and believes he or she can overcome the hurdles, and form a plan to turn vision into reality. But there aren’t that many people out there with the can-do spirit, or guts, to put down real money behind really talented teams devoted to the discovery of new drugs. And because everybody’s talking about how to go from Phase I to Phase II with drugs people invented years ago, there’s a real possibility that once those projects run their course, we’ll all look around in 2020 and wonder where all the wonderful new drugs are going to come from.

“You can really get into a vicious cycle when you have to eat your own seed corn,” says John LaMattina, a senior partner with PureTech Ventures, and the former president of R&D at Pfizer.

There are exceptions, of course, with a few people trying creative new ways to plant seed corn. Third Rock Ventures and Atlas Venture are a couple of VC firms that have remained active, continuing to bet big on the edgiest stuff coming out of the labs. Most every Big Pharma company has set aside cash for corporate venture firms that are seeking to help fill the void being created by the shrinkage of traditional VC. Pfizer, Johnson & Johnson, Sanofi, Bayer, and deserve credit for working on creative new collaborations with top biomedical universities and research centers, which seek to minimize some of the problems with the fruitless alliances of the past. J&J made news this past week when it unveiled an incubator for 18-20 startups in San Diego which looks to fill up some lab space it had vacated through its own internal R&D cutbacks.

Right now, we are in an age of experimentation with new organizational structures for supporting biomedical R&D. The hope is that these new organizations can reduce the time, money, and high-risk profile that has made life sciences such a hit-or-miss investment over the years. Pharma companies know they don’t … Next Page »

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Cambridge, MA-based Daktari Diagnostics announced in late December that it has raised $10 million in financing from a syndicate of private and venture firms. The funding round was led by Merck Global Health Innovation Fund, a unit of Whitehouse Station, NJ-based Merck (NYSE: MRK). Also participating in this funding round were Daktari’s existing investors, Norwich Ventures and the Partners Innovation Fund.

Daktari’s technology can analyze small quantities of blood and other fluids. The company developed a cell-counting system that’s portable and doesn’t require the lenses, cameras, or filters commonly used in other diagnostics systems. The company says it will use the recent funding to market its first products, which are designed to monitor patients with HIV.

Merck Global Health Innovation Fund was founded in 2010. According to its website, the $250 million fund fosters startups in six key areas, including health informatics and analytics, heath intervention, and “health productivity enablers.”

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Biotech rivalries are sometimes a bit like boxing matches, where you have two lone fighters vying for the prize. But the hepatitis C market is turning into a battle royal that’s more wide open and unpredictable, with all the competitive maneuvering, surprise crashes, and comebacks you might expect from the Daytona 500.

The medical advances in hepatitis C have been dizzying this year, especially in what it means in terms of multi-billion dollar business implications. The safest thing to say is that there’s plenty of good news for patients this year, but that shareholders in the major hepatitis C drug developers had better hold on tight as a new standard of care gets established.

Some commentators figured that Gilead Sciences (NASDAQ: GILD), the world’s biggest maker of HIV drugs, had essentially locked up the dominant position in this new drug class through its $11 billion acquisition last month of Princeton, NJ-based Pharmasset (NASDAQ: VRUS). But it’s still too soon for anyone to declare victory over the wily and fast-mutating virus that causes hepatitis C. Given the way drug development is going now, it’s possible we could have dueling antiviral drug cocktails that cure almost 100 percent of patients within five years. And before we get there, we’re going to see some fascinating chess moves—and probably a few surprising collaborations—from companies like Vertex Pharmaceuticals, Merck, Roche, Johnson & Johnson, Bristol-Myers Squibb, and Abbott Laboratories, as well as several smaller biotech startups like Alpharetta, GA-based Inhibitex (NASDAQ: INHX).

The Pharmasset compound that prompted Gilead to write such a big check, PSI-7977, is “certainly not a panacea, not the lone answer,” says Kleanthis Xanthopoulos, the CEO of San Diego-based Regulus Therapeutics, and the co-founder of another hepatitis C drug developer, Anadys Pharmaceuticals.

Regulus Therapeutics CEO Kleanthis Xanthopoulos

Xanthopoulos says Gilead was “taken to the cleaners,” and that the hepatitis C market is still up for grabs. “It’s going to take some time before people figure out how it plays out,” he says. The Pharmasset drug “is a powerful player, but you will need other direct-acting antivirals. You want to go to a 100 percent cure rate. I can guarantee the Pharmasset compound isn’t going to do it alone.”

Hepatitis C has never really captured big headlines in the U.S., as it has never benefitted from massive awareness boosting campaigns that have supported research for, say, HIV, or breast cancer. But hepatitis C has clearly emerged as one of the biggest opportunities in pharmaceuticals over the past few years. There are more than 3 million people in the U.S., and an estimated 170 million worldwide, with this liver infection that can lead to cirrhosis and liver cancer. Most people have never bothered to get treated, partly because the infection takes years to fully wreak havoc. The other reason is the standard of care with a combination of drugs—pegylated interferon alpha and ribavirin—causes flu-like symptoms that last for almost a year, and usually cures only 30-40 percent of patients. Essentially, most people figure the treatment is worse than the disease.

Vertex Pharmaceuticals changed the equation back in May. The company won FDA approval for a direct antiviral drug, a protease inhibitor called telaprevir (Incivek), that is added to the usual two-drug combo regimen. By adding the Vertex drug, researchers saw the cure rate boom to almost 80 percent of patients, while cutting the treatment time with the other drugs in half. The Vertex drug also significantly raised … Next Page »

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Theraclone Sciences has been searching for more than a year for a new CEO, and it found one close to home in Cliff Stocks.

The Seattle-based biotech company is announcing today that Stocks, a veteran biotech dealmaker with experience at Icos and Calistoga Pharmaceuticals, is taking over as CEO at Theraclone. Stocks is replacing Steve Gillis, the company’s chairman, who had been interim CEO since Dave Fanning died suddenly in June 2010.

Even without a full-time CEO, Theraclone has made significant strides this year. It raised a little more than $10 million in venture capital, made a splash with the discovery of some broadly neutralizing antibodies for HIV, formed a sizable partnership with Pfizer, and moved its first new drug candidate into clinical trials against the flu. Now the company is looking to continue its growth, partly by leveraging its technology through working with partners that Stocks surely knows well from his many years in business development.

“The idea is to do some select collaborations,” Stocks says. “We’re not going to do a lot and become a service entity. We’re going to have a few partnerships with strong partners, and structure them to allow Theraclone to maintain or keep a substantial portion of the value we develop with our partner.”

Theraclone, founded in 2005 at the Seattle-based Accelerator, specializes in the discovery of novel antibodies. The company works by starting with blood or tissue samples from patients, and identifying antibodies that are made by people’s immune systems against foreign invaders like viruses, bacteria, or cancer cells. Mother Nature has evolved pretty efficient defense mechanisms against these rogue cell types, so Theraclone’s scientists figured it was a good idea to listen to what nature is saying, and then make genetically engineered copies of these antibodies as drugs.

Besides the flu antibody program, Theraclone is moving ahead toward its first clinical trial with an antibody for another infectious disease—cytomegalovirus. And further in the future, the company has its sights on the most lucrative market for today’s antibody drugs—cancer.

Stocks, 53, was previously … Next Page »

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Sangamo Biosciences’ lead drug candidate has flunked its biggest test yet in clinical trials, and the company said this morning that it’s time to move on to other programs.

The Richmond, CA-based company (NASDAQ: SGMO) said today that SB-509 failed in a study of 170 patients that randomly assigned patients with diabetic neuropathy to a new drug or a placebo. The company has now decided to scrap development of this particular drug, and will put more emphasis on its experimental treatments for HIV and single gene disorders.

Shares of Sangamo fell 22 percent to $3.38 shortly after the opening of trading this morning.

There wasn’t any sugarcoating of the results. Sangamo’s drug missed its primary and secondary goals, in which it was seeking to help diabetes patients fight one of the most common complications of the disease—numbness and tingling of nerves in the extremities. “We are disappointed,” said Edward Lanphier, Sangamo’s president and CEO, in a statement.

Sangamo’s study has been watched by scientists because of its potential for treating disease in a new way, through its zinc-finger protein technology. The technology is used to turn specific genes on or off in all kinds of living organisms, and one of the obvious applications is to turn off disease related genes in humans. Sangamo has shown some interesting results recently with a new treatment against HIV, and for a certain kind of hemophilia, but both programs are at earlier stages of development. Sangamo, which went public in 2000, has no drugs of its own on the market.

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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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Theraclone Sciences acting CEO Steve Gillis dropped a hint earlier this week that he was looking to close another $10 million in financing for the company, and now it’s official.

Seattle-based Theraclone, the antibody drug discovery shop, is announcing today it has raised $10.6 million in an extension to its Series B financing. The Series B deal, originally announced as being worth $29 million in March 2007, has now grown to a total size of $41 million, Theraclone said. Previous investors Arch Venture Partners, Canaan Partners, MPM Capital, Healthcare Ventures, Alexandria Real Estate Equities, Amgen Ventures, and Zenyaku Kogyo participated in the Series B extension, the company said.

Gillis, a managing director at Arch Venture Partners, has been filling in as CEO of Theraclone since June 2010 when Dave Fanning died suddenly. Earlier this week, Gillis told FierceBiotech that he hopes to recruit a permanent CEO for Theraclone once the financing is done.

Theraclone made news earlier this year when it struck an antibody discovery collaboration with New York-based Pfizer (NYSE: PFE) and when its work toward discovering broadly neutralizing antibodies for HIV was featured in Nature. The company, originally known as Spaltudaq, was founded in 2005 at the Seattle-based Accelerator.

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Developing new medicines is an amazingly difficult undertaking. The research portion alone is daunting, and for those of us who have actually attempted it, humbling. A recent article reminded me just how little many people understand about the drug discovery process. The basic premise of “Pharma Needs an Innovation Intervention” was that pharma should change its focus from “finding druggable targets” to “deliver a consumer-focused product and service and a business model that goes beyond the product itself.”

Unfortunately, the article doesn’t address two critical issues; one grounded in the past, the other the future. First off, why has Big Pharma, after being one of the most profitable industries for decades, suddenly become so remarkably unproductive in coming up with new medicines? Second, if Big Pharma walked away from the difficult task of “finding druggable targets,” then who would take over the job of creating new medicines? From a business point of view, one can see a clear need to alter a revenue model that may not be working for Big Pharma any longer. However, from a practical and societal perspective, there needs to be some way of innovating new medicines, not just new business models.

I wish I could provide a definitive reason why Big Pharma, as a group, has become so unproductive in recent years. These companies are not monolithic and have distinct styles for running their businesses. To paraphrase Tolstoy’s Anna Karenina “Productive drug companies are all alike; every unproductive drug company is unproductive in its own way.” It’s easy to congregate a lineup of the usual non-productivity suspects: excessive layers of bureaucracy, fear of making the wrong (or any) decisions, entrenched industrial group-thinking, failure to recognize and support an innovative culture, and new regulatory uncertainties. I suspect that all of these concerns contribute to the productivity problem, but it’s difficult to quantitate exactly how important each of these factors really is.

I think Big Pharma is still hung over after a difficult transition from a decades-long focus on screening chemical libraries to more of a recombinant DNA/genomic biology mindset. It may very well be that after a century or so of effort, all of the “low hanging fruit” really has been picked off of the medicinal tree. Finally, consider that Big Pharma’s recent attention was focused on developing blockbuster drugs that would bring in sufficient revenues to feed their bloated organizations. Genzyme’s marked success in treating rare diseases (along with its recent acquisition by Sanofi) illustrates how that thinking has changed.

So why is coming up with new drugs so difficult? The answer is actually pretty straightforward: because biology is amazingly complex. It’s not rocket science; it’s much harder. With all due respect to the people that design and build our space vehicles, uncovering the functional role of thousands of unique biological molecules is a significantly more complicated undertaking. Twelve years is about the average length of time it takes for a single drug to be discovered, developed, tested, and approved by the FDA. Twelve years also defines the time period between the start of the space age (the launch of Sputnik 1 in 1957) and humans landing on the moon in 1969.

Even more difficult than figuring out the function of biological molecules is coming up with a way to alter, in an appropriate way, the divergent activities of selected subsets of these molecules to treat various diseases. People can be afflicted with literally thousands of different ailments. As living organisms, we reflect eons of genetic diversification and are vulnerable to rogue viruses, bacteria, fungi, and environmental pollutants. No two of us are alike, not even identical twins. People also suffer from pain, are susceptible to psychological disorders including addictions, and are at risk of unintentional side effects brought on by numerous medications. The biological and rocket sciences do share one primary characteristic: they are both very expensive, high cost-of-entry businesses. … Next Page »

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Seattle-based Theraclone Sciences is enjoying a moment in the national biotech spotlight today, just as it happens to be on the prowl for some new cash.

Theraclone was honored today as one of the Fierce 15, an annual award that the trade publication FierceBiotech gives out to 15 emerging biotech companies around the world. In a profile of the company today by FierceBiotech editor John Carroll, Theraclone acting CEO Steve Gillis says he wants to put together a new $10 million financing round for the company in the next few weeks and then complete the search for a permanent CEO. Theraclone has been without a permanent CEO since Dave Fanning died unexpectedly in June 2010.

Not very many Seattle biotechs end up garnering the national spotlight, although Fierce has typically recognized one or two companies a year from the Northwest. Last year, Bothell, WA-based Alder Biopharmaceuticals and Seattle-based VentiRx Pharmaceuticals made the cut, while Seattle’s Calistoga Pharmaceuticals (recently acquired by Gilead Sciences) took home the prize the year earlier.

Theraclone gained some visibility in the past year when it struck a partnership with Pfizer, and got some important work published in Nature about how its antibody-drug discovery technology can be used to potentially help develop an AIDS vaccine.

Gillis and Theraclone’s chief financial officer, Russ Hawkinson, didn’t immediately respond to e-mailed requests for comment about the financing.

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Earlier this year the FDA approved telaprevir (Incivek) from Vertex Pharmaceuticals and boceprevir (Victrelis) from Merck for the treatment of hepatitis C. Both agents are protease inhibitors and represent the first approvals of direct acting antivirals for hepatitis C. Direct acting antivirals are a broad class of agents that act to block the growth of viruses by directly disrupting essential viral functions. The benefit of these drugs for hepatitis C follows the dramatic success of this class over the last 15 years in HIV. Now the future advances of direct acting antiviral therapy for hepatitis C is expected to follow a central theme of their use in HIV: that combination of multiple antivirals in a single treatment regimen will provide greater benefit than use of any one antiviral drug alone.

The new protease inhibitors were approved for use only in combination with two previously approved agents, pegylated interferon and ribavirin. The addition of either protease inhibitor increased clinical cure rates, known formally as sustained viral response (SVR) rates, by 30 to 40 percentage points over control groups receiving the standard pegylated interferon and ribavirin alone. As dramatic as these improvements are, there is a good chance for even more dramatic improvements if all-oral regimens, assembled by combining multiple direct acting antivirals, are able to maintain high cure rates while eliminating injectable interferon and its associated flu-like side effects that patients have long sought to avoid.

Next in the development queue are three agents that entered Phase III development this year, including two additional protease inhibitors (TMC435 from Johnson & Johnson’s Tibotec unit and BI201335 from Boehringer Ingelheim) and a cyclophilin inhibitor that disrupts a host function required for viral replication (alisporivir from Novartis). All three Phase III programs are exploring a modality similar to the approved agents, i.e. addition of a single new agent to the standard pegylated interferon/ribavirin. The ongoing Phase III programs will hope to demonstrate one or more advantage over the recently approved agents, potentially including better tolerability, further increases in cure rates, shorter duration of therapy and/or an increased proportion of patients successfully treated with shortened therapy. While such improvements may well be achieved, they may become less important or even irrelevant if the rapidly expanding number of direct acting antiviral combination trials leads to identification of new regimens that surpass all regimens that are based on a single antiviral drug added to the old standard regimen.

Investigation of direct acting antiviral combination regimens has exploded in the last 12 months. This advance has become possible because of the diversity of antiviral mechanisms distinct from protease inhibitors that are now represented in the pipeline of hepatitis C drugs in Phase II development across the industry. Diverse mechanisms are important because they typically provide distinct resistance profiles, and antiviral combinations are being assembled using new compounds with non-overlapping resistance profiles to provide a greater barrier to the development of antiviral resistance. Additional factors that are considered important in assembling optimal combinations include the safety and tolerability profile of each agent, compatible pharmacokinetic profiles and a low potential for unfavorable drug-drug interactions. The more extensively characterized each individual antiviral drug is, the lower the risk of … 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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Our roundup of San Diego’s life sciences news is short and sweet this morning. Could these be the dog days of summer?

—Scientists from Seattle’s Theraclone Sciences, San Diego’s Scripps Research Institute, South San Francisco’s Monogram Biosciences, and the New York-based International Aids Vaccine Initiative (IAVI) have identified 17 new human antibodies that target a chink in the armor of HIV. Under their collaborative agreement, IAVI owns the rights to all the antibodies for potential development of an AIDS vaccine; Theraclone keeps commercial rights to the broadly neutralizing HIV antibodies for therapeutic purposes.

—San Diego-based Zogenix reported encouraging results from a late-stage efficacy study of hydrocodone bitartrate (Zohydro), an experimental extended-release pain-killer intended to treat moderate to severe chronic pain in patients who require 24/7 opioid therapy for extended periods. Zogenix says the pain-killer met its end point for efficacy and was safe and well-tolerated. If approved, the drug would be the first extended-release hydrocodone available without acetaminophen.

—San Diego-based TrovaGene, which was previously known as Xenomics, said last week it has regained development rights for transrenal technology for prenatal and cancer diagnostics. TrovaGene had licensed its technology to San Diego-based Sequenom (NASDAQ: SQNM) in 2008, only to learn that Sequenom had “mishandled” its clinical trials data. TrovaGene alleged in a 2009 lawsuit that Sequenom had deliberately falsified the data.

—In his BioBeat column, Luke says the volatility roiling the markets these days is not as bad as the 2008 financial crisis that triggered the great recession—despite all the scary talk. Even though biotech investments carry considerable risks, Luke says this is no time for life sciences investors to hide their cash under the mattress.

—DNA sequencing tools from companies like San Diego’s Illumina (NASDAQ: [[ticker: ILMN]]) and Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) are improving so fast that it will soon be possible to generate the 3-billion-letter signature of a person’s complete genome for $1,000—and possibly in as little as 15 minutes. Xconomy has organized an afternoon conference with prominent leaders in this emerging field to explain the implications for personalized medicine. The event will be held Oct. 24, at the Byers Auditorium on UCSF’s Mission Bay campus. Online registration is here.

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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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Gilead Sciences (NASDAQ: GILD), the world’s largest maker of HIV drugs, said today that the FDA has approved a new once-daily pill the company has developed for patients with HIV. The drug is a combination of three antivirals—emtricitabine/rilpivirine/tenofovir disoproxil fumarate—that will be marketed under the name Complera. This is the second once-daily HIV pill from Foster City, CA-based Gilead, following a combination of efavirenz/emtricitabine/tenofovir disoproxil fumarate (Atripla), which Gilead markets in partnership with Bristol-Myers Squibb.

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Three years ago, Warner Greene was among a number of HIV experts meeting at George Washington University to discuss the problem of HIV “latency”—the tendency of the virus that causes AIDS to hide in cells and then rage up when drug therapy is halted. “I made a plea,” recalls Greene, head of virology and immunology research at the Gladstone Institutes, a biomedical research institution affiliated with the University of California at San Francisco. Rather than maintaining separate and often competitive research efforts, he said, universities should join with government research agencies and drug companies to try to solve the problem together. “The world ‘collaboratory’ came out of nowhere,” Greene says.

From that discussion emerged the Martin Delaney Collaboratory—a consortium that includes academic researchers from several universities, as well as Merck, the Whitehouse Station, NJ-based drug giant that has made HIV research a priority. The National Institutes of Health (NIH) is funding the effort. On July 11, Merck announced that it would participate in a five-year effort with UCSF to solve the problem of HIV latency, funded by $5.6 million from the Collaboratory, which was named in honor of HIV activist Martin Delaney, who died in 2009. Separately, Merck said, it will participate in another multi-institutional research project led by the University of North Carolina and funded by the Collaboratory.

Merck won’t receive any money for participating, though it will share intellectual property rights with members of the consortia on any discoveries that come out of the effort, says Daria Hazuda, vice president of Merck Research Laboratories. More importantly, she says, Merck will have access to an HIV brain trust that could unlock a mystery that has confounded the field for years. “If we want to cure HIV, we have to define the problem of latency,” she says. “We need to understand where the virus is hiding and how it sleeps in cells.”

The outlook for HIV patients has greatly improved thanks to the two dozen or so anti-viral treatments on the market, which include Merck’s own raltegravir (Isentress) and indinavir (Crixivan). Problem is, says Hazuda, “They suppress the virus, but they don’t … Next Page »

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One of Seattle’s leading scientific entrepreneurs grew up in a working-class home in which neither parent went to college. Ken Stuart‘s family didn’t have enough money to send him to one of the many universities in his hometown of Boston.

When he graduated high school, he had no idea what would come next.

“I wasn’t sure I’d even go to college,” Stuart says. “I never applied. I was sick of school.”

After waiting all the way until May of his senior year, Stuart ended up talking his way into Northeastern University at the last minute and finding a co-op job to help pay the bills. Once there, he got hooked on biology. He soon got on the fast track, and could have had a tenured university faculty job, but decided early on that wasn’t enough. By combining a curiosity for some obscure fields of biology, some entrepreneurial spirit, and really good timing, Stuart ended up building a mini-global health empire at the Seattle Biomedical Research Institute.

Now at 70, after 35 years of building up Seattle Biomedical Research Institute from scratch into a research hotspot with 365 employees and a $52 million annual budget, Stuart is handing over day-to-day leadership to a successor, Alan Aderem. Stuart now says he’s looking forward to returning to more of the science that got him so fired up in the first place.

“There are very few people with the dynamic range to grow an organization from nothing to the state where Seattle Biomed is now,” says John King, a former Merck and Rosetta Inpharmatics executive who served on the institute’s board in the ’80s and ’90s. “Ken learned on the job how to be a startup guy, how to bootstrap an institute based on scientific excellence. He grew into doing things like sophisticated fundraising, marketing—all the kind of things big research institutes have to do.”

Stuart’s journey started in an unusual place. He was born in December 1940, and grew up the youngest of four sons in a working class home in Brighton, MA. His father was a house painter, and his mother was a stay-at-home mom. Stuart found himself interested in the stacks of books that his family kept at home, but he says he wasn’t much of a student. Grammar school was “incredibly easy and boring,” he says.

Stuart didn’t find much that interested him in high school science either, except for physics. It was hard to see where that might lead, though, since Stuart never really saw himself as college-bound. It all changed that one day in May of his senior year, when he recalls going to the school in person, and asking to meet with the dean of admissions. After getting an incredulous look from the secretary, who told him the fall class was full, Stuart persisted in seeing the dean. Within about 10 minutes, he had persuaded the dean to let him in, largely because Stuart had gone to a competitive public high school, he says.

This was the late ’50s, years after Watson and Crick had made the pioneering discovery of the structure of DNA, igniting the modern era of molecular biology. Looking back, Stuart says that moment was lost on him. He found biology more from his personal reading, of a number of books at home that his father accumulated. Pretty soon, Stuart found himself spending long hours not just in the libraries at Northeastern, but at Harvard and MIT libraries, which had reciprocity agreements with Stuart’s school just a few miles across the Charles River. Everything from physiology to biochemistry to frog embryo development, he gobbled up.

“I started studying intensively. I liked it,” Stuart says.

Textbooks soon weren’t enough, and Stuart says he really found his passion … Next Page »

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This week, all eyes in Seattle biotech are on Seattle Genetics. If you don’t know why, here’s a chance to catch up. If nothing else, this will provide plenty of fodder for conversation at today’s WBBA Summer Social, which I plan to attend this afternoon.

—Seattle Genetics (NASDAQ: SGEN) is making its case today in front of an FDA advisory panel that’s reviewing the company’s lead drug candidate, brentuximab vedotin (Adcetris). If the FDA ends up clearing this drug for sale in the U.S., it will not only be Seattle Genetics’ first marketable product after 14 years in business, it also has a chance to be a trailblazer in a new category of therapy, as the world’s first commercially viable “smart bomb” for cancer. The FDA staff review, in documents posted online Thursday, was benign to say the least. I plan to listen to the proceedings via webcast, and report on the FDA panel’s vote and commentary later today.

—Seattle-based Allozyne is seeking to go public through the backdoor route, a reverse merger with a shell of a public company—Poniard Pharmaceuticals (NASDAQ: PARD). CEO Meenu Chhabra talked about all the steps that she’s taking to generate interest in Allozyne on Wall Street, and how this is different from the traditional IPO route.

—Not all the news this week from Seattle Genetics was of the happy variety. Zishen Fan, the brother of a former Seattle Genetics employee, pleaded guilty to federal charges that he traded on inside information about the company in order to pocket more than $700,000 in profits. Fan could face as much as 20 years in prison, according to a statement from the U.S. Attorney’s Office for Western Washington.

—The Fred Hutchinson Cancer Research Center said this week it has secured a $20 million grant from the National Institutes of Health to investigate a new HIV prevention strategy, along with collaborators at the University of Washington, and Richmond, CA-based Sangamo Biosciences (NASDAQ: SGMO), among others.

—The biotech industry today is facing lots of problems, and one them is a lack of guts. That’s the position I took in this week’s BioBeat column. So far, I can say the response has been overwhelmingly positive to this column—apparently biotechies still have thick skins, which I consider a good thing.

—Fate Therapeutics, the San Diego-based company that was co-founded by University of Washington stem cell researcher Randy Moon, disclosed that it has cut back on its small-molecule discovery work and laid off a handful of employees, to concentrate on developing biotech drugs. John Mendlein, the executive chairman, explained the moves in this Xconomy exclusive report.

—Lastly, we had a couple of guest editorials of interest to the local life sciences scene. Stewart Parker, now the CEO of the Infectious Disease Research Institute, offered up some insights into what she saw during her time as a commercialization consultant at the WBBA. And Melinda Moree, the CEO of BIO Ventures for Global Health, provided a fascinating case study on how biotech and global health organizations can work together in really productive ways.

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Gilead Sciences (NASDAQ: GILD), the world’s largest maker of HIV drugs, said today it has expanded its global access program to offer HIV/AIDS drugs at low prices in poor countries. The Foster City, CA-based company said four Indian partners and the Medicines Patent Pool Foundation will get access to the experimental drug elvitegravir, the experimental “Quad” that combines four antiviral meds into a single daily pill, and an antiretroviral boosting agent. Partners will have the rights to sell generic versions of the new Gilead medicines, if they are approved by regulators, the company said.

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The Fred Hutchinson Cancer Research Center has secured a five-year, $20 million research project from the National Institutes of Health to study a method in which a patient’s T-cells can be modified to prevent HIV infections. The Hutch’s Keith Jerome and Hans-Peter Kiem are the lead investigators on the grant, and they are collaborating with scientists at Richmond, CA-based Sangamo Biosciences (NASDAQ: SGMO), the University of Washington, Beckman Research Institute at City of Hope in Duarte, CA, and Seattle Children’s Hospital. The approach seeks to eliminate a protein on immune cells, called CCR5, which the HIV virus uses as a gateway to infect and damage the immune system.

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Tachi Yamada ran what you could call the world’s largest nonprofit venture fund for high-risk, high-reward global health ideas the past five years. Now he’s going to apply that same feel for risk and reward in the traditional venture capital business.

Yamada, 66, the former president of global health at the Bill & Melinda Gates Foundation and chairman of R&D at GlaxoSmithKline, has landed in his next full-time job as a senior executive in residence with Frazier Healthcare Ventures in Seattle. Frazier, a firm with offices in both Seattle and Menlo Park, CA, has more than $1.8 billion under management for venture capital and growth equity investments.

While at the Gates Foundation, Yamada oversaw an effort to seed hundreds of offbeat scientific projects with big potential for global health, part of the $36 billion philanthropy’s mission to fight the most common deadly diseases in the world today—including HIV, tuberculosis, and malaria. Yamada also enlisted support for the cause among Big Pharma companies that hadn’t shown a lot interest in the past. There’s probably no more than a handful of people in the world with his set of relationships in Big Pharma, and with government health ministers around the globe.

“He has a great ability to open doors, find new opportunities, help us build our existing opportunities, and get access to international markets,” says Jamie Topper, a general partner with Frazier. “I can’t say Tachi will have a dramatic shift in our strategy, but he’ll make us better investors. He has a unique set of experiences.”

Yamada will spend about 75 percent of his time working with the firm, helping to identify new investments, get the most out of existing portfolio companies, and help craft international expansion plans for the firm—especially in China and India, Topper says. Aside from Frazier, part of Yamada’s time will still be devoted to his work on the board of Japan-based Takeda Pharmaceuticals, and as a special advisor to Takeda’s CEO.

Last July in an interview with Xconomy, Yamada noted that biotech and venture firms haven’t been nearly as active as Big Pharma companies in the global health field. But he’s kept his eye on the venture business for years, partly through a part-time advisory role he has maintained since 2006 with Frazier Healthcare Ventures. Earlier this year, he oversaw the Gates Foundation’s first-ever equity investment in a biotech company—Research Triangle Park, NC-based Liquidia Technologies. The idea was, by being an equity investor instead of a project financier, the foundation could have a bigger influence over the development of a vaccine technology with broad potential against a number of diseases.

Frazier isn’t expecting that Yamada will tilt the firm’s interest toward global health, but Topper did say that global health is “incredibly important” and that Yamada will help the firm better understand how to invest in it. “I think there’s opportunity there,” Topper says. “I’m not sure we’ll invest in 15 companies in it, but some of our companies are engaging in it now.” A couple of Frazier’s portfolio companies, Topper says, have already been interacting with the Gates Foundation, and “Tachi has been instrumental in making that happen,” he says.

Yamada, in a Frazier Healthcare statement, said he’s excited to join the firm partly because it makes bets on healthcare companies “that address major health needs.” As examples, he pointed to Seattle-based Calistoga Pharmaceuticals, a cancer drug developer recently acquired by Gilead Sciences; Marcadia Biotech, a Carmel, IN-based diabetes and obesity drug developer bought by Roche; and Baltimore-based Bravo Health, a provider of Medicare Advantage health plans for seniors which was acquired by Health Spring.

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