—It wasn’t exactly news when the board at San Diego-based Illumina (NASDAQ: ILMN) said it had rejected the $5.7 billion hostile takeover offer from Swiss drug maker Roche. Now Wall Street’s arbitragers are placing their bets on whether Roche can prevail. The most intriguing news about the deal, however, came from The Wall Street Journal, which revealed potential conflicts of interests with Illumina’s key adviser, Goldman Sachs.

—A new molecular diagnostics startup stepped into the light in San Diego. Applied Proteomics named Peter Klemm as CEO, and disclosed it raised $22.5 million in venture capital last summer from Vulcan Capital and Domain Associates. Applied Proteomics also said it moved to San Diego last June from the Los Angeles area, and double its staffing over the next year.

—San Diego-based Tocagen and Siemens Healthcare Diagnostics disclosed a partnership that will begin with Siemens’ support of clinical trials Tocagen has planned for its viral gene therapy treatments for primary brain cancer. Siemens said it will help provide companion diagnostics that are intended to help doctors decide the best course of treatments for patients, based on their unique genetic characteristics.

—San Diego’s OncoSec Medical, which was created out of a reverse merger less than a year ago, is beginning mid-stage trials of a treatment that combines electroporation and immunotherapy in patients with three types of skin cancer. Electroporation is a technology that causes cancer cells to take up higher concentrations of anti-cancer drugs by administering pulses of electricity directly to the cancer cells. OncoSec is trying it on patients with metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma.

—Brooks Life Science Systems, a Poway, CA-based division of Brooks Automation, (NASDAQ: BRKS), said it had established a development and commercialization partnership with The Scripps Research Institute (TSRI). Brooks plans to manufacture and commercialize a microplate imaging system under an exclusive licensing agreement with the biomedical research institute.

—San Diego-based Prometheus Laboratories Inc., a specialty pharmaceutical and diagnostic company, said it signed a research and collaboration agreement that provides its proprietary cancer diagnostic technology to an unnamed global pharmaceutical. Financial terms were not disclosed. Prometheus said its technology can detect the activation of specific cancer pathways with high levels of sensitivity and specificity.

—San Diego-based Synthetic Genomics and Ipswich, MA-based New England Biolabs (NEB) said they signed a non-exclusive licensing agreement allowing NEB to commercialize the “Gibson Assembly Master Mix,” a one-step, isothermal approach to enable the rapid assembly of multiple DNA fragments. The companies said Daniel Gibson and colleagues at the J. Craig Venter Institute (JCVI) developed the technology as part of a program sponsored by SGI. Financial terms were not disclosed.

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OncoSec Medical CEO Punit Dhillon tells me the startup he helped establish in San Diego last March is beginning mid-stage safety and efficacy trials of its proprietary technology for enhancing drug delivery in treatments of several types of skin cancer.

The technology, which OncoSec acquired from Blue Bell, PA-based Inovio Pharmaceuticals (AMEX: INO) almost a year ago, transmits intense electrical pulses into skin tumors through six electrode needles that are pushed into the skin. The electricity causes the tumor cells to become permeable with each jolt, and makes it easier for anti-cancer drugs injected into the region to pass through the tumor cells’ tough outer membrane. Known as electroporation, the process increases the concentration of an anti-cancer drug within the tumor.

“What we’re doing is a much more elegant and targeted approach,” says Dhillon, who estimates the technique increases the uptake of anti-cancer drugs by 4,000 to 10,000 times. As a result, doctors can reduce the dosage of anti-cancer drugs used with electroporation technology.

Dhillon, who previously served as Inovio’s vice president of finance and operations, says Inovio has been an electroporation pioneer. The Pennsylvania company decided last year, however, to sell technology that was unrelated to its strategic focus on developing DNA vaccines for cervical dysplasia, leukemia, and hepatitis C virus therapies.

The deal to acquire Inovio’s assets didn’t happen by chance. Inovio chairman and former CEO Avtar Dhillon is Punit Dhillon’s uncle, and their family and friends raised the initial $1.1 million that funded OncoSec after the company sprang to life through a reverse merger with a dormant public company. The San Diego startup raised another $3 million last June from two New York health funds, Hudson Bay Capital and Heights Capital. That should be enough cash for OncoSec to complete three mid-stage trials the company plans to begin before the end of March.

The three studies will use OncoSec’s electroporation technology to deliver the company’s lead drug candidate, called Interleukin-12 (IL-12) cytokine, to three groups of patients with different lethal skin cancers—metastatic melanoma, Merkel cell carcinoma, and cutaneous T-cell lymphoma. The experimental drug is intended to both trigger and boost a strong immune response to each type of cancer. The combined treatment, known as electroimmunotherapy, represents a potential new anti-cancer treatment with broad applicability, although Punit Dhillon says the company must pursue separate regulatory approvals to treat each type of cancer (as a combination drug-and-device product) on an application-by-application basis.

OncoSec says its technology also can be used in the same way in electrochemotherapy, which uses an established anti-cancer drug like bleomycin while a tumor is being electroporated. The use of electroporation in chemotherapy has been studied more throroughly, and Punit Dhillon says he wants to advance OncoSec’s approach through a partnership with a bigger pharmaceutical company.

“2011 was a great year for us,” he says, “and we’ve got some exciting milestones to look forward to in 2012.” Once the latest studies have been completed, OncoSec’s Dhillon says he looks forward to licensing opportunities and other commercial prospects, and he adds, “We also still have the chemotherapy program in the wings.”

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Employment in San Diego’s life sciences sector grew by 15 percent over the past two years, as biopharmas, medical device companies, and other employers added roughly 5,550 jobs here—raising employment in the sector to 41,937 in 2011, according to a report released today by Biocom. The report says overall employment in San Diego increased by 1.1 percent over the same period, gaining about 20,600 jobs to reach 1.83 million in 2011.

The 40-page economic study says San Diego’s life sciences cluster also is expected to outpace the nation in terms of job growth and economic impact over the next two years, as another 2,770 jobs are added by 2013. A broader snapshot that includes life sciences companies in neighboring Orange, Riverside, and Imperial Counties projects the region will add more than 6,000 workers over the next two years.

Despite a significant decline in venture capital funding, the report says the four-county region of Southern California will continue to retain its high standing and competitive advantage in the life sciences. By 2013, there will be 70 percent more jobs in the life sciences in these four counties than the national average.

While venture capital funding is a key indicator of entrepreneurial activity and business formation, the report says the sharp decline in Southern California VC investments, from $1.1 billion in 2007 to $553 million in 2010, reflects the severe economic downturn and other industry trends underway nationwide.

San Diego’s strength was especially apparent in federal funding for biomedical research. Of the top 10 research institutions receiving National Institutes of Health grants in 2011, nine are in San Diego. The $835 million in grants awarded last year to San Diego scientists accounted for more than 85 percent of the grants allocated in the four-county region.

The report says the four-county life sciences cluster comprises more than 3,500 companies and employs over 97,000 people. On average, salaries range between $54,141 and $116,462, well above the national and regional averages. Including direct, indirect, and induced employment, the report says this region supports a total of 248,800 jobs that pay over $17.7 billion in wages and generate $57 billion in economic activity.

San Diego County alone accounts for 1,700 companies that employ 41,937 people. Including direct, indirect, and induced job, San Diego’s industry supports more than 106,000 jobs that pay $7.5 billion in wages and generate roughly $22 billion in overall economic activity. A .pdf file of the full report can be downloaded here.

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Cambridge, MA-based Flagship Ventures, a $900 million fund known for its successes with companies such as Accuri Cytometers and Acceleron Pharma, is planning to open an office in Michigan in the next six months, says Sean O’Donnell, VP at Credit Suisse’s Michigan office.

The move comes after Venture Michigan Fund II (VMF II), a fund-of-fund which is managed by Credit Suisse, made a $15 million investment commitment in Flagship Ventures Fund IV, which invests in early-stage companies. As part of the agreement, Flagship will invest that $15 million in Michigan companies. Flagship has already found success in local companies with Accuri Cytometers, which is based on technology spun out of the University of Michigan.

“Flagship Ventures is a much larger fund than is typically involved in our program,” O’Donnell says. “We hope they’ll exceed that amount.”

The Venture Michigan Fund II was established in February 2011. Like the first Venture Michigan Fund, VMF II exists to primarily invest in early- and seed-stage Michigan companies. VMF II has $120 million in capital to invest in funds that target high-growth and emerging industries. The commitment to Flagship was the fourth investment it has made.

And what can we expect Flagship to invest in? O’Donnell admitted that Michigan continues to feel the effects of a difficult national fundraising environment, though he says there is actually an increased amount of capital available to Michigan companies compared to years past thanks to programs like VMF II. He pointed to the success of homegrown entities like Arboretum Ventures and HandyLab as helping to persuade investors that Michigan is a viable place to invest.

O’Donnell also says that, though Michigan’s life science sector will remain robust, he predicts movement away from therapeutics and devices in favor of anything that saves money. Where he expects to see increased investment is in the IT sector, particularly in software development, mobile apps, and social media, and the reason is simple: Those kinds of companies are cheap to start.

“I feel Michigan is on the right track,” O’Donnell says. “We’re always going to have gaps, but good deals will still be able to find capital.”

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Burlington, MA-based ConforMIS, a medical device company with a newly FDA approved knee replacement system, announced today that it has secured $89 million in a Series E investment.

The money comes from London-based AGC Equity Partners, New York-based Axel Johnson, government investment funds from Asia and the United Arab Emirates, as well as other private equity funds in the U.S., Europe, Asia and the Middle East. ConforMIS raised $50 million in Series D financing in July 2009 from sovereign funds of Kuwait and Singapore, and private equity investors such as Aeris Capital of Zurich, Switzerland, and Palo Alto, CA. CEO Philipp Lang says many of the startup’s return backers participated in the newest funding round.

Lang noted that the Series E investors are largely private equity investors focused on public transactions, meaning that if the time comes, they could invest the amount they did in the Series E in an initial public offering. So, is an IPO in the works for ConforMIS?

“This fundraise is very execution focused,” says Lang. “[An IPO] is not the primary objective for us right now.”

Last year, the FDA approved ConforMIS’s patient-specific, total knee replacement system, which Lang says is the first of its kind. The company, founded in 2004, originally sold patient-specific partial knee replacements. Lang says that the FDA approval of its newest system opens up a huge market for the company, as total knee replacements make up 90 percent of the roughly 700,000 knee replacement surgeries that occur each year in the U.S. ConforMIS plans to expand its technology this year to develop implants for another joint, Lang says.

ConforMIS also plans to use the new funding to expand its sales force in the U.S. and abroad to support the new market opportunity. It is planning to move the manufacturing of the implants in-house, and is in the process of looking for a new site in Massachusetts for that purpose. It currently manufactures personalized surgical instruments that go along with the knee implants. ConforMIS has 200 employees in Massachusetts, but that number is “going to increase significantly” in the next year as a result of this expansion, Lang says.

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Here’s our weekly roundup of San Diego’s life sciences news.

—Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health (CDRH), briefed reporters in San Diego on his efforts to make the regulatory review of new medical devices more predictable, transparent, and efficient. Shuren is undertaking reforms at a time when eight out of 10 biomedical CEOs say they “agree or strongly agree” that the FDA regulatory approval process has slowed the growth of their organizations.

—More than 500 people turned out Monday evening for the open house that Johnson & Johnson’s (NYSE: JNJ) new Janssen Labs startup center. The first four startups to be inducted are Diomics (diagnostics, integrated DNA analysis); Neurolixis (drugs for schizophrenia, Parkinson’s and other CNS disorders); Tem Systems (comprehensive blood test for anti-coagulants); and Yolia Health (optometry device company).

—San Diego-based Auspex Pharmaceuticals, which is developing deuterium-based drugs, has raised $3 million of a $6 million round of debt and convertible promissory notes, according to a regulatory filing. Previous investors include CMEA Ventures, Costa Verde Capital, and Thomas McNerney & Partners. Auspex uses deuterium to replace metabolically sensitive hydrogen atoms in compounds to create new versions of existing drugs.

—BrainCells, a San Diego developer of neurological drugs, raised $2 million toward an $8 million round of debt, rights and securities, according to a regulatory filing. BrainCells previously raised $77 million from Alexandria Real Estate Equities, Bay City Capital, MedImmune Ventures, Mitsubishi UFJ Capital, Mizuho Capital, NeuroVentures, New Enterprise Associates, Oxford Bioscience Partners, Pappas Ventures and Technology Partners, according to VentureWire. The company says it is developing novel therapies for treating central nervous system (CNS) diseases, based on the principal of blocking select metabotropic glutamate receptors (mGluR).

—To have the skills needed in 2022, San Diego Xconomists Robert Noble and Larry Bock recommend that students should “learn how to learn.” Drew Senyei says students should study anything they are passionate about; Duane Roth would like to see a new major that encompasses engineering, biology, chemistry, physics, law, business, humanities and communications; and Ramesh Rao would emphasize studying new techniques for sensing data, as well as data analysis. They all offered their views for an Xconomy special report on education, and what students should be studying today to be prepared for 10 years from now. Their comments are available online here.

—In a talk with Sanofi CEO Chris Viehbacher, Luke explained the company’s strategy since it acquired Cambridge, MA-based Genzyme, and cut back on its internal research and development.

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Since he set out last year to revamp the way the FDA reviews medical devices, Jeff Shuren of the FDA’s Center for Devices and Radiological Health (CDRH) has often met with industry leaders to hear their feedback and ideas for how to improve medical device regulation. Last week, he met with industry leaders in San Francisco, and this week he’s in Southern California.

Shuren’s schedule in San Diego yesterday included a stop at Nuvasive (NASDAQ: NUVA), a pioneer in innovative spinal surgery products, which must have been an interesting meeting. Last week, Nuvasive CEO Alex Lukianov told an audience in San Francisco that FDA regulatory delays in reviewing Nuvasive products are costing the company an estimated $70 million a year.

Shuren, who has overseen the FDA center for just over two years, also met with local reporters, and provided an overview of the steps he’s taken to make the regulatory review of new medical devices more predictable, transparent, and efficient. The way the industry has been talking, though, it sounds like Shuren has taken only the first steps on what must be a 1,000-mile journey.

Eight out of 10 biomedical CEOs say they “agree or strongly agree” that the FDA regulatory approval process has slowed the growth of their organizations, according to a new survey from PwC [PricewaterhouseCoopers], BayBio, and the San Diego-based California Healthcare Institute (CHI). BayBio and CHI released some early results of the annual survey at an event timed to coincide with the JP Morgan Healthcare Conference, the biggest annual gathering of life science investors and executives.

Frustration throughout the life sciences industry has been mounting, but Joe Panetta, who heads San Diego’s Biocom industry group, sounded a more conciliatory theme as he sat next to Shuren during the media briefing. “Both industry and the FDA agree that we need to provide safe and effective products for patients and physicians,” Panetta said. “We’re definitely partners in that initiative, and it doesn’t do anyone any good to keep beating up on each other.”

The FDA’s Shuren is “trying to take specific actions to improve the decision-making process at the FDA, and also the decision-making culture,” says Ross Jaffe of Versant Ventures, who was among the Bay Area VCs who met with Shuren last week at a dinner organized by CHI. “To his credit, he’s willing to … Next Page »

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Ann Arbor-based CytoPherx, a medical device company focusing on inflammation-based diseases, announced yesterday that it has raised $34 million in a new round of financing. A large group of investors participated in the round, including Ohio-based Early Stage Partners, California-based Onset Ventures, and Wisconsin-based Capital Midwest Fund. This latest round of funding comes on top of a Series A round in 2007 ($4.5 million) and Series B round in 2009 ($7.5 million).

“This round included money from Connecticut, New York, Pennsylvania, Michigan, Ohio, Illinois, Wisconsin, California, London … we were busy,” says CytoPherx president and CEO Jim Danehy with a laugh. “These are challenging times, but we were very well received.”

In fact, according to Crain’s Detroit Business, this is the largest venture round collected by any Michigan company since 2009.

Danehy says that CytoPherx will use the money to finish a 344-patient clinical trial at 30 sites, including Henry Ford Hospital and the University of Michigan Health System. The clinical trial focuses on patients who are already experiencing kidney failure; the goal is to bring the mortality rate down from the current 50 percent or greater to 30 percent by using proprietary devices.

Danehy says the clinical trial involves patients with acute rather than chronic conditions. “These patients are the sickest of the sick,” he says. “The patients we see are generally healthy people who have had something really bad happen. They’re experiencing a major trauma like a gunshot wound or a car accident. Half the patients have a massive bacterial infection. The average age is 56 years old—these patients have many years ahead of them if we can get them through this acute event.”

Danehy adds that 2.7 million U.S. patients land in hospitals with acute renal failure, and about 160,000 undergo Continuous Renal Replacement Therapy, which represents a multi-billion dollar potential market opportunity.

CytoPherx, which employs 20 people, was founded in 2007 David Humes, a nephrologist at U-M’s Medical Center, using technology developed at the university. Danehy says support from Michigan and Midwestern investors, as well as a $2 million loan from the Michigan Economic Development Corporation, have been critical to the company’s success.

The clinical trial is expected to conclude in late 2012.

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Yesterday Saddle Brook, NJ-based CircuLite announced it received a $950,000 grant to develop a device for patients whose hearts have been weakened by pulmonary arterial hypertension, a rare and potentially fatal disease. The award, which came from the Cardiovascular Medical Research and Education Fund, was the latest vote of confidence in CircuLite’s core technology—a miniscule, implantable pump that’s designed to boost the heart’s ability to circulate blood.

The grant followed close on the heels of CircuLite’s latest financing, a $30 million Series D funding round that was oversubscribed. The financing, announced November 30, brought the total amount raised by the device maker to $99 million.

CEO Paul Southworth says CircuLite will funnel the new money into an ambitious list of goals he has established for 2012. The company expects to gain approval for its device, called Synergy, in Europe and to begin marketing it there for patients with chronic heart failure. CircuLite is also planning its first U.S. trials. And it’s developing a second generation of Synergy that can be implanted without major surgery.

CircuLite was founded in 2004 in a startup incubator called Accelerated Technologies Inc. (ATI), which was run by cardiologists. They recognized a hole in the cardiac-devices market: So-called ventricular assist devices were great for very sick patients. But those in the earlier stages of heart failure had no good treatment options. “There was an opportunity to get to patients before they got so sick,” Southworth says. “These are patients who have run the course on drugs or heart-rhythm management. There’s no place for them to go but to continue to worsen and fall into that late stage.”

Synergy works by supplementing the heart’s natural ability to pump blood. The device, about the size of a AA battery, is implanted by heart surgeons in a 90-minute procedure called … Next Page »

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‘Tis the season for end-of-year acquisitions to be announced, now that everyone’s back at work. Hopkinton, MA-based VelQuest, a maker of pharmaceutical and medical device-related software, has been acquired by San Diego-based Accelrys (NASDAQ: ACCL), the scientific R&D software firm, for $35 million in cash.

VelQuest started in 1999 and is led by CEO and co-founder Ken Rapp. Its investors include GE and MedEquity Capital. The company makes software that helps life sciences organizations manage lab test procedures efficiently and in compliance with FDA regulations. “All key members” of the VelQuest management team are staying on post-acquisition, according to the press release.

Accelrys makes a wide range of modeling, simulation, lab management, workflow, and data management software. The VelQuest acquisition adds another piece to the corporate strategy that Accelrys CEO Max Carnecchia outlined last year. He said the company aspires to help its customers manage the entire process of scientific development by offering a range of software products that can harness the innovation, experiments, modeling and simulation, and other work being done in labs on a global basis, both within their own organizations and within their collaborators.

The company says it has more than 1,300 customers across pharma, biotech, energy, chemicals, aerospace, and other industries.

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—After naming former Boston Scientific executive Fred Colen as CEO last month, San Diego’s BeneChill raised nearly $15 million in a round that’s targeting a total of $25.6 million, according to a recent regulatory filing. BeneChill, founded in 2004, has been developing therapeutic hypothermia medical products. The company’s European headquarters is in Lausanne, Switzerland, and BeneChill has European approval to sell its intra-nasal cooling system—which induces therapeutic hypothermia immediately following cardiac arrest.

—San Diego’s Sotera Wireless has been busy getting its ducks in a row. After applying for FDA approval of its vital signs wireless patient care monitoring technology in August, Sotera raised $12.2 million last week in Series D financing. Sotera said it also signed a commercial partnership agreement with Kansas City, MO-based Cerner, the giant health IT systems provider. If all goes as planned, funding from the current financing round will be used to support the launch of Sotera’s “ViSi Mobile System” in early 2012.

—Melinda Richter, the founder and CEO of San Francisco-based Prescience International sat down with me to discuss her plans for the life sciences incubator going in at Johnson & Johnson’s pharmaceutical R&D facility in San Diego. The J&J facility, known as the Janssen Labs at San Diego, will host 18 to 20 early stage startups. Richter, who will manage the facility under a contract with Janssen, said she wants to dramatically lower the costs for starting a life sciences company.

—Optimer Pharmaceuticals (NASDAQ: OPTR) said it won approval to start selling its new antibiotic, fidaxomicin (Dificlir) in Europe as a new treatment for C. difficile infections of the gut. Japan’s Astellas Pharmaceuticals has the rights to … Next Page »

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Portable ultrasound maker SonoSite is being acquired by Japan’s Fujifilm for just under $1 billion. SonoSite will remain based in Bothell, WA, under its current leadership team, the companies said in a joint announcement.

The $995 million price represents a cash offer to purchase all SonoSite (NASDAQ: SONO) shares for $54 each, a 50 percent premium on the average closing stock price for the past three months. The price also includes payments in connection with SonoSite’s convertible debt. The companies’ boards have already approved the deal.

In the announcement, SonoSite President and CEO Kevin Goodwin said joining Fujifilm “will enable us to significantly accelerate our international business and product development efforts, and respond to the fast-evolving needs of physicians around the world.”

SonoSite was itself an acquirer last year, paying $71 million for Toronto-based Visualsonics, whose initial market was in preclinical biology labs. At the time of the deal, SonoSite said the ultrasound market for preclinical research was estimated to be worth $350 million with projected double digit annual growth rates.

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[Updated 12/12/11 11:20 am to clarify terms for startups. See below.] After spending much of her career in the tech sector, Melinda Richter has been pondering a provocative question for the life sciences industry.

“Billionaires are a dime a dozen in tech,” she says, “but it’s hard to find an entrepreneur in the life sciences who is a billionaire. I can’t think of a single small biotech company CEO who became a billionaire.”

Richter says she founded San Francisco-based Prescience International at least partly with the hope of addressing such inequities. Prescience helps start and manage life sciences incubators, institutes, and other research centers.

Melinda Richter

Mostly, though, Richter says she wants to make it possible for life sciences entrepreneurs to take advantage of the sort of low operating costs that make it so easy for a handful of tech entrepreneurs to start a Web 2.0 company with a few hundred thousand bucks. It’s that kind of minimal capital requirement that can enable biotech entrepreneurs to prove their concept, giving them something more than a business plan when they seek venture funding. The low-cost model might even help entrepreneurs hold onto a bigger ownership stake in their startups.

“You look at these IT companies,” she says. “You give a couple of guys a couple hundred thousand, and after a couple of months they’ve got a new iPhone app and they’re ready for business. But it’s not curing cancer or HIV.”

So Richter was on the ground floor, so to speak, as executive director when the San Jose Redevelopment Agency spent $6.5 million to start the San Jose BioCenter, a life sciences incubator that opened in 2004. The BioCenter officially hired Prescience to manage the facility in 2005, and Prescience took over management of a cleantech incubator, the San Jose Environmental Business Cluster, in 2009.

Now Prescience is in San Diego. Johnson & Johnson has hired Richter’s firm to manage the incubator it has been creating at its San Diego R&D facility, now known as the Janssen Labs at San Diego. Under a plan unveiled in October, J&J plans to host 18 to 20 startups at its new innovation center, which has various size wet labs and offices for individual companies, and common areas for shared use. Janssen Labs has emphasized that space in its innovation center comes with no strings attached. The startups that enroll will not be required to give up an equity stake or intellectual property rights. They simply have to pay a monthly fee under a 90-day lease agreement.

When we met recently, Richter told me she got into the business partly for personal reasons.

After graduating from the University of Saskatchewan (she is a Canadian), Richter joined Nortel Networks, where she says she spent more than eight years on a fast-track executive program that took her to corporate posts in the United States, Europe (she got her MBA in France), Latin America, and China.

While in China, however, Richter had what you might call a life-altering experience. She says she got very sick and was … Next Page »

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How does a 110-year-old medical device company end up on the cutting edge of regenerative medicine? The answer: A little innovation and a lot of persistence.

That formula paid off this week for Holliston, MA-based Harvard Bioscience (NASDAQ: HBIO). On Monday, the company announced that a product it makes called the InBreath Bioreactor was featured in an article in the prestigious peer-reviewed medical journal The Lancet. The article described the world’s first implantation of a synthetic trachea, which was made in the bioreactor using the patient’s own stem cells. The next day, Harvard Bioscience announced that the second synthetic trachea—also made with the InBreath—had been successfully implanted. “This is a big breakthrough at a time when there is not enough supply of donor organs,” says Harvard Bioscience’s president David Green.

For most of its long history, Harvard Bioscience has been known as a solid but relatively sleepy maker of scientific instruments, such as pumps and glassware used by drug researchers. The company markets 16 different brands, and last year it posted $19 million in profits on $108 million in sales.

In 2008, Green says, Harvard Bioscience started working with Massachusetts General Hospital on technology that can be used to grow lungs outside of the human body. Around that time, Green read a paper in The Lancet describing how physicians in Italy transplanted into a patient a new trachea that they constructed partially from donated tissues and partially from cells taken from the patient.

Green wanted to expand Harvard Bioscience’s presence in regenerative medicine, so he e-mailed the lead author of that paper, an Italian physician named Paolo Macchiarini, and expressed an interest in licensing the technology used to grow the trachea. The licensing agreement was sewed up in August 2009, and Harvard Bioscience got to work refining the technology.

The tracheas used in the two surgeries announced this week, both of which were performed by Macchiarini, were made slightly differently. The first patient—36-year-old Andemariam Beyene, who was suffering from inoperable tracheal cancer—received a tracheal scaffold made from … Next Page »

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Saddle Brook, NJ-based CircuLite announced today that it has raised $30 million in an oversubscribed Series D financing round. The company said in a statement that it will use the proceeds to support the anticipated 2012 European launch of a device it dubs “the world’s smallest surgically implanted blood pump,” which is used to treat patients with heart failure. The device, called Synergy, is a pump roughly the size of a AA battery that boosts the heart’s ability to circulate blood to vital organs. The funding will also be used to support the U.S. development of Synergy, the company said.

The financing round was led by new investor MacAndrews & Forbes Holdings and founding VC Forbion Capital Partners. CircuLite’s other investors include Crédit Agricole Private Equity, Saints Capital, Foundation Medical Partners, and SB Life Science Ventures. CircuLite raised $69 million in three previous funding rounds.

CircuLite was founded in 2004 with a focus on developing minimally invasive devices to treat patients with life-threatening heart conditions. The company is working on next-generation Synergy micro-pumps, and it has a grant from the National Institutes of Health to collaborate with the University of Maryland School of Medicine on devices to treat children with heart conditions.

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When last we checked in with Gordon Jones, it was six months ago and he had just been appointed the inaugural director of the Harvard Innovation Lab. It was May, the birds were singing, the Red Sox had pulled out of their season-starting slump, and anything seemed possible.

Now the cold, dark days are upon us, and we need a place to rejuvenate our spirits as we gear up for the holiday season. Students and young entrepreneurs especially need such a place. The Harvard i-lab, as it is called, might be that place—a $20 million center whose mission is to support all Harvard students interested in entrepreneurship. And it is officially open for business as of today, complete with a ribbon-cutting ceremony, school administrators, and politicians.

The important news is that the i-lab is real, and it marks a serious and ambitious effort to foster entrepreneurship on a grand scale. The unstated goal is to keep the next Bill Gates or Mark Zuckerberg from leaving town (and Harvard) and building a multibillion-dollar company somewhere else. Will it work? Who knows, but you have to start somewhere.

Back in May, Jones talked with me about just trying to get his baby to first grade—the idea being, walk before you run. He has been heads-down since then, but I recently caught up with him about the i-lab’s opening, and the progress and challenges to date. (And yes, he hosted Zuckerberg’s recent visit to the lab.)

“I’ve been pleasantly surprised so far,” Jones says. “It’s genuine, the interest here, and the level of engagement across the Harvard schools is strong.” He says that the overall support from the university and the enthusiasm from the academic and business communities “exceeds what I expected.”

Jones adds, “When we first talked six months ago, there was this question of, ‘Is Harvard late to the game?’ I think this is a great time to be doing what Harvard is doing.” And that is, in his words, “trying to bring the best of Harvard’s knowledge and network and make it available to students. And being part of the Boston innovation community.”

Here are my takeaways going into the first day of school at the i-lab:

1. Jones isn’t going anywhere. Yes, he has an extremely challenging job. (You try being accountable to seven different deans across Harvard, for starters.) The fact that he’s still alive and kicking—not to mention attending lots of entrepreneurship events and getting to know students and the local business community at every turn—bodes well for the lab’s future. “You’ve got to pick your battles,” he says.

2. The lab is already active. It officially opens today, but stuff has been happening there for months already: a “startup weekend scramble,” guest speakers (the series includes Eric Ries, Peter Thiel, and Jeff Taylor), Harvard courses on entrepreneurship and global innovation, special panels, startup workshops (Alex Taussig led one about mistakes entrepreneurs make; Eric Paley did one on career choices), and one-on-one consultations with “experts in residence” and “innovation partners” … Next Page »

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The FDA has cleared the first commercial product from San Diego’s Tandem Diabetes Care, a wearable insulin pump, according to a statement today from the medical device startup. Tandem Diabetes says its “t:slim” insulin pump represents an advance in terms of practicality and ease of use for managing type 1 diabetes—particularly for people who manage their diabetes with multiple daily injections.

As I reported in August, when Tandem Diabetes raised $12 million in venture funding, the company applied for FDA clearance under 510(k), a section of the Food, Drug, and Cosmetic Act that allows the regulatory agency to determine if a medical device is equivalent to existing technology already cleared for use.

Tandem Diabetes says its insulin pump enables patients to get insulin continuously throughout the day using a catheter, instead of giving themselves periodic injections. In a seeming homage to Apple’s simplicity of design, the San Diego company also emphasizes the t:slim’s thin design—”the smallest insulin pump system currently available,” user-oriented features, and “vivid color touch screen.” The device also features an “eco-friendly rechargeable battery” and can be connected via a USB port to a Web application so users can upload as much as 90 days of insulin pump data or blood glucose meter data.

In its statement, the company says, “Of approximately 1.5 million people in the U.S. with type 1 diabetes, industry estimates indicate that only 20 to 30 percent use an insulin pump, despite clinical evidence that pump use can improve glycemic control and quality of life.”

A Tandem Diabetes spokeswoman declined to say how much venture capital the company has raised since it was founded in 2006. By my reckoning, it is at least $77.3 million. The company’s investors include Delphi Ventures, Domain Associates, HLM Venture Partners, Second Technology Capital Investors, and TPG Biotech.

Tandem Diabetes is entering a market where many insulin pump makers already are established, including Minneapolis-based Medtronic; Bedford, MA-based Insulet; Switzerland’s Roche; New Brunswick, NJ-based Johnson & Johnson; South Korea’s Sooil; and Japan’s Nipro.

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TechTown has undergone some changes recently as Leslie Smith transitions into her new role as executive director. Nothing drastic, she says, but rather an expansion of its incubator business model to include targeted outreach to a few Detroit neighborhoods in order to make its entrepreneurial mission more accessible, an increased focus on microenterprise and procurement opportunities, and an increased partnership with nearby anchor institutions such as Henry Ford Hospital.

“We’ve come to understand that, in order to serve some of our constituents, we have to meet them where they are,” Smith says.

One thing TechTown plans to do is to increase its focus on connecting companies with procurement opportunities at the three anchor institutions in Midtown: Wayne State University, Henry Ford Hospital, and the Detroit Medical Center (DMC).

TechTown also wants to increase the number of high-growth IT companies in its portfolio from 20 percent to 3o percent. Smith says one way to do that is to commercialize more of the technology coming out of Henry Ford and the DMC.

“If there’s a new, innovative device or tool or process, we want to help commercialize that,” Smith says. “For example, Henry Ford has an Innovation Institute. We want to be on the receiving end of that pipeline.”

Smith says TechTown has doubled down on its commitment to help create a more vibrant city through stronger relationships with its local and regional partners. Part of that commitment involves going into communities with strong leaders and organizations already in place. Steve Tobocman, a former state legislator who has lately been spearheading the Global Detroit initiative, has been tapped to lead an effort to stabilize neighborhoods through a microenterprise training program geared towards immigrants and people of color.

Based on a model that was implemented successfully in the Twin Cities, the Detroit program will focus on … Next Page »

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Drug approvals and advances in new cancer therapies were the prevailing themes in San Diego’s life sciences news over the past week. Our briefing begins now.

—TEDMED, the exclusive medical and healthcare symposium that died in 2004 and was resurrected in 2009, is now the walking TEDMED. The entertaining show with a mix of big ideas, celebrity presentations, humor, and music that played at the Hotel del Coronado for the past three years said it is moving to Washington DC. Playing at the John F. Kennedy Center for the Performing Arts in the nation’s capital will give the $4,000-a-person symposium a bigger stage and a more influential audience, according to Priceline.com founder Jay Walker, who led an investor group that acquired the show in April. About 850 attended last week’s four-day symposium in the San Diego area.

—Federal regulators approved a new pain-killing drug intended to put off the post-surgical need for opioids that was developed by Pacira Pharmaceuticals (NASDAQ: PCRX), the Parsippany, NJ-based drug developer with operations in San Diego. The FDA’s approval marked the end to a protracted drug-development saga for the long-acting form of a pain drug called bupivacaine. Pacira plans to begin marketing the drug, branded as Exparel, in January.

—The FDA approved a new diagnostic test that was developed by San Diego-based Gen-Probe (NASDAQ: GPRO) to detect strains of the human papillomavirus (HPV) that pose a higher risk for cervical cancer and precancerous legions. Gen-Probe said regulators approved its Aptima HPV test to run on TIGRIS, a fully automated, high-throughput molecular diagnostic system. Using a Pap smear sample, the company says its test detects 14 high-risk types of HPV, giving patients and doctors information earlier and more accurately.

—Luke’s BioBeat column focused on several cancer drugs the FDA approved in August, which he suggested could be a turning point in the decades-long battle against cancer. Instead of broad-based anti-cancer drugs, Luke says regulatory approval of vemurafenib (Zelboraf), brentuximab vedotin (Adcetris), and crizotinib (Xalkori) signals the … Next Page »

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Twitter has already sucked away 20 percent of your life. What’s another 30 minutes?

If you don’t know Kabir Shahani or his startup, Appature, here is your chance. I will be hosting a live Twitter chat with him tomorrow (Thursday, Nov. 3). This open chat will start at 2 pm Eastern / 11 am Pacific Time, and you can ask him whatever you want for 30 minutes.

What’s the occasion? Well, Shahani will be one of our featured speakers at Xconomy’s “6×6: Six Cities, Six Big Tech Ideas” conference in Boston on Dec. 1, and I want to give him a hearty welcome.

I got to know Shahani and Seattle-based Appature while I was living in the Northwest a couple years ago. The company has a remarkable story. It started in 2007 and bootstrapped itself to profitability before taking a VC round in late 2009. Appature is also interesting because it is complementary to many companies in Boston’s marketing tech cluster, like HubSpot, Constant Contact, BzzAgent (Tesco), and Buzzient. It works with a lot of healthcare companies and institutions around Boston and the East Coast. And, of course, it is going through many of the same growing pains that young companies around Boston (and elsewhere) talk about, as it expands its customer base across the country.

Appature’s founders are hardcore techies with a social networking background, but they chose to go after the healthcare market—making new kinds of software tools for medical device and pharma companies to build relationships with their customers (mostly hospitals and doctors), all in a fundamentally different way from traditional marketing.

So, in our live chat, I’m interested to hear what the big idea is all about at Appature and why it chose its particular niche. Other areas up for discussion include social marketing trends in healthcare and other industries; startup/VC lessons and tech advice; and maybe a little Boston vs. Seattle talk (in terms of innovation ecosystems, talent, and coffee). I’ll bet the tech and healthcare communities will have some good questions for Appature, too—so please get them ready.

Here’s how it will work on Thursday. I’ll send off a few questions to Shahani from @Xconomy, and then we’ll open it up to everyone’s questions. Shahani will be responding from his personal account, @Kabir, with an assist from his team @Appature. And we will all keep track of the running dialogue using the hashtag #XCappature. That’s the key for you to follow the conversation on Twitter. (You can use TweetChat or another app to focus on the half-hour discussion, or for however long you want to tune in.)

See you online at 2pm ET / 11am PT on Thursday…

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