This week was dominated by financing news from younger, privately held New England drug developers and diagnostics and devices firms.

—Waltham, MA-based Proteon Therapeutics inked a $15.2 million equity- and options-based investment. The firm is developing drugs for kidney and vascular diseases.

—Fluidnet, an Amesbury, MA-based developer of electronic infusion pumps for administering IV fluids, raised $19.8 million of an equity offering that could total $25 million.

—Sudbury, MA- and Shreveport, LA-based Embera NeuroTherapeutics took in $4.5 million in Series A funding to put toward advancing its treatment for addictions, EMB-001, through a safety study and subsequent clinical trials. The money came from existing backers Louisiana Ventures, Louisiana Fund I, and Themelios Ventures, as well as other private investors.

—Lexington, MA-based lung disease drug developer Pulmatrix announced it raised $14 million in Series B financing and revealed its plans to advance its lead compound, PUR118, as a new treatment for cystic fibrosis and chronic obstructive pulmonary disease (COPD). The funding came from all of Pulmatrix’s existing investors, which includes Polaris Venture Partners, 5AM Ventures, Arch Venture Partners, and Novartis Venture Fund.

—Healthcare companies in Massachusetts collectively raised $134 million in July, according to data from CB Insights‘ FundingFlash, a daily roundup of companies receiving venture capital, angel investment, and growth equity funding. Cambridge, MA-based obesity drug developer Zafgen led the way last month with $33 million.

—SEC documents revealed a couple of life sciences-related financings in the middle of this week: Cambridge-based Daktari Diagnostics ($1.17 million in debt-based funding), and Lebanon, NH-based PharmaSecure ($2.5 million of a $6 million equity offering). The companies are working on HIV diagnostic systems and medicine counterfeiting prevention, respectively.

—Xconomy Seattle and national biotech editor Luke Timmerman profiled Tony Coles as part of our new Xconomist of the Week feature. Coles, now the CEO of South San Francisco-based Onyx Pharmaceuticals (NASDAQ: ONXX), spent his residency training in cardiology and internal medicine at Massachusetts General Hospital. He got his master’s degree in public health from Harvard University and held a research fellowship at Harvard Medical School.

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The people in San Diego who discovered a multi-billion dollar asthma drug for Merck have captured the attention of Big Pharma once again.

Amira Pharmaceuticals, a privately held company in San Diego, has agreed to be acquired by New York-based Bristol-Myers Squibb (NYSE: BMY) for $325 million in cash upfront, plus additional milestone payments of $150 million, meaning the deal could be worth up to $475 million for Amira shareholders. Bristol said in a statement that it plans to retain Amira’s scientists, and keep them in San Diego. Amira had 25 employees at last count, in November.

The key asset in the deal is Amira’s drug for pulmonary fibrosis. This is the disease that damages and scars the lungs, and is probably best-known for the high rate of incidence among first responders to the 9/11 terrorist attacks. There isn’t currently an effective FDA-approved treatment, and the disease makes it hard for people to breathe and ultimately kills an estimated 40,000 people a year. While this is a relatively small patient population, Amira CEO Bob Baltera has pointed out this is a “grievous illness,” which means anybody who comes up with a good drug could have a pretty sizable market opportunity.

Amira’s drug has passed the first phase of clinical trials to demonstrate safety, and is now being prepped for the second stage, in which researchers will get a better sense of its effectiveness.

“Bristol-Myers Squibb has identified fibrotic diseases as an area of high unmet medical need that complements our research efforts in several of our therapeutic areas,” Elliott Sigal, Bristol’s president of R&D, said in a statement.

The acquisition is clearly a big win for Amira and its shareholders. The company was started in 2005 by a trio of scientists-Peppi Prasit, Jilly Evans, and John Hutchinson-who worked together at Merck until that company shut down its San Diego operation. Their biggest accomplishment there was the development of montelukast sodium (Singulair), an asthma drug that generated about $5 billion in sales in 2010. Based partly on that track record, Amira raised more than $28 million in venture capital, most of which came from Novo A/S, Avalon Ventures, Prospect Venture Partners, and Versant Ventures in March 2007.

But money has been tight since then, at Amira, just like many biotech companies with products in the early stages of development. Amira has been supported in most recent years by an asthma drug collaboration with GlaxoSmithKline, although that wasn’t enough to cover all of the company’s R&D expenses. Amira cut half its workforce last November, and its scientific founders left the day-to-day operation as the company sought to conserve cash in a tough climate for early stage biotech financing.

Amira’s lead drug, AM152, is designed to block a novel biological target on cells, known as the LPA1 receptor. That biological pathway’s relationship to pulmonary fibrosis was described by Andrew Tager and colleagues at Massachusetts General Hospital in a paper in Nature in 2008. Scientists said that mice who lack LPA1 were protected from fibrosis and death after being exposed to likely environmental triggers of the disease.

Brisbane, CA-based Intermune (NASDAQ: ITMN) has helped blaze the trail here. Its experimental drug for pulmonary fibrosis failed to win FDA approval, but was cleared for sale in the European Union, which has been enough to boost the company’s market valuation to more than $2 billion. Others, like Gilead Sciences and Novartis have R&D programs against pulmonary fibrosis as well.

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InterMune (NASDAQ: ITMN), the Brisbane, CA-based drug developer, said today that pirfenidone (Esbriet) has been cleared by regulators for sale in the 27 countries that make up the European Union. The drug will be marketed to treat mild to moderate idiopathic pulmonary fibrosis. InterMune says it plans to start commercializing the drug in September in Germany, followed by France, Spain, Italy and the U.K. in 2012. InterMune failed to win FDA approval last May, but it rebounded in December on a positive recommendation from a European drug advisory board.

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Pearl Therapeutics, the Redwood City, CA-based developer of treatments for lung diseases, has named Charles (Chuck) Bramlage as its new CEO. Bramlage was most recently the president of pharmaceutical products for Covidien (NYSE: COV). Pearl, which raised $69 million in venture capital in October, was previously led by Howard Rosen. I wrote a feature in December about how the company beat a blockbuster drug for chronic obstructive pulmonary disease in a head-to-head study of 118 patients.

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Cambridge, MA-based Stromedix is planning to begin a mid-stage trial of its lead drug in patients with a chronic lung disease called idiopathic pulmonary fibrosis before the end of June, CEO Michael Gilman tells me. And the firm’s investors have committed as much as $15.5 million in debt to cover the costs the trial.

Debt financings aren’t as sexy as big equity rounds, yet Gilman sounds optimistic about his company’s prospects. For one, he points out that the debt financing, which can be converted into equity, provides all the money his small startup needs to complete its Phase II trial of its lead drug, STX-100, in patients with idiopathic pulmonary fibrosis (IPF). There’s also a “ton” of interest from potential pharmaceutical partners in the experimental drug for IPF—for which there are no FDA-approved therapies, Gilman says. So far, Stromedix has only taken $2 million of the debt that it can draw from the new offering, Gilman says.

Stromedix, founded in 2007, previously raised $29.4 million through two round of equity funding from well-known life sciences investors such as Atlas Venture, Bessemer Venture Partners, Frazier Healthcare Ventures, and Red Abbey Venture Partners. Those investors also participated in the company’s debt financing, according to Gilman.

While no drugs are approved for IPF, which causes scarring in the lungs that limits the body’s ability to oxygenate the blood, there are more than 120,000 Americans with the illness awaiting new therapies. This has helped make IPF a hot market. For example, the biotech powerhouse Gilead Sciences (NASDAQ:GILD) in December scooped up Palo Alto, CA-based startup Arresto Biosciences, which is in early development of an antibody for treating IPF and cancer, for $225 million. Also, the market value of Brisbane, CA-based InterMune (NASDAQ:ITMN) has taken $1 billion-plus swings after both positive and negative regulatory opinions of its late-stage IPF candidate, pirfenidone, over the past year, Gilman says.

“The situation hasn’t really changed—it’s a terrible disease, the median survival is three to four years” after diagnosis, and “there are no approved drugs in the U.S. or Europe,” Gilman says.

All these factors support the case for further investment in the development of STX-100, an antibody drug that Stromedix has licensed from Weston, MA-based … Next Page »

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PneumRx, a Mountain View, CA-based maker of a medical device that restores elastic recoil in the damaged lung tissue of patients with emphysema, said today that it has raised $33 million in working capital from European venture firms Forbion Capital Partners and Endeavour Vision. The round was also joined by existing investors Adams Street Partners, Alta Partners, Leader Ventures, Silicon Valley Bank, Spray Venture Partners, and Telegraph Hill Partners, as well as an unnamed strategic corporate partner. The company said it plans to use the funds to commercialize the device in Europe and to conduct a pivotal clinical trial to gather data for FDA approval.

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Intermune (NASDAQ: ITMN), the Brisbane, CA-based maker of a drug for a deadly lung disease called pulmonary fibrosis, said today that it has won a positive recommendation for its treatment from a panel of expert advisors to European Union regulators. The Committee for Medicinal Products for Human Use of the European Medicines Agency recommended that Intermune’s pirfenidone (Esbriet) be cleared for sale in Europe. Shares of the company more than doubled today on the news, rocketing to $34.05 a share at 1:21 pm Eastern today. The news came after Intermune failed to win approval from U.S. regulators back in May.

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Alder Biopharmaceuticals, the Bothell, WA-based developer of antibody drugs, said today it has added veteran drug developer Bruce Montgomery to its board of directors. Montgomery, 57, most recently served as senior vice president of respiratory drugs at Gilead Sciences (NASDAQ: GILD) in Seattle. Montgomery stepped down from Gilead in August to look for new opportunities, and last month he joined the board of Seattle-based Geospiza. Alder, which was profiled in Xconomy in January, is seeking to use a yeast-based technology that it hopes will provide a faster, cheaper method for creating targeted antibody drugs against cancer and autoimmune diseases

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Spiration, the Redmond, WA-based maker of devices for lung disease, has raised $6.5 million in debt and options from a single investor, according to a regulatory filing. The company borrowed $7 million last September from its partner, Olympus Medical Systems. Spiration’s IBV valve device is designed to cut off air flow to diseased parts of the lung, where air gets trapped in patients with emphysema.

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Uptake Medical, the Seattle-based developer of a minimally invasive device to treat chronic obstructive pulmonary disease, has raised $3.4 million out of a total equity offering worth $13.3 million, according to a regulatory filing. Uptake is developing a device that’s supposed to seal off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind. It is competing with Redmond, WA-based Spiration, among others. Uptake raised another $3.1 million in debt back in May, according to a regulatory filing.

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It was a relatively light week for deals in the Northwest, perhaps owing to the holiday weekend. But there was still action in biotech, marketing software, and alternative energy.

—Kennewick, WA-based Infinia raised $14.1 million in debt financing out of a $50 million offering. The company, which is backed by Vulcan Capital, Khosla Ventures, and other investors, develops solar power generation technology that uses free-piston Stirling engines and power systems.

—Luke reported on the story behind Vulcan Capital’s investment in BiPar Sciences, the Brisbane, CA-based cancer biotech firm that was recently sold to Paris-based Sanofi-Aventis for $500 million. Vulcan led the seed financing round for BiPar back in 2005, and pumped $13 million in capital into it through its lifetime. The sale will earn Vulcan more than $100 million in cash, which managing director Steve Hall says has helped put the firm in the top 10 percent of all U.S. venture funds over the past five years. BiPar’s drug, BSI-201, could be a fundamental advance against breast cancer, ovarian cancer, and other tumors.

—Bellevue, WA-based Visible Technologies, a startup that makes software for online brand reputation management and customer service, raised $6 million in debt financing. Visible Technologies was founded in 2003, and is backed by Bellevue-based Ignition Partners and New York-based WPP.

—Seattle-based Survey Analytics, a marketing and customer relations software startup, scored a partnership with the White House to power the Open Government Dialogue website, which seeks to solicit ideas from the public on how the government can be more transparent, participatory, and collaborative. Financial terms of the deal were not given. Survey Analytics, which has been bootstrapped since 2004, has developed a software platform for hosting and managing feedback communities called IdeaScale.

—Luke reported that Seattle-based Uptake Medical, which is developing minimally invasive technology to treat emphysema, raised $3.1 million in a debt financing. Uptake makes a device that seals off access to diseased parts of the lung where air gets trapped. The technique does not leave an implantable device behind. The latest funding adds to the $3 million bridge financing the company raised for its clinical trials in December.

—HealthUnity, a Bellevue, WA-based maker of software for connecting healthcare IT systems, raised $2 million out of a $4 million equity financing, Luke reported. The company was founded in 2004 and is led by CEO Prem Urali, a former group manager in the BizTalk Server division at Microsoft.

—Luke also reported that Oncothyreon, a Seattle-based developer of cancer drugs, received commitments from several investors to buy new shares and warrants for $11.1 million. The deal was underwritten by Boenning & Scattergood. Oncothyreon (NASDAQ: ONTY) has been diversifying its pipeline, and has gotten renewed interest from investors in its cancer immunotherapy program, since Seattle-based Dendreon has had recent success in that field.

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CMC Icos Biologics, the Bothell, WA-based contract manufacturer of biotech drugs, said today it has signed a deal to manufacture an experimental drug for acute lung injury. CMC will make IC14, an antibody drug, for Brisbane, Australia-based Implicit Bioscience. The treatment, which is scheduled to enter Phase II trials next year, was previously tested in 150 patients by Icos for its potential against inflammatory diseases.

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Maybe it’s because everyone is trying to get their deals announced before the holidays, but it was a busy week in the Northwest, with plenty of activity in mobile software, online media, and medical devices.

—Bellevue, WA-based BlueKai, an Internet marketing firm, raised $10.5 million in Series B funding, led by Waltham, MA-based Battery Ventures. Existing investor Redpoint Ventures also contributed to the round. BlueKai is creating a marketplace for online consumer data.

—Luke reported that Seattle-based Uptake Medical, a maker of medical devices, raised $3 million to carry out a pair of clinical trials for a technique to treat emphysema and other deadly lung-obstructing diseases. The capital was raised from all of Uptake’s previous investors, including Prism VentureWorks, Onset Ventures, and WRF Capital.

—Seattle-based mobile startup Zumobi teamed up with outdoor retailer REI to release a free software application, called the REI Snow Report, for getting instant … Next Page »

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Aires Pharmaceuticals may have a way to help patients with a rare, deadly lung disease get a little more oxygen, and maybe even live a little longer. The San Diego startup is developing an inhalable form of nitrite that could improve the lives of patients with high blood pressure in the vessels leading to the lungs, known as pulmonary arterial hypertension.

I got the rundown on Aires’ game plan from CEO Wendy Johnson. She found this company’s core technology through her other role as a venture partner with ProQuest Investments. She’s also a 20-year veteran of the San Diego biotech scene, most recently at Salmedix.

Aires has been around a couple years, but has been laying low until it got its cornerstone intellectual property nailed down last month with a license from the National Institutes of Health. The concept is to develop what it calls “Aironite,” a technology which delivers an inhaled nitrite that converts into nitric oxide in a low-acidity or low-oxygen environment in the body. That’s important because the compound can open up tightened blood vessels while also having an anti-inflammatory effect, Johnson says. This sort of treatment could be taken in addition to some other drugs such as Actelion Pharmaceuticals’ bosentan (Tracleer), Pfizer’s sildenafil (Revatio), and Gilead Sciences’ ambrisentan (Letairis). These drugs can extend lives of patients five to seven years, and Aires thinks its medicine can add a couple more years.

“The drugs work, but everyone fails eventually,” Johnson says. “It’s only a matter of time.”

Pulmonary arterial hypertension is a rare disease that affects about two people out of a million in the U.S., says the Pulmonary Hypertension Association. About 16,000 in the U.S. get treatment, according to Aires. Even so, it has grown into a big market since Actelion’s bosentan was the first oral drug approved by the FDA for this disease in 2001. The market is now worth more than $1 billion, Johnson says.

Aires got started a couple years ago with seed capital from Proquest to pursue this idea, and has put about $6 million into the company to date, Johnson says. She’s currently trying to raise another $25 million to bankroll clinical trials. The company has about 10 employees, including Gary Elliott, a former colleague of Johnson’s at Salmedix who is in charge of product development, and Lewis Rubin, acting chief medical officer. Rubin is a leading investigator in pulmonary arterial hypertension who’s taking a leave from a research post at the University of California, San Diego. “He’s seen all of these drugs in trials before,” Johnson says.

Aires feels comfortable talking publicly about its technology now because it has just wrapped up its first clinical trial of its inhaled nitrite, Johnson says. The basic conclusion, from the first 33 patients, is that the drug can be delivered safely, and in high enough concentrations that it should have an effect, Johnson says. The next trial is going to involve 80 volunteers who simulate a low-oxygen environment that patients with this condition experience—sort of like breathing thin air high on a mountainside. The researchers will want to see whether the Aires drug can reverse this state, at different doses, and measure the effect over several hours to see how long it lasts.

These are still very early days for this treatment. … Next Page »

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