When I profiled Torrey Path in 2009, CEO Peter Dresslar was in the process of moving his software analytics startup from Ann Arbor, MI, to San Diego. The company was focused on providing information services to life sciences companies, and had developed the capability to provide a scientist or research group with all the data results from experiments involving a particular gene.

Dresslar tells me he’s now winding down Torrey Path to start a new company with Derren Barken, a bioinformatics scientist who was most recently at San Diego’s Prometheus Laboratories. Prometheus agreed last month to a buyout offer from Nestlé Health Science that one analyst has estimated to be worth more than $1 billion.

Torrey Path “generated a real amount of revenue and some assets,” Dresslar says. But the focus on a still-emerging field like genomics meant the company “was always running into headwinds” as the company’s customers struggled to advance both the science and the business. Dresslar says he’s now in talks to sell some of Torrey Path’s assets.

Dresslar, who is president of Sequencethree, says he got to know Barken through San Diego’s analytics software community and a local bioinformatics user group. The idea for starting a new bioinformatics startup came to them a couple months ago with “the realization that we wanted to work together,” Dresslar says. Their startup is initially focusing on complex problems in immunology. The two founders are developing computational technology to analyze the immunological properties of peptides and similar molecules, and Dresslar says they can envision ways to develop both new therapeutics and prophylactic vaccines from computer-based simulations.

“The technology takes advantage of massively parallel computing as well as some modern artificial intelligence concepts, and gives us a unique way of exploring complex biological phenomena related to those molecules,” Dresslar says. “We are exploring both technology licensing and developing our own intellectual property as possible commercialization paths.”

Barken is the director of bioinformatics at Sequencethree. He holds a doctorate in bioinformatics from UC San Diego and was a software developer at UCSD’s San Diego Supercomputer Center before he joined Prometheus Labs in 2007. His brother Lee is known among San Diego’s startup community as a CPA and IT practice leader at Haskell & White, and as a Cleantech San Diego board member.

“It’s just the two of us, although we have a couple of great advisors we’re going to be announcing in coming weeks,” Dresslar says. The founders have funded the company themselves so far, although Dresslar says they are looking at a combination of revenue-generating partnership activity, grants, and possibly an angel round in the next six to twelve months.

“We think we have a combination of technology and an approach that will let us understand the properties of biologically interesting molecules better than has been done previously,” Dresslar says. The co-founders also have been seeking out partnerships in fields besides immunology, because their approach also should work with a large number of other molecules. Dresslar says they can envision specific applications in analyzing anti-microbial peptide activity and even microRNA analysis.

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Immune Design aspires to become a bigger company, and now it has recruited a CEO from a bigger company.

The Seattle-based vaccine developer is announcing today that its new chief executive is Carlos Paya, the former president of Elan, the Ireland-based biotech company which has significant operations in South San Francisco. Paya is replacing Immune Design’s founding CEO, Steve Reed, who will continue to serve on the company’s executive management team and board. Bruce Carter, the executive chairman, is staying in his position.

“We are fortunate to have someone of Dr. Paya’s caliber joining Immune Design,” Reed said in a statement.

Paya’s prior job was at Elan, the company known for developing the hit multiple sclerosis drug natalizumab (Tysabri). He oversaw commercial, marketing, R&D, and clinical operations there since November 2008. Before that, he was with Indianapolis-based pharma giant Eli Lilly (NYSE: LLY), as vice president of Lilly Research Laboratories. Paya, an immunologist by training, was a member of the faculty at the Mayo Clinic before going into the pharmaceutical industry.

Immune Design was founded in 2008 with technology from the Caltech lab of Nobel Laureate David Baltimore, and from Reed’s team at the Seattle-based Infectious Disease Research Institute. The technology is based on a vector from Baltimore’s lab that makes it possible to specifically stimulate dendritic cells of the immune system, which are known for sending sentinel warning signals about pathogens to other cells of the immune system. That targeting ability is being combined with synthetic chemical compounds called adjuvants, which are used to boost the effectiveness of vaccines.

The adjuvants from Reed’s lab, when combined with Baltimore’s precise delivery system, offer an opportunity to trigger highly potent, more specific immune responses in the body than vaccines from the past, according to Rick Klausner, a partner with The Column Group, one of the company’s founding investors.

The company has raised $50 million in two rounds of venture financing, and last year struck its first major partnership with AstraZeneca’s MedImmune unit to develop new vaccine candidates.

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This week we ran several meaty profiles spotlighting strategies of New England biotech companies powered by some big life sciences players.

—Lebanon, NH-based Adimab struck a research deal with Novartis, in which the startup will use its technology to discover antibodies that could potentially be used in drugs against two undisclosed diseases that Novartis chooses to target. Financial details of the deal weren’t released, but the announcement adds to Adimab’s arsenal of big drugmaker partners, which also include Merck, Roche, and Pfizer.

—Ryan took a look at Lexington, MA-based Synta’s moves to regain its footing after it halted a clinical trial for its drug for treating skin cancer in 2009, causing its stock value to fall more than 80 percent in a day. The company’s CEO sees promise in its mid-stage cancer drug, STA-9090, as well as the several years’ worth of cash it still has in the bank, Ryan wrote.

—Sylvia used her column this week to spotlight her conversation with Jeffrey Shuren, who leads the FDA’s Center for Devices and Radiological Health, and discussed subjects such as the agency’s moves to balance medical device safety with efficacy and a controversial new approval program.

—Life sciences entrepreneur and Boston University engineering professor Franco Cerrina was found dead in a lab at the school’s Photonics Center on Monday morning. The cause of death is not known, though police are not treating it as a criminal matter, according to the university. Cerrina co-founded five companies, including NimbleGen Systems, a Madison, WI-based developer of DNA microarray technology that sold to Swiss drug giant Roche for $272.5 million in 2007.

—Metamark Genetics, a Naples, FL-based startup in the process of relocating to Cambridge, grabbed a $22 million Series B funding round. The company is developing diagnostics to identify genetic markers and other indicators of tumor progression, using technology from the research lab of Harvard Medical School dermatology professor Lynda Chin.

—Concert Pharmaceuticals, a developer of technology to make drugs safer and longer lasting, inked a deal last year with GlaxoSmithKline that could have a payoff in the neighborhood of $1 billion. CEO Roger Tung talked to Ryan about how the company is exploring new ways to generate human data on its compounds, to nab as much of the potential $1 billion as possible.

—Ryan wrote about Tempero Pharmaceuticals, a biotech startup founded and funded by GlaxoSmithKline, and its work in a new slice of immunology research that’s exploring the forces behind autoimmune diseases such as multiple sclerosis. The company’s roster includes three top Harvard immunology experts as scientific co-founders, as well as Alnylam Pharmaceuticals CEO John Maraganore and life sciences investor Rich Aldrich as independent directors.

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Hold onto your lab coats and safety goggles. Big drug companies and venture firms are engaging in a scientific land grab in the Boston area and beyond to gain rights to new discoveries about what are known as adaptive immune responses. They’re jockeying for the best technology and help from top brains at Harvard, MIT, and local biotech startups.

London-based drug giant GlaxoSmithKline (NYSE:GSK) formed the biotech startup Tempero Pharmaceuticals in March 2009 to stake its claim in this emerging area of immunology. Last week, Tempero CEO Spiros Jamas gave me a rare tour of his firm’s headquarters and labs in Kendall Square (including the foosball table) as well as a run-down of its founders’ discoveries—which shed new light on why some peoples’ immune systems mount dangerous attacks on healthy tissues in autoimmune diseases such as multiple sclerosis.

Tempero, which is solely funded by Glaxo so far, is playing for keeps. It’s got a trio scientific founders—Christophe Benoist, Vijay Kuchroo, and Diane Mathis—who are Harvard professors regarded as top minds in immunology. The firm has also recruited two of Boston’s biggest names in biotech—Rich Aldrich, a life sciences investor who was a founding executive of Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ:VRTX), and John Maraganore, the CEO of Cambridge-based Alnylam Pharmaceuticals (NASDAQ:ALNY)—to serve as Tempero’s independent directors.

Jamas told me about what prompted Glaxo to form Tempero, rather than pursuing its technology internally. “There was a realization that a lot of the basic science in this space was driven by academic thought leaders,” Jamas said. “And a lot of them were being pursued by venture capital … Next Page »

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Individuals in today’s world, Nathan Myhrvold once observed, are sort of like single B-cells in the immune system who go about their business oblivious to what’s happening in an entire human organism with 1 trillion cells. Biology, Leroy Hood often likes to say, is becoming an information science built on units of A, C, G, & T in the place of digital 1’s and 0’s.

Many in the current era of specialization stay within their professional comfort zones, and never cross-pollinate their ideas with people from disciplines as divergent as computer science and molecular biology. But that’s not true of Myhrvold, the Microsoft Research founder who later started Bellevue, WA-based Intellectual Ventures, or Hood, the high-speed gene sequencing pioneer who now leads the Institute for Systems Biology in Seattle. These two big thinkers—who are featured speakers at an Xconomy event Monday at the University of Washington—are close friends who long ago saw the benefit of sharing what they are learning about IT and biology.

There are many connections between the two. Myhrvold, along with Bill Gates, is a member of Hood’s “President’s Council,” an informal kitchen cabinet of advisors to the Institute for Systems Biology. Myhrvold has given keynote talks at the ISB’s annual scientific symposium in which he has drawn analogies between the way the human immune system functions and the way societal networks operate (as mentioned above). Myhrvold is known for his omnivorous interests, and if you watch this video, you can see biology is one of them. This talk is specifically focused on how the human immune system spots infections, fights them off, and develops protective memory against future attacks. It’s not too hard to see how those concepts might be useful against computer viruses and worms, for starters.

Myhrvold, in an e-mail, said he first met Hood after Gates recruited him in the early 1990s from Caltech to start the molecular biotechnology department at the University of Washington. They’ve been working together informally almost ever since.

“Lee has been fantastic for Seattle, first at UW and then by creating the ISB,” Myhrvold wrote. “His mission is to peel back the lid of the black box of biology and peer inside to understand how biological systems work. Biological systems are obviously complicated but there is a strong analogy to the algorithms and electronic circuits used in modern technology. Lee’s approach has motivated some interesting discoveries. I’ve both invented with Lee, and I’ve learned a tremendous amount from him over the years.”

Lee Hood & Nathan Myhrvold

Hood told me he has participated in many of Myhrvold’s “invention sessions” over the years which bring together experts from a wide array of disciplines. Hood said he has also sought Myhrvold’s advice on how to raise awareness of the Institute for Systems Biology’s work in the academic and business worlds. And an IT focus is obvious to anybody who walks into the Institute’s offices: the place hums with high-powered gene sequencing instruments and computers that sift through vast amounts of DNA that make up the genome inside each living cell.

While they have some things in common, the analogies that Myhrvold is talking about are hard to follow at times, much less condense into a single story. But I figured I’d try to sum it up anyway after watching Myhrvold’s freewheeling 39-minute keynote to a bunch of biologists at the April 2008 Institute for Systems Biology symposium. He admitted at the beginning that the analogies are “bold and crazy,” and that he was taking a risk by talking about immunology concepts in front of a lot of people who know more than he does about immunology.

The human immune system, Myhrvold said, has evolved to do a few things very well. It provides surveillance of invading pathogens like viruses and bacteria; analyzes and synthesizes the information; acts on it in the form of an immune response; and stores the information in its memory so that we can quickly produce antibodies to fight off strains of, say, the common cold, that we have seen before.

That process is sort of like how individual biologists have acted independently throughout history. When an emerging pathogen stands out, like smallpox, HIV, or SARS, large numbers of scientists working independently conduct surveillance … Next Page »

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One of the inconvenient truths of the biotech and pharmaceutical industry is that only about one out of every 10 drug candidates good enough to enter clinical trials passes all the tests to graduate as an FDA-approved therapy. Every major drugmaker is searching for ways to boost that success rate, and yesterday I got an interesting glimpse into how the world’s largest biotech, Amgen, thinks about how to raise its game.

Amgen is based in Thousand Oaks, CA, but has 900 employees in Seattle and about 200 more in Cambridge, MA, many of whom play critical roles in the perilous early steps of R&D where a lot of time and money get wasted. I got an overview from Amgen’s senior vice president of translational sciences, Joe Miletich, while he was in Seattle this week to meet with employees (and briefly enjoy the view of Elliott Bay from the office CEO Kevin Sharer sometimes uses).

Amgen (NASDAQ: AMGN) had $15 billion in revenues a year ago, largely from products for patients with anemia, autoimmune diseases, and cancer. About one-fifth of that revenue, $3 billion, was poured into the R&D budget. Much has been written about how Amgen coasted on the success of its first two blockbusters in the 1990s, acquired another one in 2002 from Seattle-based Immunex, but has more recently sought to re-ignite its innovation engine, particularly for cancer drugs, this decade under R&D boss Roger Perlmutter, a former Merck executive and University of Washington immunology professor.

Since it often takes a decade or more to develop a new drug, this effort is still a work in progress, but Amgen now has 50 drugs in the pipeline from the late discovery stage through Phase III clinical trials. Amgen has organized the pipeline with three key guys who report to Perlmutter from beginning to end. David Lacey runs the early discovery, Miletich handles translational steps from there through early-stage clinical trials, and Sean Harper is responsible for late-stage clinical trials.

Amgen's Joe Miletich

Miletich was formerly a professor of internal medicine and pathology at Washington University in St. Louis and a Merck executive. His team in the middle of the R&D machine takes drugs after they’ve graduated from the discovery phase, and then runs them through a battery of genetic tests, cell-based tests, animal tests, models of disease, and biomarker studies to see which types of people might respond to such a treatment. The goal is to test whether the candidates are safe, and whether there’s “evidence of biological impact” that gives the company “a high degree of certainty” on whether the drug is actually hitting the desired target and doing what it is supposed to do in people, he says. If done right, this work is supposed to answer which of those 50 drugs on the roster, and which of the 6 to 8 new ones that enter human trials each year, are truly worthy of putting major-league resources behind in the ultimate proving grounds of Phase II and III clinical trials. The rest of the candidates, Miletich says, may need more long-term observation in people, while some should be killed early before too much money is wasted, he says.

This isn’t revolutionary stuff—it’s what other companies do, Miletich acknowledged. But it is an effort to weave together basic research and clinical development in a closer way than had been done in the past, when research might just hand over a drug to development to see if it worked, Miletich says. He says this more integrated, or “translational,” approach should pay off directly by raising Amgen’s success rate above the usual industry rule of thumb.

“Over the next five years, I’d like to see us have about a 20-30 percent higher success rate over the historical average,” Miletich says.

That sounded pretty bold, but Miletich was quick to throw in qualifiers. There are … Next Page »

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Most Seattleites would probably list Bill Gates, Paul Allen, Howard Schultz, and Jeff Bezos when asked to name local entrepreneurs who built not just successful companies but entirely new industries. But they’d be forgetting Steve Gillis.

Gillis would have to be considered something like the Fifth Beatle in a group like that—you can walk into his office today without being babysat by PR handlers—but he is one of the pioneers of the biotechnology industry both in Seattle and nationally.

For those who don’t know, Gillis was a charismatic 28-year-old immunologist when he left a faculty post at the Fred Hutchinson Cancer Research Center to start Immunex in 1981. He and co-founder Christopher Henney rode the early wave of investor enthusiasm for genetically engineered drugs to an IPO, recruited top scientific talent from around the world to Seattle, and persevered through some dark days to create a breakthrough drug for autoimmune diseases that generates more than $7 billion a year in worldwide sales for biotech giants Amgen and Wyeth.

Talk to any scientist who worked at Immunex in the early days, and they’ll tell you they adored Gillis, the inspirational scientist with an irreverent brand of humor. Legend has it he used to dare scientists to dream big, and instead of bashing them for running a failed experiment, he’d honor goof-ups with the “Pons & Fleischmann award for achievement in dubious science,” named after the guys who once claimed to discover cold fusion.

Gillis didn’t have as much success in his second career act from 1994 to 2005, as the founder and CEO at Seattle-based Corixa. But when GlaxoSmithKline bought that company for a little more than $300 million, he took a new direction in his career, joining one of the most active life sciences venture firms in Seattle, Arch Venture Partners.

This role at Arch allows Gillis, now 56, to put his fingers in a lot more pots. He serves on the boards of six life sciences companies in Seattle: Accelerator, Trubion Pharmaceuticals (NASDAQ: TRBN), VLST, Theraclone Sciences, Qwell Pharmaceuticals, and VentiRx. He also serves on the board of two other Arch companies in Massachusetts—Brighton, MA-based Surface Logix and Cambridge, MA-based Variation Biotechnologies.

This new perspective as a venture capitalist provides Gillis an opportunity to be even more influential in the community, says one of his protégés from the Immunex days, ZymoGenetics CEO Doug Williams. “He can be enormously helpful to the local biotech scene at Arch, and in fact I think if you look at the companies he’s involved with locally, you’d have to conclude that he already is. Steve is one of those rare people with an equal dose of talent in science and the business of biotech. He’s pretty much done and seen it all, and for him to be able to convey that to many companies instead of just one is of great benefit to the local scene,” Williams says.

I sat down with Gillis a few days ago to talk about life as a venture capitalist, how the biotech investing model has changed, and Seattle’s strengths and weaknesses. Here are the highlights of the conversation.

Xconomy: Can you bring us back to your thought process when you came to Arch? It was the summer of 2005, you had a long run at Corixa, and could have done a lot of different things. Why did you decide to become a venture capitalist?

Steve Gillis: After whatever it was, 14 years at Immunex and 11 at Corixa, that was 25 years of being involved in operations of a public company. I didn’t want to jump back into doing that. I needed some sort of break. Because sometimes running public companies isn’t a lot of fun. A lot of what you do is … 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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Leave it to Paul Allen to create a museum that flies. Literally. This Saturday afternoon in the skies above Everett, WA.

Okay, the museum doesn’t really fly, it’s an aircraft hangar that remains on terra firma. The part that flies is most everything inside the museum, which the billionaire with omnivorous interests calls his Flying Heritage Collection. It’s composed of 15 World War II-era fighter planes that Allen has assembled from around the world over the past decade, polished up, and restored to FAA-certified flying condition.

Aviation fans can marvel at the roaring engine of the P51D Mustang, or imagine the danger pilots of other planes faced when performing night bombing raids over Berlin or London. But the larger question Allen is raising with his collection is an even more fascinating one, for me, anyway: What ingredients are necessary to make big leaps ahead in innovation? After all, this short historical period from 1935-1945 saw planes go from propeller-driven to the era of jet engines. Speeds went from 60 mph to 600 mph. Wood and fabric were replaced by all-metal body frames. Radar went from concept to mainstream. How did those stars align so quickly?

I drove up to Paine Field on a rainy Wednesday afternoon to see for myself and meet Adrian Hunt, the executive director of the Flying Heritage Collection. Since it opened in June, the flying museum has apparently been something of an instant hit. More than 11,000 people have already visited, the type of attendance figure that organizers thought it would take six months to eclipse, Hunt says.

Apparently, people are drawn to the living, breathing aspect of the place, where the artifacts don’t sit around collecting dust. Hunt pointed to an eye-washing station on the wall next to an exhibit, and a fire hose. They aren’t props—this is an active aircraft hangar. “That’s not the sort of thing you see at the Seattle Art Museum,” Hunt says. He adds, “It’s important that these are restored to flying condition, so people can experience the power, the engines, and the noise.” (The public can’t hop on board, the planes are flown strictly by professionals.)

By taking a close look at each plane, you can see the step-by-step advances aviation made in those formative years. Allen’s exhibits credit the leaps in innovation to six main themes, which you can see etched on the wall before you enter the hangar. The first is political will, defined by government leadership and public support, which the museum says was “driven by ambition or the need to survive.” (I’ll go on a limb and say that’s a more powerful motivator than stock options).

But political will alone wasn’t enough. For one, the means and manufacturing capacity from capital and labor had to be in place. For another, the support technology like weather instruments needed to mature. More precise weaponry had to be developed. Of course, engines had to evolve with greater horsepower to fly longer, higher, and faster. Then fuselage and wing materials needed to get stronger and lighter in order to make planes safer and more nimble.

Even though I’m the biotech guy at Xconomy, it made me think there’s got to be some lesson here for my corner of the world. Maybe it’s the next flu pandemic that mobilizes political leadership and public support around vaccine research, which could be the catalyst to propel us to a new era of disease prevention after decades of immunology research. Then again, if we aren’t already laying the right foundations in research, maybe we won’t be equipped to make such rapid leaps in a time of crisis. That’s something to think about when the 70-year-old planes rumble in the skies over our modern high-tech mecca this Saturday afternoon.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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