This was a great year for Seattle biotech if you measure success through sheer number of acquisitions. But if you prefer to measure the health of an innovation community by the number of exciting new startups it hatches, then this was most certainly a down year.

That’s the mixed bag of returns that I saw when looking back at the news of 2011 from the Seattle life sciences scene. This was the year of the acquisition for Calistoga Pharmaceuticals, Pathway Medical Technologies, Calypso Medical Technologies, SonoSite (NASDAQ: SONO), Amnis, Geospiza, and Pacific Biosciences Labs (the maker of the Clarisonic skin brush.)

While those companies got harvested, not a whole lot of new seeds got planted. The list of notable Seattle biotech startups this year includes Cardeas Pharma, Oncofactor, Blaze Bioscience, Aquedect Neuroscience and Cardiac Insight.

Who else made headlines in Seattle biotech in 2011? Seattle Genetics emerged. Dendreon crashed. Marina Biotech, Omeros, and AVI Biopharma all had years they’d like to forget. Cell Therapeutics somehow managed to stay in business. New leaders emerged at the global health nonprofits, as Alan Aderem moved in to run the Seattle Biomedical Research Institute, Stewart Parker took over at the Infectious Disease Research Institute, and Chris Elias created a vacancy at the top of PATH by leaving for a new gig at the Bill & Melinda Gates Foundation. The foundation’s head of global health, Tachi Yamada, left for a new venture capital gig, and was replaced by a former Novartis executive, Trevor Mundel.

Here’s a company-by-company rundown of the major events at Seattle biopharmaceutical and global health organizations we keep tabs on here at Xconomy. Tomorrow, I’ll follow up with the rundown of rundown of medical device, diagnostic, and others in fields like Bio-IT or Health IT.

Seattle Genetics (NASDAQ: SGEN). This was a transformative year for Seattle Genetics. The company broke through in August by winning FDA approval of its first product, a souped-up antibody for rare lymphomas. The drug validated a new target on the surface of cancer cells, CD30, and provided hard proof that Seattle Genetics’ proprietary chemistry can successfully link toxins to antibodies—a feat that has eluded scientists for 30 years. Big Pharma companies have beaten a path to Bothell to get licenses to the antibody-drug linking technology, and Seattle Genetics has exceeded Wall Street expectations in the early days of its drug rollout.

Dendreon (NASDAQ: DNDN). Dendreon was the star of local biotech in 2010, and this year it fell flat on its face. The company failed to live up to its first full year sales forecast with its immune-boosting drug for prostate cancer, and burned its shareholder base in the process. The company lost more than $3.5 billion in market valuation, and had to cut 500 jobs, largely because it sparked controversy and confusion by pricing its cancer drug too high—at $93,000 per patient. It remains to be seen this year whether Dendreon can pick up the pieces, as the disastrous screw-up of 2011 has created a gaping opportunity for emerging competitors like Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100.

Amgen (NASDAQ: AMGN). The Thousand Oaks, CA-based biotech company, which has significant R&D in Seattle, said at the end of the year that longtime CEO Kevin Sharer … Next Page »

Comments (3) | Reprints | Share:          

Lots of little blurbs crossed the desk this week, along with one major blowup for a drug in the third and final stage of clinical trials.

—Seattle-based Omeros (NASDAQ: OMER) said it failed in a series of pivotal clinical trials with its anti-inflammatory drug to help patients undergoing arthroscopic knee surgery. The trials, which enrolled more than 1,000 patients from 2004 through 2010, were a big reason investors bought into the Omeros IPO of October 2009. The stock is down 39 percent since the news broke.

—An individual shareholder in Kansas kicked up a debate online after calling for a boardroom shakeup at Seattle-based Dendreon (NASDAQ: DNDN). Brad Loncar accused the company of failing to properly look out for the interests of small shareholders, and encouraged fellow readers of a popular stock message board, InvestorVillage.com, to urge the company to add one or two new board members to represent those interests. Loncar says he has received some support in his effort, along with plenty of vocal criticism.

—Bothell, WA-based Halosource, the maker of technology for purifying drinking water in the developing world, introduced three new products that consumers use at home. These are powered-water pitchers, or a gravity-based water container that use Halosource’s technology for killing viruses and bacteria. The company made its initial inroads into developing world markets by selling a replaceable cartridge with its technology that works with devices made by other companies.

—Vancouver, BC-based Tekmira Pharmaceuticals made headlines a few weeks ago when it accused its partner, Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) of misappropriating trade secrets related to the delivery of RNA interference drugs into cells. Now Alnylam has formally responded to the allegation in court, saying it plans to fully defend itself.

—Seattle-based Oncothyreon (NASDAQ: ONTY) said this week it has started a mid-stage clinical trial of drug for brain cancer, PX-866, which is designed to work against one of the high-profile molecular targets in cancer biology—the PI3 kinase. The study is enrolling 30 patients at seven sites in Canada.

—This week’s BioBeat column was about antibiotics, and why more biotech entrepreneurs should take this field seriously. I listed a few promising companies I’ve covered in this business all over the country, but couldn’t think of a single example of an antibiotics company from Seattle. If any readers out there have an idea why that is—or can alert me to some promising company I overlooked—please enlighten me at ltimmerman@xconomy.com.

—The University of Washington’s Center for Commercialization said last week it has added five new people to its roster of entrepreneurs-in-residence, who scout for university technologies with business potential. Ron Berenson, the former CEO of HemaQuest Pharmaceuticals, and Stephanie Amoss, formerly of Pathway Medical Technologies, are a couple of the new additions with expertise in biotech and medical devices, respectively.

—Bothell, WA-based AVI Biopharma (NASDAQ: AVII) said it has raised $30 million through a stock offering. The company followed up a few days later to say its underwriters exercised their options to buy extra shares, meaning that AVI netted about $32 million after paying expenses. AVI said previously that it entered this year with about $34 million of cash in the bank, and a plan to spend about $23 million to $28 million of its cash on operations.

Comments | Reprints | Share:          

[Updated: 3:45 pm] Omeros, the Seattle-based biotech company, went public back in the fall of 2009 partly on optimism that it had found a novel way to help people recover from knee surgery. Today, the company is reporting that the program was essentially a bust. Omeros stock fell 40 percent on the news in after-hours trading.

Omeros (NASDAQ: OMER) said today that its most advanced program in clinical trials, a combination of generic drugs designed to reduce pain and swelling in patients undergoing arthroscopic knee surgery, has failed. There was nothing to sugarcoat here—the drug, OMS103HP, failed to meet its goals in the third and final stage of clinical trials. Omeros blamed confounding factors in the studies, which means that if patients improved, it could have been caused by some other reason than the Omeros drug. And the treatment failed in more than one study. The Phase III program involved three clinical trials, composed of 1,040 patients, according to Omeros’ most recent annual report.

“We are obviously disappointed and surprised by the outcome,” Omeros CEO Greg Demopulos said in a statement.

The Omeros treatment is a combination of three generic pharmaceuticals—the anti-inflammatory compound known as ketoprofen, the pain reliever amitriptyline, and a blood vessel constrictor known as oxymetazoline. By adding that mix to a standard surgical irrigation solution, Omeros hoped it would help people suffer less pain, and ease the recovery from arthroscopic knee surgery. The market potential for something here is quite big—about 2. 6 million arthroscopic knee surgeries are performed each year in the U.S., and the numbers are only thought to go up as Baby Boomers get older.

Omeros is still combing through the data, and didn’t say in today’s statement what it plans to do next. The company said the latest findings do not appear to undermine use of the drug for a type of knee surgery known as meniscectomy.

Fortunately for Omeros, it hasn’t bet the entire company on OMS103HP. The company reported on some positive findings last week from a mid-stage study of patients on a drug for cataract surgery. And Omeros raised $25 million last year from Paul Allen’s Vulcan Capital and the state’s Life Sciences Discovery Fund to support a discovery program that hopes to uncloak a number of promising new drug targets known as G-protein coupled receptors.

Shares of Omeros dropped 40 percent in after-hours trading, down to $4.81 at 6 pm Eastern, following remarks by Demopulos on a conference call.

[Updated with comments from Omeros conference call.] While Omeros is still analyzing the data to determine what went wrong, Demopulos did note that there was a lot of variability in how the study was conducted over a period of years. It was designed so that a physical therapist performed a post-operative functional assessment of the patient. The problem in a large study, with multiple centers, is that there is bound to be a lot of variation in how those individuals perform the functional assessment, Demopulos said. Omeros tried to account for this with consistent training of clinical sites and follow up, Demopulos said.

The company’s cash position is now bound to attract more scrutiny. Omeros said it entered the year with $42 million in cash and investments, after burning through about $18 million of its cash balance in 2010. Demopulos assured analysts that the company is comfortable it has more than 12 months of cash left. Yet that comment was made based on some new information Omeros disclosed today. Omeros said in a separate regulatory filing today that it agreed to borrow $10 million from Oxford Finance in a transaction dated March 25th, and Demopulos told analysts the state Life Sciences Discovery Fund still owes Omeros a $5 million payment.

Demopulos didn’t try to hide the depth of his disappointment in the clinical result, but in his closing remarks, he urged people not to give up on the company.

“This is part of the business we are all in. At Omeros, we have an outstanding group of people, and we are building a company around a unique and valuable set of assets. While there are no guarantees, I don’t expect to make a habit of delivering this kind of news.”

Comments (1) | Reprints | Share:          

Another week, another deal for Seattle Genetics. This company is clearly on a roll.

—Seattle Genetics (NASDAQ: SGEN) raked in another $8 million upfront payment this week from a big drugmaker that wants to use its technology for linking targeted antibodies to toxins that make them more potent. This time, Abbott Laboratories shelled out for rights to the technology, making this the 11th such licensing deal Seattle Genetics has signed. If Abbott reaches certain milestones, Seattle Genetics could collect another $200 million in payments, plus royalties on product sales.

—Seattle-based Omeros (NASDAQ: OMER) said it passed a mid-stage clinical trial with one of its lesser-known assets in development—a combination treatment for eye surgery to repair cataracts. This drug, OMS302, was able to maintain pupil dilation during surgery, and reduce postoperative pain and irritation. Omeros said it plans to advance the drug into the third and final stage of clinical testing usually required for FDA approval. The stock climbed about 10 percent on the news.

—The Allen Institute for Brain Science made a notable personnel move this week, hiring Christof Koch, a veteran neuroscientist on the faculty at Caltech, as its new chief scientific officer.

—A year has gone by since President Obama signed the landmark healthcare reform bill into law. Plenty of people feared it would stifle drug prices and take away the incentive to develop innovative new drugs, but as I point out in this week’s BioBeat column, it didn’t happen.

—Vancouver, BC-based Tekmira Pharmaceuticals kicked up a storm last week when it sued its longtime partner, Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) for more than $1 billion, accusing it of misusing trade secrets. Alnylam CEO John Maraganore says his company did no such thing, and he fired back with some choice words for the folks at Tekmira in this exclusive interview.

—Stewart Lyman offered up a thorough analysis of biotech financing over the past couple years, which raises a very tough question on a lot of people’s minds: “Who will pay for drug development in the future?” Check out his first installment, and the second part.

Comments | Reprints | Share:          

Omeros has some news out this morning on one of the lesser-known members of its drug development pipeline.

The Seattle-based biotech company (NASDAQ: OMER) said today that its experimental treatment for patients undergoing eye surgery to correct cataracts was safe, able to maintain pupil dilation during the procedure, and reduce postoperative pain and irritation. The results—which Omeros said will be published and presented later in a scientific forum—were from a study of 221 patients that randomly assigned people to a control group, the Omeros combination product, or its two individual components. Based on the results, the company said it now plans to take the drug, OMS302, into the third and final stage of clinical trials normally required for FDA approval.

The findings are important for Omeros, giving something to potentially stir interest among investors. The company, which went public at $10 a share in October 2009, has been stuck in the doldrums, closing at $6.05 yesterday. Omeros pitched investors on the promise of an anti-inflammatory solution for knee surgeries that has been in pivotal testing for several years, although it still hasn’t presented final results. At a much earlier stage, Omeros has talked up the promise of its initiative to discover new drug targets, known as GPCRs, which it hopes will entice Big Pharma companies to form partnerships. That program is supported by $25 million from Paul Allen and Washington state’s Life Sciences Discovery Fund.

Omeros’ cataract program, by comparison, has gotten little attention. The market for a new drug could potentially be quite big, as there are about 3 million surgeries in the U.S. each year to correct vision impairments from cataracts, and the number is expected to climb as Baby Boomers get older.

Here’s what the study was about, based on Omeros’ statement this morning. Omeros developed a proprietary combination of two generic drugs that have been used by ophthalmologists for more than 15 years in irrigation solutions. One component minimizes inflammation, and one causes pupil dilation. The pupil dilation part is important because if it isn’t maintained throughout the procedure, then risks of injury during surgery go up.

The study showed that pupil dilation was maintained through cataract surgery, and that fewer people complained afterwards about moderate to severe pain, Omeros said. Both findings were statistically significant. Omeros didn’t say how much better the combo was than its individual components—a key point it will have to delineate if it is going to convince doctors to use a brand-name combination drug instead of a cheap generic one.

One prominent eye specialist quoted by Omeros today in its statement sound bullish. “These data are compelling and could represent a major advance for lens replacement procedures, including cataract surgery and refractive lens exchange. OMS302 has the ability to facilitate the ease of the procedure while improving patient outcomes and safety,” said Alan Crandall, director of glaucoma and cataract, senior vice chairman of ophthalmology and visual sciences at the Moran Eye Center at the University of Utah.

Taking this latest program into pivotal trials certainly won’t be cheap, and Omeros doesn’t have unlimited resources. The company said it ended 2010 with $42 million in cash in the bank, down from $60.3 million a year earlier. With a depressed stock price, it’s no easy thing to raise more money, so it will be interesting to see if investors find this eye surgery solution compelling enough to help finance it all the way to FDA approval.

Comments (2) | Reprints | Share:          

‘Twas the week before JP Morgan and all through the house…OK you get the idea. Not much biotech news was stirring this week as everybody is prepping for the big industry confab next week in San Francisco. I’ll be reporting there as always.

—We rang in the New Year on the biotech desk with a story titled “The Immunex Alumni: Where are they now?” It’s been more than eight years since the Seattle biotech bellwether was bought by Amgen, so I thought it would be interesting to track down where a lot of the Immunoids went. I’m getting a lot of great comments in my inbox, and please keep them coming. The list has 306 names at last count, and if you or someone you know is an alumnus that would like to be included, just send me a note at ltimmerman@xconomy.com

—One of the most prominent Immunex alumni, Doug Williams, made some news this week when he took a new job as the executive vice president of R&D at Weston, MA-based Biogen Idec (NASDAQ: BIIB). This means Seattle biotech can subtract one of its few bankable CEO candidates, as Williams is headed off to the East Coast.

—AVI Biopharma (NASDAQ: AVII), the Bothell, WA-based developer of RNA-targeted therapies, said it has formed an alliance with the Karolinska Institute in Sweden to look for new drugs against extensively drug resistant forms of tuberculosis. Financial terms weren’t disclosed, but the two parties will split research costs.

—Seattle-based Omeros (NASDAQ: OMER) said it has obtained an exclusive license from the University of California to a number of new drug candidates for trauma-related and surgical bleeding. Terms weren’t disclosed.

—Genentech, the biotech giant in South San Francisco, has taken a license to a number of antibacterial drug candidates from AMRI, the pharmaceutical service firm. AMRI did much of the work on these novel compounds, derived from natural product sources, at its lab in Bothell, WA.

—Leroy Hood added another major prize to his trophy case this week. Hood took home the Russ Prize, a $500,000 bioengineering honor presented by the National Academy of Engineering. Hood won for his most famous series of inventions in high-speed gene sequencing, which laid a critical foundation for the Human Genome Project and the wave of faster/cheaper genome sequencing that came after.

—We have had a bunch of guest editorials flowing into the Xconomy Forum lately, on a number of tech-related themes, and from a number of writers in our 5-city network. Here are two from the past couple weeks that are of most interest to Seattle biotech readers. Sue Siegel, a partner with Mohr Davidow Ventures, offered her view on five things to watch for in the coming year of healthcare and life sciences. And Larry Corey, the new president of the Fred Hutchinson Cancer Research Center, provided his thoughts on how vaccines were the big innovation story he saw in 2010.

Comments | Reprints | Share:          

Omeros (NASDAQ: OMER), the Seattle-based biotech company, said today it has obtained an exclusive license from the University of California to a series of new drug candidates for controlling traumatic bleeding and surgical bleeding. The compounds, which are known as antifibrinolytic agents, are supposed to be safer than Bayer’s aprotinin (Trasylol), which was withdrawn from the U.S. market in 2008. The Omeros drug candidates haven’t yet entered clinical trials.

Comments | Reprints | Share:          

The medical meeting season has passed, and pretty soon Seattle biotechs will go into hibernation for the holidays. But here are a few headlines to catch up on you may have missed in the last week.

—Washington’s Life Sciences Discovery Fund had never invested in a corporation until October, when it agreed to pump $5 million into a drug discovery project at Seattle-based Omeros (NASDAQ: OMER). Like many people, I was under the impression that the state couldn’t really do things like this because of a constitutional prohibition against investing in companies. But executive director Lee Huntsman explained in this follow up interview how this deal was structured in a way that passed legal muster, and which he says could provide a significant return on investment for the state, and a nonprofit entity that may someday replace the Life Sciences Discovery Fund.

—We had the exclusive feature this week on Seattle-based Adaptive TCR, a spinoff from the Fred Hutchinson Cancer Research Center, that has made major strides as a business in its first full year of operations. The company, which is seeking to dominate a new industry in what it calls immune system profiling, has signed up more than 50 academic customers this year, CEO Chad Robins says.

—The future of ultrasound may be on an iPhone, if the folks at Redmond, WA-based Mobisante are correct. This was one of a couple of interesting life sciences startups that were featured last week at the Northwest Startup Demo conference, organized by the MIT Enterprise Forum of the Northwest.

—We announced the next big event on the calendar at Xconomy Seattle, a conference we are calling “Computing in the Age of the $1,000 Genome.” This event, set for February 7 at Swedish Medical Center’s James Tower Auditorium, will feature leading speakers at the nexus of computing and biology from around the West Coast. Today is the last day to get the “super saver” discounted rate, so if you plan on attending, this is the best time to get a ticket.

—Bothell, WA-based AVI Biopharma (NASDAQ: AVII), the developer of RNA-based therapies, named former Celgene executive Chris Garabedian as its new CEO this week. He steps in after former CEO Les Hudson was ousted in a shareholder revolt last April.

—OVP Venture Partners hadn’t had an IPO in a long time until last month, when Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) pulled off that daring feat. I caught up with CEO Cliff Reid last week, and asked him about his company’s business plan to sequence complete human genomes specifically for cancer researchers.

—The Fred Hutchinson Cancer Research Center has been on a major push to boost its immunotherapy programs, and it got an assist from the community with donations from its annual Hutch Holiday Gala. This year, the center pulled in $5.6 million in donations, which was enough over a two-year period to trigger a full $10 million matching grant from the family of Amazon founder Jeff Bezos.

Comments | Reprints | Share:          

Railroad barons from the 19th century ruined it for Washington State, the common business perception goes, by snookering states into coughing up egregious corporate welfare. It led to a popular uprising and a subsequent state Constitution that forever prohibited direct aid to corporations. That, politicians often say, is the reason the state can’t invest in local startups today.

So it surprised a lot of people in October—me included—when the state’s Life Sciences Discovery Fund defied the perception by funneling $5 million of state money into a biotech corporation—Seattle-based Omeros (NASDAQ: OMER). This was part of a larger deal in which the state pooled resources with Paul Allen’s Vulcan Capital to invest a total of $25 million into a basic research program at Omeros. The vision is that the company could make it possible to develop new therapies against 100 or more protein targets on cells that have been inaccessible to drugmakers.

This deal was remarkable because it represents the first time the state Life Sciences Discovery Fund has plowed its resources directly into a for-profit entity. The transaction was done through a project financing structure which has never been used by the state life sciences agency before, and which is within the legal boundaries set by the state’s Constitution, says executive director Lee Huntsman. If the bet fails, the state and Vulcan will have lost their money. If it pays off, the state could get back five times its original investment, and Omeros could end up throwing off much more cash flow into a new nonprofit entity that hasn’t yet been named, Huntsman says. That nonprofit agency could provide grants to Washington State researchers and companies long after the sun sets on the state’s Life Sciences Discovery Fund, originally envisioned by Gov. Chris Gregoire as a 10-year, $350 million plan to boost biotech in the state.

“I’m very excited about what this could mean medically, and I’m optimistic about what it could mean economically for the state,” Huntsman says. “You can do wild-eyed calculations about home run scenarios, and I don’t want to get too wrapped up in that. There are a lot of things that can go wrong. But we were convinced, and the board was convinced, they didn’t need to get any home run to justify this award. It was well within our mission, our mechanisms, and within our risk profile.”

Lee Huntsman

This deal involves some complicated scientific and financial considerations which I’ve been meaning to follow up on ever since the original story broke. Huntsman talked about all of that in a detailed interview at his Seattle office a few weeks ago.

The story began back in the summer of 2009, when Omeros CEO Greg Demopulos and chairman Tom Cable approached Huntsman. They told him about the company’s opportunity to discover new drug targets known as G-protein coupled receptors (GPCRs). These are complex spaghetti-like 3-D protein structures that weave in and out of the surface of cells. Many of today’s best-selling therapies for allergies, pain, and mental illness hit these GPCR targets, including billion dollar blockbusters of the past and present like Merck’s loratadine (Claritin), Bristol-Myers Squibb’s aripiprazole (Abilify), and Purdue Pharma’s oxycodone (Oxycontin).

Omeros, through its acquisition of Seattle-based Nura five years ago, and a subsequent license it obtained to technology from Toronto-based Patobios, thought it had hit upon … Next Page »

Comments (2) | Reprints | Share:          

This was a short holiday week, and so we have an appropriately short biotech roundup.

—Seattle-based Dendreon (NASDAQ: DNDN) said last week that its top sales and marketing executive, Varun Nanda, left the company effectively immediately. Nanda was hired back in April to lead the market introduction of Dendreon’s first product, sipuleucel-T (Provenge), and stayed in that job less than a year.

—Nanda wasn’t the only executive departure we reported on in the past week. Light Sciences Oncology, the Bellevue, WA-based maker of a drug/device combo treatment for cancer, said its CEO, Llew Keltner, has left to take a job at another biotech company. A replacement hasn’t been named.

—Omeros (NASDAQ: OMER), the Seattle-based developer of neurological drugs, said this week it had completed its acquisition of drug discovery technology that it hopes will help it develop new therapies aimed at G-protein coupled receptors—some of the most lucrative targets in the pharmaceutical business today.

—Amgen (NASDAQ: AMGN), the biotech giant with operations in Seattle, said it won FDA clearance to start selling denosumab (Xgeva) as a to fight bone fractures in cancer patients. The drug was approved earlier this year as a treatment for osteoporosis, but this anti-cancer usage, long championed by Bill Dougall at Amgen Seattle, might be equally or even more lucrative, analysts say.

—Lastly, we had a national op-ed piece from Lisa Suennen of Psilos Group, who recently moderated an Xconomy Forum in San Diego. She takes on health IT data security in this post.

Comments (1) | Reprints | Share:          

Omeros (NASDAQ: OMER), the Seattle-based biotech company, said today it has completed its acquisition of drug discovery technology from Toronto-based Patobios. The assay technology from Patobios is supposed to help Omeros design new drugs against targets known as G-protein coupled receptors. The GPCR program is thought to be promising because many of the world’s top pharmaceuticals are currently aimed at GPCRs, and there are still an estimated 120 of these targets that are inaccessible by drugs today. Omeros raised $25 million last month from Paul Allen’s Vulcan Capital and the Washington Life Sciences Discovery Fund to support this scientific work.

Comments | Reprints | Share:          

A couple of sizable deals crossed the Seattle biotech news desk this week, and one of the Northwest’s main venture firms eagerly awaited its first IPO in a long time.

—Omeros (NASDAQ: OMER), the Seattle biotech company, pulled in $25 million through an unusual deal that pooled $20 million from billionaire Paul Allen’s Vulcan Capital along with $5 million from the state’s Life Sciences Discovery Fund. The money is to help Omeros continue its quest to make it possible for drug developers to make treatments against more than 100 currently inaccessible protein targets.

—Seattle-based Immune Design said this week it has struck its first Big Pharma partnership, by providing AstraZeneca’s MedImmune unit with the right to use an immune-boosting compound to boost the effectiveness of a vaccine candidate against respiratory syncytial virus. Full terms of the deal aren’t being disclosed, although Immune Design says it stands to get as much as $212 million in development and sales-based milestones.

—I profiled a new IT startup with an interesting idea for helping Big Pharma and biotech companies better engage with patients online. The company, Corengi, is seeking to build a Wikipedia-style site in which patients with Type 2 diabetes can share information about clinical trials, with an eye toward encouraging more people to participate and speed up the notoriously slow process. If Corengi can make this work in diabetes, it has its sights set on other helping pharma companies recruit patients with other diseases too.

—Kirkland, WA-based OVP Venture Partners is eagerly awaiting news from the IPO front on one of its portfolio companies, Mountain View, CA-based Complete Genomics. This company, which offers a low-cost genome sequencing service to researchers, said it hopes to price its shares at a range of $12 to $14. One of its rivals in the faster/cheaper gene sequencing field, Menlo Park, CA-based Pacific Biosciences (NASDAQ: PACB), completed its IPO this week at $16 a share, which showed that at least some investors want in on this new wave of genomic technology.

—Mitch Gold, the CEO of Seattle-based Dendreon (NASDAQ: [[ticker:DNDN]) had some political statements to share at last week’s annual meeting of the Washington Biotechnology & Biomedical Association, which was combined with the Governor’s Life Sciences Summit. He talked about taxes, education, and a whole bunch of other things.

—One of the big things I’ve been getting ready for this week is Xconomy Seattle’s “VC Crossfire” event at Amazon. My colleague Greg Huang is in town to co-moderate this panel, which features Bob Nelsen, Tom Alberg, Andy Sack, and Chris Henney. These guys have a ton of experience in financing innovation in both tech and life sciences, so we’re eager to hear their thoughts on where this is going now that the venture capital model is under siege.

—And lastly, Ken Myer contributed a thoughtful editorial about how even in the downturn, when so many people are out of work, technology leaders often still find it hard to recruit top-notch people in technical fields of science and engineering. So, Myer contends, the state needs to stick to get more serious about inspiring young kids to pursue careers in these fields.

Comments | Reprints | Share:          

Seattle-based Omeros has raked in $25 million for its drug discovery technology from a couple of unusual suspects—billionaire Paul Allen and Washington state’s Life Sciences Discovery Fund.

Omeros (NASDAQ: OMER) is collecting $20 million from Allen’s investment operation, Vulcan Capital, along with a $5 million grant from the state fund that aspires to spur more commercialization of biotech ideas in Washington. In an unusual deal structure, both Vulcan and the state agency will have skin in the game with Omeros. Vulcan and the Life Sciences Discovery Fund will be eligible for a percentage of the future profits from partnerships Omeros signs, and they will stand to collect royalties on product sales if the technology paves the way for new drugs against targets on cells known as G-protein coupled receptors (GPCRs).

The deal provides an important new shot of cash for Omeros, which doesn’t have any moneymaking products on the market and didn’t raise as much capital for its drug development programs as it had hoped to in its IPO last year. The new financing will help Omeros push forward with its quest to identify ways to develop treatments that bind with more than 100 GPCR protein targets that have previously been considered “undruggable.”

An estimated 30 to 40 percent of all existing prescription drugs today are made to hit the more accessible forms of these targets, including big brand name therapies for allergies, pain, and mental illness. Merck’s loratadine (Claritin), Bristol-Myers Squibb’s aripiprazole (Abilify), and Purdue Pharma’s oxycodone (Oxycontin) are a few of the drugs that work this way. As anyone following the pharma business knows, companies are desperately looking for new blockbusters like that to replace the revenues they will lose in coming years as patents expire and cheap generic copies emerge.

By investing $25 million in the Omeros discovery technology, Vulcan and the Life Sciences Discovery Fund are essentially taking a piece of the action in a local company that thinks it has found a way to feed the pharma industry and satisfy its hunger for innovative new medicines.

“We see the Omeros GPCR technology as a major disruptive opportunity,” says Steve Hall, the managing director of Vulcan Capital. “Paul Allen is not a short term investor. We see potential to yield new innovation and returns over multiple decades.”

Steve Hall

Terms of the deal are unusual. Vulcan and the Life Sciences Discovery Fund will be eligible to get a “mid-teens” percentage of proceeds from any partnership income Omeros generates up to $1.5 billion. If Omeros generates $1.5 billion in cumulative proceeds from its GPCR program, Vulcan and the state agency will get a 1 percent slice of the subsequent revenue. Vulcan and the state agency will also get royalties on any products generated by the Omeros program. Vulcan is also getting warrants to buy shares in Omeros over the next five years at exercise prices of $20, $30, and $40 a share.

Investors may choke on their morning coffee today when they see those high warrant prices. Omeros, at Friday’s closing stock price, traded at just $7.30.

This is also clearly an unusual step for a state agency, but it’s not hard to see the underlying rationale. Washington state’s Life Sciences Discovery Fund has been whacked by 40 percent budget cuts by state lawmakers once before during the economic downturn. If Omeros can … Next Page »

Comments (1) | Reprints | Share:          

Seattle-based Omeros (NASDAQ: OMER) said today that the National Institutes of Health has provided a four-year, $3.6 million grant to support mid-stage clinical trials of the company’s experimental anti-addiction drugs. The trials will examine whether the new drugs can help people suffering from addiction to opioid-based painkillers, nicotine, and alcohol, as well as compulsive behaviors like eating disorders. The trials will be conducted at the New York State Psychiatric Institute.  This is the second NIH grant the company’s anti-addiction program has received this year, Omeros said.

Comments | Reprints | Share:          

Omeros (NASDAQ: OMER), the Seattle-based biotech company, has struck a deal in which it may raise as much as $40 million over the next two years through selling shares of common stock to a single investor, Azimuth Opportunity. Omeros raised $68.2 million through its initial public offering in October, but securing more money at certain times should help strengthen its bargaining position “as we pursue strategic opportunities,” the company said in a statement.

Comments | Reprints | Share:          

Ironwood Pharmaceuticals showed today that an IPO market does exist for a serious biotech company without a moneymaking product on the market, but that investors’ appetite for the speculative business of drug development is modest.

The Cambridge, MA-based biotech company set its initial public offering price at $11.25—a far cry from its forecasted price range of $14 to $16. By the end of today’s trading, the initial investors had made a little money, as the stock (NASDAQ: IRWD) opened trading at $12.40 and finished the day up 3.6 percent to close at $11.65, after about 2.7 million shares changed hands. This action came on a ho-hum overall trading day, in which both the Nasdaq Composite and Nasdaq Biotechnology Indexes were basically flat.

Importantly for Ironwood, the IPO raised $188 million in new cash for operations, turned the company’s stock into a liquid asset for its employees and venture investors, and established an initial market valuation of $1.1 billion.

The Ironwood deal marks only the third time in two years that a biotech company in the product-development phase has been able to complete an IPO. Sunrise, FL-based Bioheart did it in February 2008, and flamed out soon after, while Seattle-based Omeros (NASDAQ: OMER) has lost almost 40 percent of its value since it went public in October. As I noted on Monday, Ironwood is clearly in a different category than most biotech IPO candidates, since it has a drug for a big market that has already passed two pivotal clinical trials. Still, plenty of biotech investors were hoping Ironwood could crack open the IPO window, and re-ignite the interest of general public investors in other IPO aspirants.

I have a few calls out to ask for commentary about what ripple effect the Ironwood deal may have on the rest of the biotech sector, and I may update this space later if I hear anything noteworthy.

Comments (2) | Reprints | Share:          

This may not be the bellwether for the IPO market that people were hoping for in the life sciences industry. Cambridge, MA-based Ironwood Pharmaceuticals priced its initial public offering of at least 16.67 million shares last night at $11.25 per share, far below the $14 to $16 range that the firm proposed last month.

Smart people were projecting the IPO of Ironwood, which is trading on the NASDAQ market under the symbol “IRWD,” to be a huge hit. The company is viewed as unique because, although it doesn’t have a product on the market, it has completed two pivotal trials for its lead drug linaclotide for chronic constipation. It’s also raised more than $300 million since it was formed in 1998. Historically, most biotechs don’t have that much going for them when they attempt an IPO.

Doug Fambrough, a general partner at Oxford Bioscience Partners in Boston, said this morning that he thinks it’s an overall positive development that Ironwood has moved ahead with its IPO, even at the lower price, rather than pulling the deal altogether. Ironwood would have left a bad taste in the mouths of investors on Wall Street if it had nixed the maiden public offering, he added. (Luke spoke to Fambrough and other industry leaders last week amid the positive buzz about this IPO.)

“For the first half of the story, it’s gone pretty well for the [life sciences] industry,” Fambrough said. “The second half of the story is how well Ironwood’s stock trades over the next two weeks.”

Still, there’s no avoiding the fact that public investors pushed back on the proposed $14 to $16 per share price range for this deal. The $11.25 share price values the company at $1.07 billion, as opposed to the more than $1.5 billion market cap it would have created at $16. Because Ironwood is more mature than most biotechs that attempt IPOs, it’s unlikely that other life sciences firms at earlier stages of development will fetch as high a price as Ironwood in their initial public offerings, according to Fambrough.

We’ll be tracking how Ironwood’s stock trades in the coming days to cover the second half of this story.

Comments | Reprints | Share:          

Everybody with a financial stake in biotechnology will be watching Ironwood Pharmaceuticals this week, as it attempts to pull off the biggest initial public offering the industry has seen in years.

The Cambridge, MA-based company, which filed its original IPO prospectus on Nov. 20, is now primed to go ahead and start selling its first shares on the NASDAQ market this week under the ticker IRWD, according to Renaissance Capital. If the company and its investment bankers pull the trigger, this will be a monster deal for a biotech company still in the product development phase. Ironwood could raise as much as $306 million if it can command the high end of its forecasted price range of $14 to $16 a share, which would establish an initial market valuation of more than $1.5 billion.

Biotech has been itching for someone to come along and whet the appetite of Wall Street for new companies, so that venture capitalists and entrepreneurs can realize the big paydays they need to justify the risks of drug development. Only one biotech company in the drug development stage, Seattle-based Omeros (NASDAQ: OMER), has gone public in the past two years, and that was a dud. So if Ironwood can find demand for its shares at the high end of its range, and the stock price rises on the first couple days of trading, it could provide a lift to the entire industry, including both public and private companies, according to three veteran market watchers I spoke with on Friday.

“There is huge buzz about it, and it could be bigger than most biotech IPOs in recent memory. The whole industry is waiting with baited breath and watching how it trades,” says Bob Nelsen, managing director of Arch Venture Partners in Seattle. “There is no question they will get a good price and get out, so the big question is what happens post-IPO. If it goes out strong, the number of followers will be much larger. If it goes out weak, only a few super-high-quality deals will get through the window. My fingers are crossed.”

Then again, a couple others I spoke with said that Ironwood is clearly a different beast than the average biotech. So while it will have an impact on the sector as a whole, it won’t necessarily re-ignite the IPO market.

“It’s a great story, but it’s more of a singularity,” says Richard Pops, the CEO of Cambridge, MA-based Alkermes (NASDAQ: ALKS), a longtime market watcher with no ties to Ironwood. “There aren’t five other Ironwoods teed up behind them.”

What’s different about Ironwood? The company has an oral pill in development that has already passed two pivotal clinical trials, so much of the clinical trial risk has been removed. The product is for a potentially vast market of millions of people who suffer from chronic constipation and irritable bowel syndrome, and who don’t have good treatment options. And Ironwood already has big partners to market the drug … Next Page »

Comments (1) | Reprints | Share:          

It’s too early to say whether it’s the beginning of the end of the liquidity drought, or just the end of the beginning. But after seven straight quarters of declining IPO and M&A earnings for venture-backed U.S. companies, there was a ray of hope in the fourth quarter of 2009. Venture-backed firms raised $7.5 billion through mergers and acquisitions and IPOs in Q409, the highest total since the first quarter of 2008, according to year-end data released today by Dow Jones VentureSource.

It was the first quarterly increase in liquidity since 2007, and exceeded Q408 levels by almost 50 percent. The jump was fueled largely by a dramatic increase in the median amount paid in company acquisitions, from about $30 million per deal in the third quarter of 2009 to nearly $85 million per deal in the fourth quarter.

“The fourth quarter has set the stage for an active year in M&As in 2010,” said Jessica Canning, Dow Jones VentureSource’s global research director, in a statement. “As the economy improves, acquirers are gaining confidence in their own financial situation and returning to strategic acquisitions. At the same time, the steady trickle of public offerings is teasing investors who expect the IPO window will re-open in the coming year.”

Of course, it’s also easy to take a glass-half-empty view of the latest round of data. The median M&A amounts in the fourth quarter were inflated by a small handful of relatively large deals, including Amazon’s $847 million acquisition of Zappos, ViaSat’s $568 million acquisition of WildBlue Communications, and Logitech’s $405 million purchase of LifeSize Communications. The total liquidity among venture-backed companies in 2009 was only $17.1 billion, a poor showing next to 2007′s total of $61 billion and 2008′s $26.1 billion. And the median amounts paid in M&As, averaged across all of 2009, was just $27 million, which looks slight compared to 2007′s $73 million and 2008′s $33 million.

About the best thing you can say about M&A trends is that acquirers were finding a lot of bargains in 2009. Canning called 2009′s $27 million median “a positive sign for acquirers looking to purchase companies at reasonable prices.”

The IPO market, after a pathetic 2008, improved by only a small margin in 2009. Seven venture-backed companies went public in 2008, raising a total of $550 million. In 2009, IPOs among venture-backed companies increased to eight, with the total amount raised increasing to $903 million. (Three fourth-quarter IPOs—by Chicago-based Echo Global Logistics, Sunnyvale, CA-based Fortinet, and Seattle-based Omeros—accounted for $220 million of that total, making it the slowest quarter since Q109, when there were no IPOs at all.)

But while the IPO numbers did increase in 2009—and while companies in Xconomy’s home cities, including Watertown, MA-based A123Systems ($371 million), San Diego-based Bridgepoint Education ($142 million), Woburn, MA-based Logmein ($107 million), and Seattle’s Omeros ($68 million) contributed significantly to the 2009 totals—the IPO market was still largely shuttered compared to 2007, when 78 companies went public, raising $6.9 billion.

Could 2010 turn out better? It almost has to, unless a big chunk of the 25 venture-backed companies currently in registration with the SEC drop their IPO plans. One interesting tidbit in the Dow Jones VentureSource data is that venture-backed companies seem to be moving to pay off their backers with greater haste. The companies that achieved exits through mergers or acquisitions in 2009 had been in business for a median of 5 years and had raised a median of $18 million, compared to six years and $22 million for companies acquired in 2008. Companies that went public in 2009 were 7.9 years old on average and had raised $43 million, compared to 8.7 years and $55 million for companies that went public in 2008.

Comments (1) | Reprints | Share:          

Well, 2009 did not turn out to be the biotechnology disaster here in Seattle that many people had predicted.

By my reckoning, only four of the local biotech companies that I track on my website went bust in 2009 (Eden Biosciences, VizX Labs, Northstar Neurosciences, and Rosetta Inpharmatics). This last blow was softened when Microsoft bought some of Rosetta’s assets from Merck (it’s biosoftware division) and hired a number of its employees. Many of the VizX employees (along with its GeneSifter software) were absorbed by Geospiza. The loss of four companies put Seattle on a roughly equal footing with Boston, which saw at least five companies fold, and San Diego, where at least six companies went under.

Although we didn’t lose quite as many companies, it was still a very tough year locally for those employed in the biotech sector. At least nine companies reported significant layoffs, including Cardiac Science, CMC Icos, Trubion Pharmaceuticals, Cell Therapeutics, Poniard Pharmaceuticals, Amgen, Targeted Genetics, ZymoGenetics, and VLST.

On the positive side, Dendreon moved much closer to being able to sell sipuleucel-T (Provenge), their novel treatment for prostate cancer, and has been on a hiring frenzy. OncoGenex Pharmaceuticals had a breakout year with its own prostate cancer treatment. Partnerships were both formed and broken at a dizzying pace, with Seattle Genetics, ZymoGenetics, MDRNA, Alder Biopharmaceuticals, Arzeda, Ikaria, Kineta, Trubion, and Nanostring among the notable participants. Amgen won its long running patent fight with Roche and was able to block them from selling generic erythropoiesis stimulating drugs in the U.S. Some top executives moved around, with Immune Design gaining part-time help from ex-Zymo CEO Bruce Carter, and with Peter Thompson leaving Trubion and Stewart Parker departing Targeted Genetics.

Other notable events: PATH won the $1.5 million Hilton Prize, the world’s biggest humanitarian award, for it’s work improving health in poor countries, and local biotech Omeros was successful in launching their IPO (although the stock price has dropped some 25 percent since then).

A number of new companies launched or moved into the area, including Arrowsmith Technologies, Beat Biotherapeutics, Qwell Pharmaceuticals, ImaRx, Novo Nordisk, AVI Biopharma, Covance, Arzeda, Xori, Presage Therapeutics, Integrated Diagnostics, Sage Bionetworks, and Genzyme (via its acquisition of Leukine from Bayer). Chris Rivera got off to an excellent start as he took over the head job at the Washington Biotechnology & Biomedical Association. The State’s Life Sciences Discovery Fund expenditures were cut by 41 percent to help balance out the state budget deficit.

In 2010, at least three companies that operate in Seattle will hope to have their drugs approved: Dendreon’s sipuleucel-T (Provenge) for prostate cancer, Amgen’s denosumab (Prolia) for osteoporosis, and Cell Therapeutics’ pixantrone for non-Hodgkin’s lymphoma. Here’s hoping that they all fair well.

Health care reform is sure to bring numerous changes to the industry. One key change likely to be enacted via legislation in 2010 will define a regulatory pathway for the approval of follow-on biologics, which are generic versions of biologic-based drugs. This has the potential of providing significant savings for consumers, although such benefits will depend on the period of market exclusivity awarded to innovator drugs.

Continuing economic problems indicate to me that 2010 will also be a very challenging year for biotech companies in Seattle and beyond. I expect to see many more deals for the acquisition of product candidates, but not so many acquisitions of companies. I wish all of you on the local biotech scene a productive and successful year in 2010.

Comments | Reprints | Share: