The price of shares at San Diego’s Gen-Probe, Amylin Pharmaceuticals, and Optimer were clipped for various reasons over the past week, but several local startups successfully raised capital. Our good news, bad news briefing begins here.

—Rempex Pharmaceuticals, a San Diego biopharmaceutical startup developing a new approach to antibiotics resistance, said it raised $67.5 million in Series B venture funding—bringing total funding for the company to $76 million since its founding less than five months ago. The startup is on a fast track, and plans to use the capital to accelerate the commercialization of its therapies for treating gram-negative bacterial infections. Rempex said it plans to file a new drug application for its first drug candidate in the second half of 2012. New investors Frazier Healthcare Ventures and Vivo Ventures joined existing investors SV Life Sciences, OrbiMed Advisors, and Adams Street Partners in the latest round.

—Cambridge, MA-based Vertex (NASDAQ: VRTX) has held the high ground in hepatitis C therapies since the FDA approved its protease inhibitor drug telaprevir (Incivek) last year. But two rivals are gaining ground. The price of Vertex shares have fallen with the rise of Alpharetta, GA-based Inhibitex (NASDAQ: INHX) and Princeton, NJ-based Pharmasset (NASDAQ: VRUS). Vertex, which has operations in San Diego, hit a 52-week high of $58.87 on May 12, but it has been trading around $31 in recent days.

—Adding to the competition in hepatitis C drugs, San Diego-based iTherX Pharmaceuticals raised almost $3.2 million to advance its development of a prophylactic treatment for Hepatitis C, according to a regulatory filing earlier this week. The startup said in March that its drug candidate TX-5061 appears to prevent the hepatitis C virus from entering liver cells, and has shown “potent preclinical antiviral activity against all HCV genotypes.” Former UCSD virologist Flossie Wong-Staal is a co-founder and chief scientific officer. The company raised $2.8M in 2010.

—San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) agreed to pay Eli Lilly more than $1.5 billion as it gradually reassumes responsibility for global commercialization of its best-selling diabetes drug in a deal that ends its 10-year partnership with Lilly. Under their agreement, which also ends litigation with Lilly, Amylin will take over sales of exenatide (Byetta) in the U.S. by the end of this month—and global sales of both Byetta and an experimental, extended release version (Bydureon) over the next two years. Amylin shares, which hit a 52-week high of $16.65 on Jan. 27, have been trading around $10 a share over the past few weeks.

—Xconomy east coast biotechnology editor Arlene Weintraub profiled PharmaSecure, a four-year-old startup in Lebanon, NH, with operations in San Diego, Michigan, and India. The company provides machines to drug-makers that print unique bar codes and serial numbers on drug packaging. PharmaSecure raised $3.9 million last month from Innovation Endeavors, Gray Ghost Ventures, Healthtech Capital, and angel investors. The Tech Coast Angels (TCA) participated in … Next Page »

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One of the more memorable quotes I’ve picked up on the biotech beat came in a 2004 story about the company once known as Chiron. Speaking of Emeryville, CA-based Chiron’s $700 million acquisition of Pathogenesis in 2000, a Seattle researcher said the following:

“Chiron bought filet mignon, turned it into hamburger, and now it’s burning the hamburger.”

That comment from Arnold Smith, a researcher now at Seattle Children’s Hospital, was made after Chiron had sliced and diced up the Seattle operation, fired a lot of people, and generally drained the local site of its former verve. Rah-rah headlines about the deal had faded into distant memories, and most people had forgotten about the empty platitudes mouthed at the time. The comment taught me a lesson: Pay little attention to what is said when a big acquisition is announced. Pay close attention to what actually happens over the years.

That little quote popped to mind a few weeks ago when I visited the Emeryville offices that were once home to Chiron. It’s been almost exactly five years since Chiron itself agreed to be acquired by the Switzerland-based healthcare giant Novartis for $5.4 billion. So when Novartis invited me over to show me around and meet with the new local management team, I figured it was a good time to ask whether a place that was once considered filet mignon had been able to avoid the fate of becoming charred hamburger.

Chiron, as many remember quite well, was one of the pioneering companies of the biotech industry and the Bay Area life sciences hub. It suffered from a disastrous contamination at a flu vaccine factory in the U.K. in November 2004, and about nine months later, Novartis offered $4.5 billion to obtain full control of Chiron. Shareholders balked initially, but Novartis sweetened the deal and ended up taking over in April 2006. Within days, nine of the 12 senior Chiron executives walked out, and there were rumblings about the possibility of 1,000 layoffs, according to a San Francisco Business Times story at the time, although the final tally was more like 500 job cuts.

Like most acquisitions, people in the broader community, and those in the media, eventually lost track of who was doing what at the Emeryville company under its new corporate overlord.

Novartis' Daniel Parera (left) and Eric Whitters

Lots of things got switched around in various corporate re-organizations, which frankly made my head spin. As I gather, vaccines moved to Cambridge, MA, yet infectious disease headquarters is in Emeryville. Blood-based DNA screening diagnostics are in Emeryville, while molecular diagnostics and companion diagnostics for therapeutics are in Cambridge. Get all that?

Regardless of how dizzying the org chart may be, the Emeryville site has started to grow again under Peter Maag, who became president of Novartis Diagnostics and the head of the Emeryville site in 2009. The local operation now has about 850 employees, about 200 more than it had a couple years ago. Maag has a new management team working under him, many of whom I met on my tour—Daniel Parera, the VP and global head of development for Novartis Diagnostics; Eric Whitters, the global head of research for Novartis Diagnostics; and Emma Lees, the executive director of oncology and the Emeryville site head for the Novartis Institutes of Biomedical Research (NIBR). The operation is expected to get even bigger over the coming year, as about 150 new people are joining a consolidated infectious disease unit which Novartis has … Next Page »

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NanoBio, the Ann Arbor, MI-based developer of new vaccine formulations made to be more potent and easy to deliver, has snapped up a $6 million grant from the Seattle-based Bill & Melinda Gates Foundation. The money will help fund development of the first nasal spray vaccine against one of the most common bugs that causes lung diseases like pneumonia in infants.

The company, a University of Michigan spinoff founded in 2000, secured the support to study its experimental vaccine against respiratory syncytial virus (RSV). This deal allows NanoBio, a for-profit company, to retain the commercial rights to this vaccine in wealthy countries, while the foundation will have access to the vaccine in the developing world.

No one has yet developed a vaccine for RSV infections, and it’s clearly one of the bugs that public health officials would love to tamp down around the world. Almost all infants get this contagious infection at least once by the age of two or three, and it causes an estimated 900,000 hospitalizations every year in the U.S. and Europe for a host of lung complications like bronchiolitis and pneumonia. The latter disease is one of the leading killers of children in sub-Saharan Africa. AstraZeneca’s MedImmune unit made a fortune—$1.23 billion in 2009 to be exact—through selling palivizumab (Synagis) as an antibody treatment for RSV infections, although its nowhere near as practical as a vaccine would be in poor countries, where it would be too expensive. But that robust market makes it clear that if NanoBio can develop a vaccine, it will have an opportunity to make money in wealthy parts of the world, and to make an even bigger impact around the world with help from the Gates Foundation.

“We believe our program holds tremendous promise for addressing a number of global health challenges,” said James R. Baker, Jr., NanoBio’s Founder & CEO, in a statement.

NanoBio made waves back in mid-September, when it reported some eye-opening results of a nasal spray vaccine it has developed for seasonal flu. The study of 199 healthy adults found that NanoBio’s NB-1008, as a nasal spray, was safe and capable of triggering an immune response against the flu virus in both the bloodstream and the mucosal membranes like those that line the nose, where people usually first encounter pathogens. This two-pronged form of immunity hasn’t been shown before with conventional flu vaccines that are injected into a muscle, or with the currently available nasal spray flu vaccine (FluMist).

The NanoBio approach essentially took a commercially available flu vaccine and combined … Next Page »

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Genzyme’s sales of non-core businesses continues. The Cambridge, MA-based biotech company (NASDAQ:GENZ) said this morning that it has agreed to sell its diagnostic products business to Japan’s Sekisui Chemical for $265 million in cash. The deal takes Genzyme, the world’s largest provider of drugs for rare genetic diseases, a step further in sharpening its focus as it fights off an unsolicited takeover bid from the French drug giant Sanofi-Aventis.

Sekisui, which is expected to close on its purchase by the end of this year, is offering jobs to the some 575 employees of the Genzyme diagnostics business—which has operations in Framingham, MA, San Diego, and at least four other locations, according to Sekisui. The diagnostics business, which brought in $167 million in 2009 revenue, sells raw materials and other products for the cardiovascular, diabetes, infectious disease, and renal health markets.

Genzyme announced in May that it planned to sell off its diagnostics business and two others as part of a plan to raise shareholder value. In September, the 29-year-old company sold its genetic testing business to Burlington, NC-based Laboratory Corporation of America (NYSE:LH) for $925 million. Genzyme still has one of the three businesses, its pharmaceutical ingredients unit, on the block. The company says it might use proceeds from these transactions to finance the second half of its $2 billion stock buyback, which was also announced in May.

Genzyme’s stock closed at $69.75 on Wednesday, November 17.

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Trius Therapeutics, the San Diego-based biotech company, has passed an important milestone in its quest to develop a more convenient, more effective antibiotic against deadly MRSA bacterial infections that people tend to get in the hospital.

Trius released results today from a study in which 188 patients with severe skin infections were randomly assigned to get a low, mid-range, or high dose of its experimental antibiotic, torezolid (TR-701). The study found the once-daily pill, given for five to seven days, helped 98 percent of patients on the lowest dose achieve what’s considered a clinical cure. There were no clinical relapses at follow-up visits three to four weeks after treatment.

“The nature of such infections usually warrants use of an IV antibiotic, but the trial results indicate that oral torezolid successfully treated these severe infections quickly and effectively,” said Joseph Surber, chief medical officer of Southwest Regional Research Group, and a clinical investigator on the study, in a company statement.

Biotech and pharmaceutical companies have been pushing hard for several years—without much success—to develop new antibiotics that can kill tough bugs like the MRSA pathogen that are becoming increasingly resistant to standard treatments. An estimated 19,000 people in the U.S. die from bacterial infections each year, more than die from HIV, Trius CEO Jeff Stein told me back in October. Two other companies trying to crack this market—South San Francisco-based Theravance, and Cambridge, MA-based Targanta Therapeutics—ran into various roadblocks and delays after applying to the FDA for market approval.

Trius’s goal is to develop a drug from the same chemical family, but with a superior profile compared to Pfizer’s linezolid (Zyvox), one of the fastest-growing antibiotics.

Antibiotics in this class are potent killers of drug-resistant bacteria, like MRSA. The Trius candidate appears to be more potent in animal tests than linezolid, meaning it can be taken at a much lower dose—which could offer fewer side effects and lower manufacturing costs. It also could be given once a day instead of twice a day, Stein has said. Both Pfizer’s drug and Trius’s can be taken as oral pills, but the added convenience of less-frequent dosing could be important, because antibiotic resistance thrives when patients fail to take all their required meds. Giving them a once-daily pill option may increase the odds that patients will stay in compliance with doctors’ orders.

The Trius therapy was considered well-tolerated, and 92 percent of the side effects considered possibly drug-related were graded as mild, researchers said. No patients dropped out because of adverse events. The least number of side effects were reported on the lowest dose, of 200 milligrams, Trius said.

The trial results have given Trius enough information to pick the lowest dose, 200 milligrams once a day, for the next step in development, a Phase III pivotal clinical trial in patients with severe skin infections. The company plans to complete an early-stage trial of an intravenous form of the drug later this year, and to merge the IV and oral development programs in Phase III trials early next year, Trius said in a statement.

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The Massachusetts Biologic Laboratories, a Boston lab that is part of the University of Massachusetts Medical School, will share an upfront fee of $60 million with Princeton, NJ-based biotech firm Medarex (NASDAQ:MEDX) that U.S. drug giant Merck (NYSE:MRK) is paying for an exclusive worldwide license to two monoclonal antibodies that the UMass lab and Medarex are co-developing for the treatment of clostridium diffficile infection, according to a press release. The deal also provides the UMass lab and Medarex up to $165 million in additional fees for reaching development goals related to the antibody drugs and double-digit royalties on Merck’s potential sales of the products.

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San Diego’s Adventrx Pharmaceuticals, which had 32 employees a year ago, plans to reduce its full-time workforce to five executives and “substantially end” its drug development and business operations as of April 3. The biopharmaceutical company was developing drugs to treat cancer and infectious disease; its lead candidates were novel emulsion formulations of currently marketed chemotherapy drugs. Adventrx said in its 2007 annual report last March it had about $35 million in available cash remaining, and cumulative losses of almost $100 million. In a statement Friday, Adventrx says its five remaining employees will work to consummate a strategic transaction or otherwise obtain financing.

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Regulus Therapeutics has shown it can crawl, now it’s ready to walk. The fledgling Carlsbad, CA-based company is taking steps to raise a large round of private investment capital, and become a more independent company developing a new breed of microRNA-based drugs.

Regulus plans to raise “a very respectable amount” of capital from private investors, which will allow it to reorganize as an independent corporation, says Regulus CEO Kleanthis Xanthopoulos. The company currently operates as a joint venture formed by Carlsbad, CA-based Isis Pharmaceuticals and Cambridge, MA-based Alnylam Pharmaceuticals. Xanthopoulos discussed the plan after a series of meetings with investors and potential partners at the JP Morgan Healthcare Conference last week in San Francisco.

The company, founded less than 18 months ago, made waves in the scientific community in late November. That’s when it published results in Nature from a series of experiments that showed for the first time that blocking microRNA targets in mice was an effective way to prevent and treat congestive heart failure. MicroRNAs are tiny substances first discovered in humans in 2001. They are thought to have big potential as drugs, because they can affect not just one gene or protein in isolation, but rather full networks of genes. That might be useful in treating complex diseases like diabetes or heart failure, where multiple genes are thought to be out of whack.

The company has been able to benefit from getting intellectual property, office space, and staff support from its corporate parents, but apparently the offspring yearns for an ability to raise its own cash.

“I’m not in a position to issue equity now because I don’t have structure to do it since I’m in a joint venture,” Xanthopoulos says. Once Regulus re-organizes with new bylaws as a Delaware corporation, then Xanthopoulos can issue new equity shares, and dole out stock options to employees, instead of offering them stakes in Alnylam or Isis, he says.

The new form of Regulus will have to go through a “branding exercise,” Xanthopoulos says. Isis Pharmaceuticals CEO Stanley Crooke called Regulus a “satellite company” during his presentation, while Alnylam’s John Maraganore calls it a “joint venture.” Both said they were pleased with the model of setting up an independent entity to focus exclusively on a promising field like microRNA, rather than trying to keep it in-house as part of a bigger portfolio, where presumably, … Next Page »

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Woburn, MA-based U.S. Genomics, a maker of single-molecule technologies for biodefense and diagnostics, announced today it has raised $4.5 million in private equity funding from Becton, Dickinson & Co. The deal marks the start of a strategic partnership between the firms to develop an infectious-disease diagnostic platform.

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Idera Pharmaceuticals, the Cambridge, MA-based developer of treatments for autoimmune and infectious diseases, said today it has received an undisclosed milestone payment from drug giant Novartis. Idera (NASDAQ: IDPH) received the payment because Novartis started an early-stage clinical trial of QAX935, a drug that stimulates Toll-Like Receptor 9. The companies entered a partnership in June 2005 to develop drugs against TLR9 for asthma and allergies. Idera stock fell 2 percent to $14.34 at 10:33 a.m. Eastern time today.

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Spaltudaq has never really said a whole lot publicly about what it’s doing. So I was eager to get an update this week from CEO David Fanning about what’s percolating at the Seattle biotech company, particularly since he’s just down the hall from Xconomy’s Seattle office on First Hill.

The basic idea hasn’t changed much since Spaltudaq got started in 2005 as one of the early companies born at Accelerator, the biotech incubator affiliated with the Institute for Systems Biology. Spaltudaq’s scientists look at blood or tissue samples from patients, and identify 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 troublemakers, so it seems like a good idea to sort through critical antibodies with broad potential uses, and make genetically engineered copies of them as drugs. It was compelling enough for the company to raise $29 million in March 2007 from Arch Venture Partners, Canaan Partners, HealthCare Ventures, Amgen Ventures, MPM Capital, and Alexandria Real Estate Equities.

Originally, Spaltudaq looked at developing antibodies for cancer. Then, a realization hit. “Choosing cancer is like choosing Mt. Everest for your first mountain climbing class,” Fanning says. So Spaltudaq has broadened its efforts to include infectious diseases and autoimmune diseases.

Fanning spent most of his time in the interview talking about infectious diseases. Spaltudaq’s scientists are looking for clues in tissue samples from rare individuals who have developed “universally relevant and effective” antibodies, he says. He’s thinking of individuals who survived exposure to the wicked Ebola virus, or those infected with HIV in sub-Saharan Africa who somehow never get sick, possibly because they developed certain antibodies to keep the virus in check. Such antibodies for influenza, if turned into a drug, could be stockpiled as a backup treatment in case of a pandemic. The company has two antibody candidates for flu, which have been able to protect animals from getting the virus after being directly exposed to seasonal flu, or bird flu, Fanning says.

None of the programs have advanced far enough yet to reach clinical trials. Fanning, a former chief operating officer of Seattle-based Corixa, got plenty of experience there in doing deals to keep research and development alive through the long years needed to show a drug works. He wants to do it again. “We’re reasonably confident we’ll see partnerships in place in six months,” he says.

One totally extraneous point. Since I get asked this a fair bit about Spaltudaq, I had to ask Fanning whether he’s keeping the name of the company. “We have the discussion internally from time to time” about changing the name, he says. For now, it’s staying. Founder Johnny Stine came up with the name, which stands for an Indian healing ceremony to ensure that people don’t die before their time. “It’s a neat name, and really links to our goal of developing drugs for patients,” Fanning says.

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