It was another big week for life sciences news in San Diego, with interesting developments in agricultural biotech, industrial biotech, and genomic sequencing. This is our wrap up of what you need to know.

—San Diego’s Synthetic Genomics spun out a new San Diego-based agricultural biotech, Agradis, with $20 million in Series A financing and proprietary technology that can be used to develop improved hybrid crops such as castor and sweet sorghum. Mexican investor and businessman Alfonso Romo is a co-founder of Agradis, along with J. Craig Venter, Synthetic Genomics’ chairman and CEO.

—TedMed is underway this week at the Hotel del Coronado. Peter Diamandis, the chairman and co-founder of the X Prize Foundation, took the stage yesterday to announce some changes in its $10 million competition in genomic sequencing. The foundation, based near Los Angeles, says the $10 million Archon Genomics X Prize presented by Medco will be awarded to the first team that accurately sequences the whole genome of 100 people within 30 days for $1,000 or less per genome, and at an error rate no greater than one per million base pairs. The prize is intended to open the way to new era of personalized medicine with unprecedented accuracy.

—San Diego’s Illumina, (NASDAQ: ILMN), the market-leading maker of DNA sequencing equipment, said it’s eliminating 200 jobs, or about 8 percent of its workforce. Illumina said a restructuring of its business is expected to add a $15 million to $17 million charge on the company’s income statement, mostly in the fourth quarter.

—In a separate announcement, GenoLogics of Victoria, BC, said it has raised $8 million through a strategic financing in the company by San Diego’s Illumina. GenoLogics said it plans to develop genomics software tailored for cheaper desktop sequencers, to build up its sales and marketing efforts, and develop new applications.

—The MoneyTree Report on third-quarter venture capital activity found … Next Page »

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San Diego life sciences research and development, the engine that drives innovation, got some new digs at Isis Pharmaceuticals, and J. Craig Venter started the digging for the construction of a new genomics research headquarters. But we didn’t have to go digging for news; our roundup begins now.

—After meeting with federal regulators, San Diego’s Orexigen Therapeutics (NASDAQ: OREX) said it is restarting work on its experimental diet pill, a combination of naltrexone and bupriopion (Contrave), after declaring in June that it was suspending development of the drug. Orexigen shelved the program after the FDA said the company still needed to conduct a costly, long-term clinical study of more than 60,000 patients to demonstrate that the proposed diet pill wouldn’t increase the risk of heart attack or stroke. Orexigen found a way to move forward, however, by proposing a two-year cardiovascular study that would enroll 10,000 patients. Orexigen said the FDA’s feedback was “reasonable and feasible.”

—San Diego-based Independa, a wireless health startup developing technology to help seniors live independently, raised $1.6 million in an early stage financing round involving Miramar Venture Partners and City Hill Ventures, with an additional $200,000 loan from Silicon Valley Bank. Independa plans to spend the money on development of its Software-as-a-Service (SaaS) technology and to expand its marketing and distribution.

—NuVasive (NUVA: NUVA), the San Diego medical device company developing new surgical products and techniques for repairing the spine, said it gave more than it got in a continuing patent dispute with Medtronic. While a formal judgment has not yet been entered, a jury reviewing four of the nine contested patents determined that Medtronic should pay NuVasive $660,000 plus interest for infringing on a NuVasive patent. The jury also found that NuVasive should pay Medtronic $101 million plus interest for infringing three Medtronic patents.

—San Diego scientist J. Craig Venter and local dignitaries attended a ceremony Tuesday as construction began on a new $35 million building to house the West Coast headquarters for the J. Craig Venter Institute (JCVI). It’s going in near the Salk Institute and the new Sanford Consortium for Regenerative Medicine. A JCVI spokeswoman said the 45,000-square-foot building will be support 125 scientists and staff in a state-of-the-art, carbon-neutral building on the UC San Diego campus. The work will be focused on genomic research, including human genomic sequencing and analysis, synthetic genomics, and environmental genomics.

—Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS) has completed the consolidation of three R&D facilities into a single corporate and research facility. An Isis spokeswoman said the company’s 320 employees continue to be focused on research and drug development, with technology that enables the company to move three to five new drugs into its pipeline every year. The cholesterol-reducing drug mipomersen is the company’s most advanced drug.

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The TEDMED conference, with its two-hour sessions of engrossing 15-minute presentations on medical technology, education, and design, returned this week to the San Diego area’s famed Hotel del Coronado. Like its progenitor, the annual TED conference in Long Beach, the four-day TEDMED event cultivates an aura of exclusivity by mixing talks from celebrities, prominent CEOs, and famous scientists and technologists—and by charging attendees $4,000 apiece to enjoy the show.

Each series of talks is grouped around a general theme, but the overall effect tends to be impressionistic. So keeping in the spirit, here are some rapid-fire impressions of the TEDMED presentations yesterday afternoon.

—Motivational speaker Tony Robbins is huge!—especially when he’s standing next to the diminutive TEDMED founder Richard Saul Wurman. At 6-feet, 7-inches, Robbins is not just tall—he is clearly some kind of power weight lifter. He could probably bench press 750 pounds. Robbins, whose seminars urge audiences to “Take Charge of Your Life” and “Overcome Any Challenge,” informs the sellout crowd that it is Wurman’s 75th birthday. Robbins asks the audience to acknowledge the inspiration Wurman has provided the world, and they respond with a standing ovation.

—J. Craig Venter, the human genome pioneer and founding CEO of San Diego-based Synthetic Genomics, tells the audience that most humans are born without any microrganisms in their body, but we acquire them very quickly. Scientists estimate that the average human has 1,000 unique microbial species in their mouth, 1,000 in the intestinal tract, 500 in the vagina, and 200 on the skin (mostly on the hands and forearms). “You can’t understand human biology without understanding what all these organisms do,” Venter says. For example, Venter says each human has the ability to make about 500 different chemicals in our blood that circulate throughout the body, including the brain. About 10 percent of these are bacterial metabolites. Another 30 percent are from the food we eat, and 60 percent are from our own metabolic processes.

—Juan Enriquez, managing director of Boston’s Excel Venture Management, makes the argument, drawn from a soon-to-be-published … Next Page »

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San Diego’s Synthetic Genomics, co-founded by human genome pioneer J. Craig Venter, and the nonprofit J. Craig Venter Institute, are forming a new company called Synthetic Genomics Vaccines.

The startup plans to develop next-generation vaccines, using the latest advances in synthetic biology and genomic sequencing from the Maryland-based Venter institute, and intellectual property and “business acumen” from Synthetic Genomics, according to a statement today. The new vaccine company also has formed a three-year alliance with Novartis, the Swiss pharma giant, to collaborate in the development of influenza seed strains needed for vaccine manufacturing.

The collaboration with Novartis is supported by an award from the U.S. Biomedical Advanced Research and Development Authority that is intended to lay the groundwork for a more effective public health response to seasonal and pandemic flu outbreaks. The companies did not specify the amount of the award.

Under their collaboration, Novartis and Synthetic Genomics Vaccines plan to establish a “bank” of synthetically created seed viruses, which could be used to produce vaccines as soon as the World Health Organization identifies seasonal flu strains of concern. Currently, the WHO distributes live reference viruses after they have been identified to major vaccine manufacturers like Novartis. By creating the bank, Synthetic Genomics says the partnership could reduce vaccine production time by as much as two months, which would be critical during a pandemic.

The Venter Institute has been working with Novartis for more than a decade to apply its expertise in genomics to the development of new vaccines. Their last collaboration resulted in a technique now known as “reverse vaccinology,” a genomics-based way of finding new targets for vaccines that’s faster than traditional methods. Using advances in synthetic genomics, the companies say it is conceivable that more universal vaccines could be developed to target a broader range of infectious agents.

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Ever wonder how it is that the day a big scientific paper is published, or a groundbreaking presentation is given at a meeting, all major media outlets seem to have the story right away? It doesn’t happen by chance. The massive coordination effort is known as the embargo system. It is one of the most well-oiled machines within the massive conveyor belt that moves discoveries from bench to bedside.

The system is supposed to level the playing field for journalists covering the highly complex topic of science. It works by allowing reporters advance access—usually 3 to 4 days—to the data in exchange for a promise not to publish until after a pre-arranged date and time. Thus, reporters are able to thoroughly report the piece and talk to sources without fear that a competitor will scoop them. This supposedly makes for better journalism.

I don’t disagree that this is helpful in some cases. For major medical stories, or scientific discoveries that may have a significant impact in some aspect of our lives, it makes sense to have several media outlets scrutinizing the information. Behind the scenes, this increases the pressure for a reporter to do a good job. If I know that when my story comes out so will a version from the New York Times and the Associated Press I will be much more eager to avoid looking like an idiot as I explain the study’s significance.

However, things have gotten a little out of control with the embargo system, and I’m not sure its benefits outweigh the drawbacks. For way too many examples of less-than-relevant science, the system has become a way to artificially create newsworthiness. A recent example that comes to mind was J. Craig Venter’s announcement of his team’s creation of the first synthetic cell. The news was released to reporters under embargo, along with notice of the date and time of a press conference organized by the journal Science. There, Dr. Venter proceeded to tout his research as a landmark with numerous future—emphasis on future—applications.

The event was orchestrated in a way that made it hard for news organizations to pass on it. While I respect the scientific achievement, I wonder what would have happened if … Next Page »

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After reading Andy Pollack’s reportage on biotechnology for years in the New York Times, I finally got a chance to meet him a couple of weeks ago in San Diego, at a briefing to update reporters and VIPs on the $300-million partnership that Synthetic Genomics and ExxonMobil formed to develop algae biofuels.

Today Pollack published an overview on algal biofuels that features two San Diego algae biofuels startups—Synthetic Genomics and Sapphire Energy—and mentions the concerns raised in some quarters about growing genetically engineered algae in open ponds. The concerns about genetically engineered algae are similar in nature to the concerns raised about growing any genetically modified organism (GMO) in an open environment.

While genetically modified crops are grown throughout the United States, many environmental groups—particularly in Europe—remain opposed to agricultural production of genetically engineered plants. In the case of genetically engineered algae, Synthetic Genomics’ founding CEO J. Craig Venter says in the Times article that “suicide genes” could be inserted that would kill the algae if they escaped from the lab or fuel production facility.

But the Times article left me with a sinking feeling that I had gotten some important information wrong in a story I posted last October, “Two Things I Learned During My Tour of Sapphire Energy.”

One of the things I learned—or thought I learned—last year was that San Diego-based Sapphire Energy wasn’t genetically engineering its algae. The algal biofuels startup, which has funding from Bill Gates, Arch Venture Partners, and others, was using high-throughput screening to test thousands of different species of algae daily—and thereby identify which species are ideally suited for producing natural oils that can be used to make gasoline and other fuels.

In an e-mail to Sapphire spokesman Tim Zenk, I said I wanted to set the record straight, and I felt like my headline should have said, “Two Things I Learned During My Tour of Sapphire—One of Which is Wrong…”

But in his reply, Zenk assures me that … Next Page »

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Sometimes in this job, the stuff you hear just seems too good to be true. Like when the mayor of San Diego invites members of an audience to suggest a slogan more exciting than the one he came up with: “When you think of pond scum, think of San Diego.”

It’s not often that the mayor of a major city serves up an opportunity to respond to something like that.

Yet that’s pretty much what San Diego Mayor Jerry Sanders did in public remarks last week at an event that Synthetic Genomics organized to mark the first anniversary of its partnership with the oil giant ExxonMobil (NYSE: XOM). The San Diego startup is getting at least half of the $600 million that ExxonMobil is spending to develop algae that could someplace replace crude oil as a refinery raw material for the production of diesel, gasoline, and jet fuel.

There are thousands of different types of algae, so the task of identifying—or genetically engineering—the ideal algal species for making biofuels still represents a huge scientific challenge. Still, if all goes as planned, our next generation of transportation fuels could someday come from ordinary pond scum.

So it was a proud mayor who stepped to the microphone following a few introductory comments by J. Craig Venter, the human genome pioneer who is Synthetic Genomics’ CEO and co-founder.

Mayor Jerry Sanders

“Our region, the San Diego region, has been able to gain stature as a hub for biofuels,” Mayor Sanders said. “We have more than 20 companies right now working on alternative fuels—including fuels made from used cooking oil, plant-based fuels, and then the micro-algae research being done right here. Between our first-rate research universities—UCSD and San Diego State University—and all of the research institutions up here on Torrey Pines Mesa, we believe that San Diego will soon be synonymous with alternative energy and biofuels.”

The mayor then went on to make a little joke—which now must seem like a soft pitch down the middle of the strike zone to wordsmiths everywhere.

“Now we’re still working on our slogan, after our initial efforts failed to generate excitement,” Sanders said. “So if anyone can think of something more exciting than, ‘When you think of pond scum, think of San Diego,’ we’d appreciate some help on that.”

Amid the polite laughter that ensued, an idea was born. Let’s ask the gentle readers of Xconomy to take up the offer that hizzoner so generously extended!

But first a little background.

As a popular convention and tourist destination, San Diego has promoted itself since … Next Page »

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San Diego’s Synthetic Genomics and Texas-based ExxonMobil celebrated the first anniversary of their strategic alliance today with the official opening of a greenhouse for growing and testing algae that could someday replace crude oil in the production of diesel and other fuels.

On this day last year, ExxonMobil announced plans to spend at least $600 million to develop next-generation transportation fuels from algae—a renewable resource—with $300 million directed to Synthetic Genomics, a five-year-old startup that has assembled an all-star roster of biologists. The founders include CEO J. Craig Venter, the human genome pioneer, Nobel Laureate Hamilton O. Smith, and Juan Enriquez of Boston’s Excel Venture Management.

The greenhouse, near Synthetic Genomics’ headquarters atop San Diego’s Torrey Pines Mesa represents the next step in a 1,000-mile journey to algae-based fuel production, figuratively speaking. The greenhouse is intended to serve as a facility bathed in real sunlight (instead of indoor laboratory lighting), where scientists can work to identify—or genetically engineer—the particular algae that is best-suited to serve as a biological feedstock in the existing fuel production infrastructure. The next major milestone in the program would be establishing an outdoor test facility, a step the partners would likely announce about this time next year.

“I like to think of this greenhouse as sort of a halfway house,” Venter told a small crowd of dignitaries and journalists who gathered for the event under an intense Southern California sun. “Most of what you hear in algae research happens in the research laboratory. But things don’t always translate well out from the laboratory bench to the scale that we need here, of literally billions of gallons of fuel if this is going to have any impact at all on shifting the CO2 levels or coming up with alternate sources of energy.”

Growing algae in the greenhouse requires only sunlight, “which we have in abundance here today,” and carbon dioxide, Venter said. Synthetic Genomics scientists are working with various types of both cyanobacteria (also known as blue-green algae) and eukaryotes. Promising batches begin in small glass flasks and are transferred in steps to larger containers, including 8-liter and 100-liter plastic bags (also known as photobioreactors) that hang on racks in the greenhouse. Algae also are grown in oval, raceway-like ponds stirred by paddlewheels.

One surprising detail that Venter disclosed: All the algae under cultivation in Synthetic Genomics’ greenhouse are grown in saltwater taken from the Pacific Ocean, off the end of a pier near La Jolla. Algae thrives in both fresh water and saltwater, but Venter says he does not want to develop a process that takes agricultural resources by using fresh water. “Fuel cannot compete … Next Page »

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The big news came with a guilty plea by Sequenom’s former R&D chief, but it’s just the beginning. In pleading guilty, Elizabeth Dragon agreed to cooperate with a continuing criminal investigation of wrongdoing in the company’s development of a prenatal diagnostic test for Down syndrome. Our weekly wrap-up begins here.

—The former chief of research and development at San Diego’s Sequenom (NASDAQ: SQNM) pleaded guilty yesterday to conspiring to commit securities fraud. Elizabeth A. Dragon, who joined Sequenom in 2006 after 16 years at Roche Molecular Diagnostics, admitted in federal court that she had lied to investors about the sensitivity and accuracy of a prenatal genetic test the company was developing for Down syndrome. Dragon, who has agreed to cooperate with a continuing criminal investigation, also settled a civil suit filed yesterday by the Securities and Exchange Commission.

—San Diego’s DexCom (NASDAQ: DXCM) says it will comply with changes sought by the FDA in the way it labels certain biomedical devices used to monitor blood sugar levels. In a warning letter sent to the company, the FDA says DexCom should have disclosed that its sensor wires sometimes fracture, leaving wire splinters under the skin of some users.

—James Sweeney, who started CardioNet (NASDAQ: BEAT) in San Diego and led its $425 million IPO in 2008, says his advice to startup CEOs about initial public offerings is “to avoid going public at all costs.” Sweeney, who now heads San Diego’s PatientSafe Solutions, talked about IPOs, reverse mergers, and other corporate exits during a meeting of the San Diego Venture Group.

—In a small step for gene therapy, San Diego-based Celladon says its gene therapy treatment for healing patients with advanced heart failure didn’t appear to cause any serious side effects and was more effective than a placebo in a study with 39 patients. The biotech hasn’t yet disclosed exactly how effective its treatment is.

—Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) made an undisclosed equity investment in San Diego’s Synthetic Genomics, the startup co-founded by genomics pioneer J. Craig Venter. Life Technologies makes many of the laboratory instruments and materials that Synthetic Genomics and other biotechs use to sequence the genomes of different organisms.

—Life Technologies also disclosed that it has acquired a 74 percent ownership stake in Germany’s GeneArt, one of five small companies around the world that specialize in synthesizing custom-ordered genes for use in biomedical research.

—Luke profiled Blue Heron Biotechnology, which is the Bothell, WA, biotech that Craig Venter recently turned to in making the first bacterial cell with an entirely synthetic genome. Like GeneArt, Blue Heron is among the five small biotechs that specialize in synthesizing custom-ordered genes for use in biomedical research.

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Quite a few Seattle biotechies are quietly gearing up for the always-important American Society of Clinical Oncology meeting from June 4 to 8 in Chicago. Combine that with a holiday weekend, and the local life sciences news was a little light for Xconomy Seattle.

—One of the big national headlines this week came when Amgen (NASDAQ: AMGN) won FDA approval, ahead of schedule, to start selling denosumab (Prolia) for women with osteoporosis. This is big news for the world’s largest biotech company. But it’s not the end of the story. The company is also vying for FDA approval to market the product for cancer-related bone loss, a quest that one of Amgen’s local scientists has been pursuing for about 15 years.

—SonoSite (NASDAQ: SONO), the Bothell, WA-based maker of portable ultrasound machines, made an important strategic move last week when it gobbled up Toronto-based Visualsonics. CEO Kevin Goodwin explained in detail what this new technology will mean for portable ultrasound, and how the company plans to use the new capabilities to crack open some new markets.

—Sometimes a startup is born after a couple old friends bump into each other after years of going their separate ways. That’s how Seattle Sensor Systems got an infusion of new vision and enthusiasm early this year, when Dendreon veteran Carole Spangler re-connected with UW researcher Clem Furlong on a portable technology for spotting pathogens.

—Genomics pioneer J. Craig Venter made international news a couple weeks ago when he engineered the first bacterial cell with an entirely synthetic genome. But he actually had a lot of help. One of the key players he relied on behind the scenes was a privately held company in Bothell, WA, called Blue Heron Biotechnology.

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[Updated: 12:15 pm, 6/3/10] Life Technologies (NASDAQ: LIFE), the Carlsbad, CA-based maker of lab supplies and instruments, has invested $10 million out of an equity financing that could be worth as much as $50 million for San Diego-based Synthetic Genomics, the startup co-founded by genomics pioneer J. Craig Venter, according to a regulatory filing. Synthetic Genomics, like the name suggests, uses synthetic biology techniques to create or modify cells or genomes of different organisms. The startup is seeking to apply its technology to clean energy, clean water, food production, and vaccines. [Update: this story reflects the dollar amount invested, which wasn't included in Life Technologies' original statement on June 2.]

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When genomics pioneer J. Craig Venter stepped before the cameras last week and claimed that he engineered the first bacterial cell with an entirely synthetic genome, he actually had a lot of help. One of the key players he relied on behind the scenes was a privately held company in Bothell, WA, called Blue Heron Biotechnology.

Venter’s team in San Diego and Maryland went through an elaborate process to “boot up” the bacterial cell by stitching together more than 1,000 stretches of DNA that were each more than 1,000 chemical base units in length. The sequences were designed on a computer, but Venter’s team hired the people at Blue Heron to take care of the next vital step—the job of synthesizing all that data into genes that gave rise to the famous bacterial cell. Blue Heron was singled out for a kudo in the J. Craig Venter Institute’s press release, and got a line in Nicholas Wade’s story in the New York Times. (Blue Heron even got a little publicity from hometown KOMO-TV.)

Beneath the scientific implications and ethical debate, there’s actually an intriguing business story. For Blue Heron, it’s emblematic of its growing capabilities in the emerging field of synthetic biology, and the increasingly powerful things it can enable its customers to do. The company is one of five contract firms around the world that are ushering in an “industrialized” era of molecular biology. The idea is to take a time-consuming, costly process of synthesizing genes in the lab, and automate it into something much cheaper, faster, and more reliable.

While the Seattle-area company doesn’t disclose its revenue, or say whether it is profitable, it currently provides its service to 19 of the world’s top 20 pharmaceutical companies and a growing cadre of academic researchers, says John Mulligan, Blue Heron’s founder and chief scientific officer. The company’s business is “sustainable” for the future with its current team of about 35 employees, he says.

“Customers are saying ‘At this price, it doesn’t make sense to do any molecular biology internally anymore,’” Mulligan says. “Several companies have outsourced [DNA synthesis] completely.”

The field has made dramatic strides over the past decade. Mulligan, who previously ran one of the sequencing centers at Stanford University that played a role in the Human Genome Project, left to start Blue Heron in 1999. He got some seed investment in the early days from Leroy Hood and David Galas, a couple of the co-founders of Darwin Molecular, a one-time highflier where Mulligan worked for a time in the mid-90s.

Back in Blue Heron’s founding days, cost was the big barrier preventing the synthesis of DNA sequences in any systematic way. But the price per base pair, or chemical unit of DNA, plummeted about 90 percent over the company’s first nine years. That made it cheap enough for drug companies to order manufactured genes, rather than assign the task of making them to young scientists or skilled technicians in-house.

And the trend has only continued. Two years ago, Blue Heron would synthesize genes for about $1.50 to $2 for each chemical base pair of DNA—now the same genes can be had for 40 cents to $1 per base pair, Mulligan says, depending on their complexity. Some researchers order short genes that are only 200 chemical units long, but Blue Heron can synthesize really complicated genes that can go as long as 200,000 units long, Mulligan says. If a customer wants to slip in a single letter variation here and there, an insertion of an extra letter or a deletion, Blue Heron has shown over time it can deliver the exact sequence the researcher wants, within one to three weeks of turnaround time.

While falling per-unit prices sound bad for Blue Heron’s overall revenue, Mulligan says his company has been able to offset that decline a couple ways. One is … Next Page »

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Leroy Hood, the pioneer of high-speed gene sequencing technologies that made the Human Genome Project possible, has been awarded the 2010 Kistler Prize. The $100,000 award is named after Walter Kistler, the inventor and president of the Bellevue, WA-based Foundation for the Future. Past winners include famous scientists J. Craig Venter, Richard Dawkins, and Edward O. Wilson. In a statement, the foundation said, “Hood’s discoveries have permanently changed the course of biology and revolutionized the understanding of genetics, life, and human health.”

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Synthetic Genomics, the San Diego biofuels developer, today named a top executive from San Diego-based Illumina (NASDAQ: ILMN), the maker of genetic sequencing tools, as its chief operating officer. Joel McComb, a senior vice president and general manager of Illumina’s $650 million life sciences business unit, will start March 1 and report to J. Craig Venter, Synthetic Genomics founder and CEO.

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All year long, I listened to venture capitalists talk about the steady decline their industry is facing. Returns in a number of sectors just aren’t there anymore to justify the risk. Big pension funds and endowments that provide the fuel for innovative VC-backed companies are still licking their wounds from the downturn, and looking for more reliable places to park their assets.

Then, a couple months ago, I had an odd conversation with Steve Gullans, a managing director with Boston-based Excel Venture Management. He was talking about how his venture firm was having a good year, and the market dynamics were tilting in its favor. And he had some hard facts, not just fluffy adjectives, to back up what he was saying.

Excel first started talking about what it was doing in July, when I interviewed one of Gullans’ partners, Juan Enriquez, who was the founding Director of the Harvard Business School’s Life Sciences Project. Enriquez talked then about how Excel had closed its first $125 million fund, and provided a detailed glimpse into the firm’s strategy of investing in life sciences companies with platform technologies that could give rise to a number of different products, and which could cross over and disrupt other industries, like IT and energy. There would be no classic biotech investments betting the-farm on a single drug with billion-dollar potential. The odds of success were too low to justify the huge amount of capital investment in that model, Enriquez said. He described a long-term, broad vision that says we’re still in the early days of the era of genomics, and that biotech will give birth to “the next Googles, the next Intels, the next HPs.”

Nothing that successful has emerged yet from the Excel strategy in the early days of the firm, but when I followed up with Gullans a little before Thanksgiving, he certainly had some legitimately positive things to talk about. Just one week after I profiled Excel in July, one of its portfolio companies, San Diego-based Synthetic Genomics, received a $600 million investment from Exxon Mobil to develop algae-based biofuels. It’s the latest venture founded by genomics pioneer J. Craig Venter.

Steve Gullans

“We’re still excited about alternative fuels,” Gullans says. “There have been disappointments in that space, but Synthetic Genomics is a clear winner.”

In November, another portfolio company, Cambridge, MA-based Aileron Therapeutics, published an important paper in Nature with some academic colleagues that validated its technology for hitting previously unreachable drug targets inside cells. That’s not exactly the same as scoring a $600 million investment, but it certainly didn’t hurt to validate a company that raised a $40 million venture round a few months earlier.

The same week as the Nature paper involving Aileron, Excel’s very first portfolio investment—Woburn,MA-based BioTrove—generated some more good news. The company, which makes a “universal test tube” to speed up the efficiency of genetic analysis, was acquired by Carlsbad, CA-based Life Technologies for an undisclosed sum. I pressed Gullans for details on the magnitude of this return, and while he wouldn’t provide specifics, he did say “it’s meaningful.”

“For Excel to have gotten a meaningful exit in this climate is very rewarding,” Gullans says.

And Excel didn’t just take all the money and run. A new company spun out from BioTrove called Biocius, which will handle the RapidFire technology for handling samples that go into mass spectrometer machines, which can provide researchers with data on precise molecular weights. Gullans has retained a board seat with the new company.

Then last month, the firm was confident enough that it made another new investment last month in Cambridge, MA-based Fina Technologies, a spinoff from Gene Network Sciences that uses massively parallel supercomputing that was developed for the world of biotech drug development and apply it to the world of finance.

What’s going on here with all this optimism?  Part of it is the luxury … Next Page »

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It may be that TEDMED founder Richard Saul Wurman is the Brett Favre of emcees, or perhaps he’s like Al Pacino in Godfather III, who proclaims in exasperation, “Just when I thought I was out—they pull me back in!”

But after a five-year hiatus, TEDMED has returned this week (opening last night at San Diego’s Hotel del Coronado), and Wurman, who is both the TEDMED chairman emeritus and lead master of ceremonies, stepped back onstage for what must be a familiar role. He is the folksy glue that brings the sometimes-esoteric show back to Earth as leading thinkers in medicine, health care, and life sciences deliver 15- to 20-minute talks about their work and big ideas.

So, for example, after J. Craig Venter, a leader in genomic sequencing and synthetic biology, ended his presentation last night, Wurman took the stage and reassured the crowd by saying, “I’ve heard Craig speak a number of times. And I don’t understand it all…”

The four-day TEDMED symposium, which costs $4,000 per person to attend (and is sold out), follows a format similar to the first conference in Technology, Entertainment, and Design (TED) that Wurman established in 1984. Chris Anderson acquired rights to that TED business in 2001 and Boston entrepreneur (and Xconomist) Marc Hodosh got rights earlier this year to TEDMED and its focus on health care. Wurman told us he had agreed to help Hodosh out this year, and between sessions he often helped the audience by identifying themes they would likely see emerging in presentations to come.

“Maps are also patterns, and patterns are the threads that run through this conference,” Wurman said. “They are the constructive tissue that holds ideas together.” Those emerging ideas include:

—J. Craig Venter, the co-founder and CEO of San Diego-based Synthetic Genomics, said about 21 million genes have been discovered since the first genome was sequenced in 1995—“and over 20 million have been taken from the deck of my sailboat.” (Venter’s sailboat, the Sorcerer II, embarked from San Diego in March on an expedition to collect and sequence marine organisms.) Venter also outlined synthetic biology research that aims to transplant a chromosome from one cell into another cell—and turn it into a different species. Venter says, “I think it’s possible we’ll have the first species powered by a synthetic chromosome by the end of this year, although that’s something I’ve been saying now for two years.”

—Anthony Atala, a urologist and director of the Wake Forest Institute for Regenerative Medicine, showed how researchers are using “smart biomaterials” to patch damaged organs and grow new heart valves, blood vessels, liver, muscle, skin, ears, and even fingers. Still, Atala said, “90 percent of patients on transplantation waiting lists are waiting for kidneys.” He also noted that the organs with lots of blood vessels—the heart, liver, and kidney—are the hardest to grow.

—Bill Davenhall, who leads the health and human services marketing team at ESRI, the Redlands, CA, company that specializes in geographic information systems, argued for the creation of new programs and training in “geo-medicine”—and for ensuring that GIS data can be included in electronic health records. He demonstrated his point with a map that shows geographical areas in mid-Atlantic and Midwestern states where heart attacks occur far more frequently than other parts of the country. Davenhall, who said he suffered a heart attack in 2001, associates environmental factors in the places where he has lived with the higher incidence rate. He grew up with high levels of sulfur dioxide in Scranton, PA, before moving to Louisville, KY, with high levels of chloropene and benzene. He now lives east of Los Angeles in Redlands, CA, which has high levels of airborne particulates, carbon dioxide, and ozone. He told the audience, “Doctors never ask me about my place history. But if I wanted to have a heart attack, I’ve lived in the right places.”

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When the organizers of the annual Algae Biomass Summit convene to begin planning for next year’s event, they might consider renaming it the Algae Biomass Smackdown.

It might be more accurate, considering the air of skepticism that seemed to pervade some of the sessions I attended during the three-day conference that was held last week in downtown San Diego. Bear in mind that in September 2008 we learned that Bill Gates’ investment arm, Kirkland, WA-based Cascade Investment, was participating in a $100 million secondary round of funding for San Diego’s Sapphire Energy. About 10 months later, ExxonMobil disclosed that it was investing $600 million to develop algae biofuels, including at least $300 million through a partnership with Synthetic Genomics, the algae biofuels startup founded by human genome pioneer J. Craig Venter.

To many observers, both of these announcements were indications that serious investors with the scientific resources to do serious due diligence had determined the credibility of algae biofuels technologies.

So it seemed like John Walter of San Antonio-based Valero Energy was going against the grain when he urged the algae industry to “get away from some of the outlandish claims that are out there.” He cited as an example startups’ claims that they can produce 1 million gallons of biofuel a year from 5 acres of algae. In his comments, which came during a panel discussion of “critical end-users,” the Valero executive also urged the algae industry to report actual “dry-weight yields per square meter” instead of estimating harvest yields in various ways. And he urged algae-based startups to make realistic estimates of how much capital will be required to reach pilot plant production levels of 1 million gallons a year.

“The money needed to get to the 1-million-gallons-a-year demonstration level is now orders of magnitude greater than what we heard in previous funding requests,” Walter said. (Sapphire Energy, by the way, said in April that it expected to be able to produce 1 million gallons a year of algae-based diesel and jet fuel by 2011.)

Events like this often include some outliers, a curmudgeon or two whose dyspeptic comments are highly quotable, but not necessarily realistic. But Walter’s views were echoed by other speakers at the summit, including Bill Barclay of Maryland-based Martek Biosciences, who said two-to-four-year timelines for algae biofuel production are “too optimistic.” Based on his experience in developing nutritional oils from algae, Barclay pronounced that algae-based biofuels are at least 10 years away.

Ultimately, algae-based feedstocks must compete with conventional petroleum crude on price. As Robert Rachor of FedEx told the audience, “If you guys are going to … Next Page »

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A few basic themes seemed to emerge in the first few presentations yesterday afternoon during the 3rd Annual Algae Biomass Summit.

One theme is that the algae biofuels industry remains at a nascent stage of development, despite widespread enthusiasm over the size of San Diego-based Synthetic Genomics’ deal with ExxonMobil, and venture funding for Sapphire Energy. Biologist Steve Mayfield, a Sapphire co-founder who is moving from The Scripps Research Institute to UC San Diego, says scientific papers published about the E. coli bacteria outnumber the papers published about a common algae strain by nearly 50 to 1. That is a ratio that needs to be reversed, Mayfield says.

Another theme is that some industry leaders have been overly optimistic in saying that algae-based biofuels can be brought to market in two to four years. Bill Barclay of Columbia, MD-based Martek Biosciences says he spent 11 years developing and commercializing methods for using algae to produce a nutritional supplement called Omega-3 DHA (docosahexaenoic acid), an unsaturated fatty acid. (The startup that Barclay founded in 1987, Boulder, CO-based OmegaTech, was acquired by Martek for about $50 million in 2002.)

The process Barclay went through to make nutritional supplements from algae is comparable to the current effort to develop algae-based biofuels. But Barclay, a scientist who oversees Martek’s intellectual property, says much of the fundamental production technology is “immature,” and that timelines of two to four years from inception to production are unrealistic. Barclay says flatly, “Commercially feasible biodiesel from photosynthetic algae is more than 10 years away.”

And finally, the substitute for keynote speaker J. Craig Venter seemed determined not to say anything that Venter, his boss at San Diego’s Synthetic Genomics, had not previously disclosed publicly.

In other words, “restraint” was the unspoken watchword of the first day.

Venter, a pioneer in genetic sequencing and the founding CEO of Synthetic Genomics, already had agreed to be the conference headliner when he learned he had won a National Medal of Science (the highest honor awarded to scientists by the United States government). But later, Venter learned the White House scheduled the award ceremony with … Next Page »

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You always hate to see a keynote speaker pull out of a major conference attracting wide attention, especially when the conference is focused on a hot emerging field like algae-based technologies and the speaker is J. Craig Venter, the renowned human genome pioneer and founding CEO of San Diego’s Synthetic Genomics.

The brash Venter, who rarely appears in public these days, has gained even higher visibility since mid-July, when he announced Synthetic Genomics has a new partnership with ExxonMobile, which plans to invest $600 million to develop algae-derived biofuels.

At least he has a good excuse.

Instead of speaking to the masses attending the 3rd Annual Algae Biomass Summit in downtown San Diego, Venter will be attending a White House ceremony, where he is receiving a National Medal of Science from President Obama. A recent statement issued by the J. Craig Venter Institute says the medal is intended to recognize Venter’s dedication to “the advancement of the science of genomics, his contributions to the understanding of its implications for society, and his commitment to the clear communication of information to the scientific community, the public, and policymakers.” The medal is the highest scientific honor bestowed by the U.S. government.

Venter’s replacement as keynote speaker Wednesday is Paul Roessler, Synthetic Genomics’ vice president for renewable fuels and chemicals.

Conference organizers also announced last week that Jacque Beaudry-Losique, Deputy Assistant Secretary for Renewable Energy of the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, will be the luncheon keynote speaker on Thursday. The three-day conference at the San Diego Marriott Hotel & Marina ends Friday.

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[Corrected 9/03/09, 7:20 am. See below.]

It felt almost anti-climactic when retired Vice Adm. Dennis McGinn arrived in San Diego last week to meet with some of San Diego’s leading algae biofuels scientists and tour a local biofuel research facility.

McGinn, a former commander of the Navy’s Third Fleet in San Diego, is a member of a blue-ribbon panel warning that continued U.S. reliance on fossil fuels (as well as the nation’s strained electric grid) pose significant threats to U.S. security. As a result, the retired admiral represents an unanticipated ally in efforts by San Diego’s emerging cleantech community to rapidly advance algae-to-biofuels technologies. The blue-ribbon panel, actually the military advisory board of CNA, a non-profit research group near Washington D.C., is urging the Pentagon to bolster its national-defense strategy by boosting energy conservation and by embracing alternative energy technologies as a way to end U.S. reliance on unfriendly foreign sources of crude oil.

McGinn’s support was welcomed, of course. But San Diego’s biofuels industry has gained so much momentum in such a short time, it’s not like McGinn was bringing badly needed reinforcements to a desperate struggle for survival.

Lisa Bicker, who heads the non-profit industry group Cleantech San Diego, marks the dawn of San Diego’s “green crude” revolution in mid-2008, when local scientists and industry officials first met to discuss their various efforts in algae biofuels research. The implications were obvious at the time, because U.S. gasoline prices were skyrocketing beyond $4 a gallon nationwide. Since then, news concerning San Diego’s advances in algae biofuels technology has been flying fast and furious.

One of the more significant developments occurred last September, when it was disclosed that San Diego’s Sapphire Energy had raised $100 million in venture capital to develop algae biofuels—and the investors included Bill Gates. Then there was a flurry of news in April surrounding the formation of SD-CAB, the San Diego Center for Algae Biotechnology, and the formulation of a $10 million Algae Fuel Prize competition organized by Del Mar, CA-based Prize Capital. All that, however, seemed to be eclipsed in July, when Exxon Mobile said it was investing $600 million to develop algae biofuels through a partnership with San Diego’s Synthetic Genomics, and the intense J. Craig Venter.

Even since July, much has happened. So what McGinn had to say to Bicker and local scientists wasn’t nearly as interesting to me as the update he got from the front lines of algae biofuels development in San Diego.

McGinn met with Bicker, Stephen Mayfield, an expert in algae genetics at The Scripps Research Institute (and who broke the news that he is moving to UC San Diego San Diego in November), Greg Mitchell, a marine biologist at UCSD’s Scripps Institution of Oceanography, and Robert Knox, the oceanographic institute’s deputy director for research. Here are some of the insights I gleaned from their briefing:

—Mayfield told McGinn that federal funding to … Next Page »

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