Kineta, the Seattle-based developer of drugs for autoimmune diseases, has won about half of a $13 million federal contract awarded to the University of Washington to create new compounds which might be used to boost the effectiveness of vaccines against HIV or flu.

The five-year contract from the National Institutes of Health is worth about $6.8 million to Kineta, a company with 11 employees, with the rest going to teams led by UW scientists Michael Gale Jr. and Michael Katze. The company’s job will be to identify and analyze new chemical compounds that could become vaccine boosters, called adjuvants, and test them in animals, while Gale’s lab will study the way they work, and Katze will pitch in with computational biology support.

The federal contract is a coup for a small company like Kineta, especially in a period when seed capital for new biotech companies is scarce. Kineta is led by a pair of scientists who worked together at Seattle-based Illumigen before it was acquired by Lexington, MA-based Cubist Pharmaceuticals two years ago in a deal that could be worth as much as $340 million over time. Kineta CEO Charles Magness and chief scientist Shawn Iadonato have started their new company with a strategy of taking relatively raw molecules at the animal testing stage, steering them through the value-building steps of early human trials, and then striking partnerships with larger companies that will find them less risky and more valuable.

The decision to pursue vaccines shouldn’t come as any surprise, because Kineta’s expertise is in immunology, and Gale and Katze were both among the company’s original scientific advisers. It has been pursuing the contract for about a year, Magness says.

“This certainly helps with our financial future because it’s a long-term fixed contract,” Magness says. “We’ll look to hire some people in the short term, but what it really represents is another long-term product opportunity for the company with secure funding.”

The researchers will specifically look to activate …Next Page »

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Seattle biotech is quieting down these days, so it’s a good time for your local life sciences correspondent to step away on vacation. See you back here on July 20.

—EndoGastric Solutions, the medical device firm based in Redmond, WA, and Redwood City, CA, raised $7.5 million from investors. The company makes devices to combat heartburn and obesity. It was originally incubated at Scout Medical Technologies in Kirkland, WA, and has previously raised $79 million from investors including MPM Capital and Advanced Technology Ventures.

—The writing has been on the wall for months at Seattle-based Targeted Genetics (NASDAQ: TGEN), and this week the company may have pulled an important last-ditch maneuver to avoid bankruptcy, or at least hold on a while longer. By paying a $500,000 termination fee, Targeted Genetics escaped a $12 million lease obligation on a manufacturing facility in Bothell, WA, that Targeted Genetics never occupied. This could clean up the balance sheet enough, the company hopes, to entice a partner or other investor to provide capital to keep the doors open beyond August.

—Amgen (NASDAQ: AMGN), the world’s largest biotechnology company, said its lead experimental drug, denosumab, reached all its goals in a clinical trial of more than 2,000 women with breast cancer. The Amgen drug, which is also vying for FDA approval as an osteoporosis treatment, has been studied for more than a decade as a cancer drug at Amgen’s Seattle research center, as I described in a feature in October. So this result has been a long time coming. Detailed results will be presented later at a medical meeting, Amgen said.

—I profiled Kineta, a Seattle-based biotech company formed by a team that worked together at Seattle-based Illumigen before that company was sold to Lexington, MA-based Cubist Pharmaceuticals (NASDAQ: CBST) in October 2007. Team members don’t want to create the next fully integrated biotech company, like Amgen, but instead want to zero in on one delicate spot in the drug development process they know well—early-stage clinical trials.

—Seattle-based Theraclone Sciences received some good news this week when the International AIDS Vaccine Initiative agreed to continue funding a program to develop antibodies that might have broad potential for HIV vaccines and drugs. Terms weren’t disclosed.

—Qliance Medical Management, a Seattle-based company that won’t accept insurance for primary care medical services and instead relies on patients paying a monthly membership fee for such services, raised $4 million from Second Avenue Partners, New Atlantic Ventures, and Clear Fir Partners. Qliance is aiming high, attempting to help form closer connections between patients and doctors by eliminating the insurance middleman, at a time when power players in Washington, DC, are talking about potentially sweeping reforms in how healthcare gets delivered in America.

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Seattle-based Kineta doesn’t want to grow up to be the next Amgen. It has seen plenty of biotech companies go up in flames when they try to do everything from drug discovery to development, and manufacturing to marketing. Instead, the company sees opportunity in carving out one piece of that product development continuum, doing it well, and hopefully making some money.

Sound odd? It’s all part of an unusual business plan at Kineta, a company formed last year by CEO Charles Magness and chief scientist Shawn Iadonato, who worked together at Seattle-based Illumigen before that company was sold to Lexington, MA-based Cubist Pharmaceuticals. I sat down with them last week at their new offices in Seattle’s South Lake Union neighborhood to hear about the company strategy and its initial case-study—drug candidates it acquired for autoimmune diseases like multiple sclerosis and Type 1 diabetes.

The company was founded on the basic idea that there is a great supply of drug candidates in the biotech and pharmaceutical industries in the preclinical (animal testing) phase, but little demand for those products until someone generates evidence they work in human trials, Iadonato says. On the other end of the spectrum, there’s great demand from patients for new therapies, but a slim supply of really promising drugs in the late stages of development to meet the demand. The Kineta group, through work at Illumigen and other companies, showed they were skilled at taking relatively untested drugs through the late preclinical and early-stage clinical trials—steps that often trip up larger companies, and take a lot longer than they think.

So the Kineta concept is to cast about for promising drug candidates in animal tests, acquire licenses for pretty modest terms, run them through early-stage clinical trials on a strict budget of time and money, and then form a partnership with a bigger drugmaker who has the money and manpower to run bigger trials needed to win FDA approval for a new drug. If all goes as planned, Kineta will collect the usual upfront payments on these deals, milestones from success in later development, and royalties on product sales if they ever become marketed products. And they’ll repeat the cycle many times over. Essentially, they plan to do a couple of essential drug development steps well, and let other people try to be the next Amgen or Genentech.

“A lot of biotechs are built on ill-defined timelines, and ill-defined amounts of investment, …Next Page »

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Two veterans of Illumigen Biosciences, the Seattle-based company that was acquired a year ago by Lexington, MA-based Cubist Pharmaceuticals, have resurfaced in a new biotech venture in Seattle called Kineta.

Shawn Iadonato and Charles Magness co-founded the company to develop new classes of therapies to enhance the innate immune system to fight viral infections and autoimmune diseases. They went to work shortly after Illumigen was sold to Cubist (NASDAQ: CBST) last December. That deal was worth $9 million in upfront cash, plus milestone payments potentially worth $332 million based on success with Illumigen’s hepatitis C drug candidate and other experimental treatments.

Kineta isn’t disclosing who’s backing it, or how much capital it has raised. It does claim to have assembled an impressive team of scientific advisers, including Michael Gale and Michael Katze, a pair of immunology experts at the University of Washington. It also says it has partnerships with Cubist to finish animal tests on a novel hepatitis C drug, and what it calls “substantial development funding” from the National Institutes of Health under the Small Business Innovation Research program. The goal will be to identify conventional small-molecule drugs that stimulate the RIG-I gene pathway, which is thought to trigger native immunity against hepatitis C and other viruses. The Kineta team says it can use its techniques to fight flu, West Nile Virus, Type 1 Diabetes, Multiple Sclerosis, and Rheumatoid Arthritis.

“Kineta’s launch is truly great news for Seattle’s biotech cluster,” said Bruce Jackson of enterpriseSeattle, a regional economic development booster organization, in a Kineta statement. “It is extremely important that Seattle’s most successful life sciences entrepreneurs reinvest in our community.”

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