[Updated 11/16/09 6pm. See below] Microsoft co-founder and renowned technologist Paul Allen has been diagnosed with non-Hodgkin’s lymphoma, a form of cancer, as of early this month, according to an e-mail message sent from Allen’s sister, Jody Allen Patton, to employees of Seattle-based Vulcan and its affiliates this afternoon. The message was sent to Xconomy and other media outlets by a Vulcan spokesperson.

Doctors say Allen has diffuse large B-cell lymphoma, which is a relatively common form of lymphoma, and he has begun chemotherapy, according to the e-mail. The message pointed out that Allen “beat Hodgkin’s a little more than 25 years ago and he is optimistic he can beat this, too.” That form of cancer is different from Allen’s current diagnosis, which is classified as a non-Hodgkin’s lymphoma.

Non-Hodgkin’s lymphoma is an umbrella term for cancers in which white blood cells of the immune system start growing out of control, according to the National Cancer Institute. The disease is the fourth most commonly diagnosed cancer in the U.S. each year, following lung, bladder, and melanoma tumors, according to the American Cancer Society. About 66,000 new cases are expected to be diagnosed this year in the U.S., and about 19,500 people are expected to die from the disease. Diffuse large B-cell lymphoma is the most common subtype of non-Hodgkin’s lymphoma, accounting for 30 percent of all newly diagnosed cases, according to an expert review published by the Lymphoma Research Foundation.

Vulcan spokesman David Postman wouldn’t comment on any specific questions about the stage of Allen’s disease, how early it was detected, whether it is an aggressive or slow-growing form of lymphoma, or where he is getting treatment.

Those questions are key to determining what kind of prognosis Allen has. His form of cancer is generally considered an aggressive, fast-growing lymphoma and requires immediate treatment, according to the Lymphoma Research Foundation’s description, authored by Carol Portlock of Memorial Sloan-Kettering Cancer Center in New York, Julie Vose of the University of Nebraska Medical Center in Omaha, NE, and Bruce Cheson of Georgetown University Hospital in Washington D.C. The first sign is usually when the lymph nodes swell in the neck, armpit, or groin—other symptoms include night sweats, unexplained fevers, and weight loss, according to the summary from Portlock and colleagues.

A common treatment for the disease is a regimen of chemotherapy combined with Roche and Biogen’s targeted antibody drug rituximab (Rituxan), which kills excess B-cells of the immune system. The combination treatment can lead to a cure in a large number of patients. “Even when a cure is not possible, treatment can often keep the disease away for many years,” Portlock wrote.

“Paul is feeling OK and remains upbeat,” the Vulcan message stated. “He continues to work and he has no plans to change his role at Vulcan. His health comes first, though, and we’ll be sure that nothing intrudes on that.”

Here is the Vulcan e-mail in its entirety [added 11/16/09 6pm]:

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To employees of Vulcan and affiliates:

I want to let you know that Paul was recently diagnosed with non-Hodgkin’s lymphoma.

He received the diagnosis early this month and has begun chemotherapy. Doctors say he has diffuse large B-cell lymphoma, a relatively common form of lymphoma.

This is tough news for Paul and the family. But for those who know Paul’s story, you know he beat Hodgkin’s a little more than 25 years ago and he is optimistic he can beat this, too.

Paul is feeling OK and remains upbeat. He continues to work and he has no plans to change his role at Vulcan. His health comes first, though, and we’ll be sure that nothing intrudes on that.

We would ask you to respect Paul’s privacy and not discuss this outside of the office.

If you have any questions, please ask your EC member.

Thank you in advance for what I know will be all your good thoughts for Paul.
Jody

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It was a big week for big companies. Amazon’s stock soared, and the e-commerce giant made a deal with Microsoft that should make Kindle e-books even more popular. There was also interesting deals news from Bing and a few Northwest venture firms and startups.

—Kennewick, WA-based Infinia has raised $3.25 million in debt and options out of a total financing round worth as much as $10.5 million, as Luke reported. The investors were not disclosed. Infinia, which (before this latest round) has raised $84 million from a syndicate that includes Paul Allen’s Vulcan Capital and Vinod Khosla, is developing novel solar power systems.

—Seattle-based Bezos Expeditions, the venture firm run by Amazon’s Jeff Bezos, re-upped with an investment in Aviary, a design software startup based in Long Island, NY. The $7 million Series B round was led by Boston-based Spark Capital. Aviary makes cloud-based software for graphic design, audio editing, and other creative digital services.

—Amazon (NASDAQ: AMZN) is teaming up with Microsoft (NASDAQ: MSFT) to release Kindle for PC, a software application that will let people read Kindle electronic books on Windows personal computers. No financial terms were announced. The free application will be released next month.

—Revolution Computing, which has offices in Seattle and New Haven, CT, raised $9 million from North Bridge Venture Partners of Waltham, MA, and Intel Capital, based in Santa Clara, CA, as Wade reported. The startup, which provides software and support for the statistical programming language known as “R,” also announced that Norman Nie, a veteran of the data mining software firm SPSS, is its new CEO.

—Kirkland, WA-based OVP Venture Partners led a $12 million investment in RedSeal Systems, a security software firm in San Mateo, CA. Existing investors Venrock Associates, Jafco Ventures, Sutter Hill Ventures, and Leapfrog Ventures also participated in the deal, which brings RedSeal’s total funding to more than $43 million. OVP managing director Mark Ashida has joined the company’s board.

—Bellevue, WA-based AudienceScience confirmed it has raised $20 million from Silicon Valley investors Mohr Davidow Ventures, Mayfield Fund, Meritech Capital Partners, and Integral Capital Partners. The online advertising firm said it will use the funding to hire new staff, do R&D in targeted advertising, and expand internationally. Luke previously reported that AudienceScience (formerly called Revenue Science) had closed a $15.1 million funding round involving equity, debt, and preferred stock, which had the potential to go up to $20 million, based on an SEC filing.

—Microsoft is integrating real-time status updates from Twitter and Facebook into its Bing search engine, as Thea Chard reported in her first freelance story for Xconomy. The Redmond, WA, software company has formed non-exclusive partnerships with the two social media networks, as part of Microsoft’s plan to fuse the “real-time Web” with its search engine to create a new kind of social-media focused reader. Bing’s access to tweets is now in beta form, while the Facebook deal, which will grant the search engine access to all publicly shared information from the social network’s users, will be effective at a later date, according to Microsoft senior vice president Yusuf Mehdi.

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Infinia, the Kennewick, WA-based company developing solar-powered engines that generate electricity, has raised $3.25 million in new debt financing as it pushes through the final year before it starts selling its product on the market.

The company raised $3.25 million in debt and options out of a total financing round worth as much as $10.5 million, according to a regulatory filing today. The document doesn’t say who was behind the latest financing, but Infinia has raised $84 million in capital before this latest round, from a syndicate that includes billionaire Paul Allen and famed venture capitalist Vinod Khosla.

Infinia, as I described in this profile back in August, is using satellite dishes that capture rays of sunlight and channel them to a focal point that contains a Stirling engine. This is a device that converts concentrated heat from the sun, converting it into mechanical work that powers a piston to generate electricity. This device is more efficient at converting solar energy into electricity than other solar technologies, and can be made to last 25 years without any maintenance, or oil, or water. Infinia CEO J.D. Sitton told me back in August that his company had $2 billion worth of orders, and that it hoped to start bringing its first product to the market by the end of September 2010.

While the regulatory document doesn’t say who provided the latest round of debt financing, it lists five members of Infinia’s board. The directors, besides Infinia’s Sitton, include Sharon Clayton of MCC Global in Malibu, CA; Bill Gross of Idealab in Pasadena, CA; John Small of GLG Partners in New York; and Richard Shorten of Silver Mine Capital in New Canaan, CT.

Sitton couldn’t immediately be reached for comment.

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The deals rained down on the Northwest this past week. We saw some strong activity in biotech, gaming, and software.

—Integrated Diagnostics, the new biotech company founded by Lee Hood, has secured $30 million in venture funding from Menlo Park, CA-based InterWest Partners, the U.K.-based Wellcome Trust, and Germany-based dievini Hopp Biotech holding, as Luke reported. The startup aims to detect cancer and neurodegenerative diseases like Alzheimer’s in their earliest (and most treatable) stages.

—Washington state’s venture funding numbers for the third quarter of 2009 fell to $144 million, down from $275 million in the previous quarter, as Bruce reported. And one deal in September, the $50 million investment in Calypso Medical, a Seattle-based developer of technology that pinpoints radiation therapy for cancer to minimize side effects, dominated the state’s third-quarter figures.

—Decho, the Seattle-based subsidiary of EMC (NYSE: EMC), formed a partnership with British mobile network operator Vodafone to develop new data backup services for European markets. Financial terms weren’t given. The products will be built using Mozy, the online backup service operated by Decho.

—Redmond, WA-based Bionavitas formed a partnership with Seattle-based Blue Marble Energy to make biochemicals from algae, as Luke reported. Financial terms of the deal weren’t announced, and the companies didn’t say exactly what they plan to make under this alliance.

—Seattle-based Evri formed a partnership with media giant Hearst to power its new website and news aggregator, LMK (which stands for Let Me Know). Evri, a Paul Allen-backed startup that uses semantic analysis and natural language processing to find connections between entities on the Web, is providing the content-filtering software for LMK.

—Omeros, the Seattle biotech company developing a treatment to improve recovery from knee surgery, completed its initial public offering last week, raising $68.2 million, as Luke reported. The state’s first IPO in more than two years was underwritten by Deutsche Bank and Wedbush PacGrow Life Sciences. Omeros (NASDAQ: OMER) opened trading at $10 a share and closed its first day at $8.73, giving it a market valuation of about $186 million.

—Seattle-based Amazon (NASDAQ: AMZN) participated in a $19 million Series C investment in Engine Yard, a cloud computing and software automation company based in San Francisco. Amazon was a previous investor in Engine Yard, along with Benchmark Capital and New Enterprise Associates. The latest deal also included new investors DAG Ventures, Bay Partners, and Presidio Ventures.

—Seattle-based PopCap Games raised $22.5 million in its first outside funding round since its founding in 2000. The investment was led by Meritech Capital Partners, based in Palo Alto, CA, and also included participation from investors Larry Bowman and John McCaw. The money will be used to help accelerate PopCap’s global expansion and distribution of its games.

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The next step in the future of journalism could be led by a Seattle startup. Today, media giant Hearst announced it has started a new website called LMK (Let Me Know), a news aggregator that pulls in Web feeds from sources like the Associated Press and Getty Images, and automatically creates topic pages for individual celebrities, sports teams, companies, and the like. The content filtering technology behind the site comes courtesy of a partnership with Seattle-based Evri, a startup founded by Paul Allen’s Vulcan Capital.

It’s a big deal for Evri, which has been using semantic analysis and natural language processing to find meaningful connections between entities on the Web. Its technology has led to partnerships with The Washington Post and The Times of London, in which Evri’s widget suggests related articles for readers. But the Hearst deal is more significant, because Evri is actually powering the site.

Will Hunsinger, Evri’s chief executive, says the deal was done about a month ago. He declined to give financial details, but did talk about how the partnership works. Hearst subscribes to Evri’s Web platform, which ingests more than 30,000 sources of content (news, blogs, tweets) and applies natural language processing to produce a massive “semantic index.” When the LMK site wants information about the Florida Gators, say—one of the site’s first focuses is college football—Evri’s software filters stories about the Gators by their timeliness, relevancy, and credibility of sources. It then delivers the primary links and snippets of text and photos to LMK.

“What’s significant is we feel this is a beachhead, or flagship demonstration, of how you can use semantic technology to deliver what appears to be an editorial experience, algorithmically,” Hunsinger says. The benefits of this are twofold. It’s a very fast way of getting news up, and it’s cheap—you don’t need a big editorial staff to pick and choose each story.

Of course, its value all depends on how good the feeds and filtering are. Hunsinger says Evri’s semantic analysis could make news aggregators far more powerful than sites like Google News. That’s because Evri’s software understands that Manny Ramirez is a baseball player associated with steroids, for example—so you can filter content by asking for all stories about baseball players, or stories about players using banned substances, and Ramirez will show up. Most aggregators, including Google, are based on keywords, so you’d usually have to type in “Manny Ramirez” to get stories about him to appear.

Beyond LMK, technology like Evri’s could potentially make the whole editorial side of the newspaper industry more efficient, Hunsinger says. “You could deliver all stories around a particular topic—the entire story behind the story,” he says. That might let reporters and editors spend more time on things like developing relationships with sources and digging up entirely new stories. Examples of aggregation topics might be Seattle sports, or San Francisco politics.

I asked Hunsinger whether being a huge sports fan had anything to do with getting the LMK deal done. He insists it was just “a total bonus.” But he added that his stress level will be going up in about a month, when his alma mater, the Georgetown Hoyas, start their basketball season.

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Veratect, the Kirkland, WA-based company that tracks emerging health threats like swine flu, has raised $4.2 million out of $5 million debt financing, according to an amended regulatory filing today. The filing doesn’t say who invested, but the company’s list of directors includes William Savoy, the former manager of billionaire Paul Allen’s Vulcan investment portfolio and Lee Huntsman, the executive director of the Washington Life Sciences Discovery Fund. A spokesperson for the company didn’t immediately respond to a request for comment.

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The Northwest deal flow in the past week tended toward small partnerships and acquisitions. But there was still some significant activity in software, Internet, and entertainment.

—As ghostbuster Bill Murray once said, “Dogs and cats living together…mass hysteria!” Seattle-based Pet Holdings, operators of I Can Has Cheezburger (Lolcats) and other humor websites, formed an advertising partnership with San Francisco-based social network Dogster. Dogster will sell ads for the Cheezburger network in exchange for the greater traffic on Pet Holdings’ popular sites (which will hit 1 billion page views this week). Details of the revenue split were not given.

—The Washington Technology Industry Association (WTIA) joined forces with advocacy organization TechAmerica in Washington state, thereby broadening its membership to include more companies in hardware, electronics, and devices. WTIA has now become TechAmerica’s exclusive management and marketing partner in the state.

—Seattle-based Appature is getting close to securing its first round of venture funding. No deal has closed yet, but the bootstrapped and profitable healthcare marketing startup has generated a lot of interest in the VC community. Appature was founded in early 2007 and develops software that helps companies in healthcare, pharmaceuticals, and medical devices understand their customers better and do more effective marketing.

—Kirkland, WA-based Digeo, the home entertainment company backed by Paul Allen, was bought by Arris, a Georgia-based broadband communications firm, for $20 million in cash. Arris will acquire Digeo’s high-definition digital video recorder, called Moxi, along with about 75 Digeo employees and their expertise in video networking and multimedia services. About 10 Digeo staff members will lose their jobs in the transition, however.

—Seattle-based Maveron and Boston-based Spark Capital co-led an $8 million Series A investment in Altius Education, a San Francisco company deveoping online higher education programs through partnerships with nonprofit universities. The Noah Fund also participated in the funding. Maveron was founded in 1998 by Howard Schultz and Dan Levitan, and focuses on investments in consumer and tech companies.

—Microsoft (NASDAQ: MSFT) acquired the technology assets of Interactive Supercomputing (ISC), a parallel computing software firm in Waltham, MA, as Ryan reported. Financial terms of the deal weren’t given. ISC’s chief executive, Bill Blake, and the firm’s technical experts are moving into Microsoft’s New England Research & Development Center in Cambridge, MA.

—This was not a new deal, but I took a closer look at Bellevue, WA-based Ignition Partners’ investments in cloud computing and virtualization. The VC firm’s biggest win to date is XenSource, the Palo Alto, CA-based virtualization company that was bought by Citrix (NASDAQ: CTXS) for $500 million in 2007. Three other Ignition investments in the space—Skytap, InstallFree, and Xeround—are still in pretty early days, but are off to promising starts.

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Kirkland, WA-based Digeo, a 10-year-old home entertainment company backed by Microsoft co-founder Paul Allen, has been sold to Arris, a broadband communications firm based in Suwanee, GA, for about $20 million in cash.

Digeo is known for its high-definition digital video recorder, called Moxi. The acquisition gives Arris expertise, intellectual property, and talent in video networking and multimedia services delivery. Arris will gain about 75 Digeo employees (mostly engineers) in Kirkland, which will raise its R&D costs by about $3 million per quarter, the company said.

“Arris delivers the market position necessary to take the Moxi vision to the next level,” said Digeo’s CEO, Greg Gudorf, in a statement. “I am extremely pleased that the Digeo team will continue to drive the evolution of the Moxi platform.”

But observers point out that the purchase price means a substantial loss on the investment for Allen. PaidContent reports Digeo’s total funding was more than $110 million. In an interview with TechFlash, Gudorf said fewer than 10 Digeo employees would lose their jobs in the acquisition, and that he will stay with Arris during the transition. The news of Digeo’s layoffs was first reported by the Seattle Times.

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Most Seattleites would probably list Bill Gates, Paul Allen, Howard Schultz, and Jeff Bezos when asked to name local entrepreneurs who built not just successful companies but entirely new industries. But they’d be forgetting Steve Gillis.

Gillis would have to be considered something like the Fifth Beatle in a group like that—you can walk into his office today without being babysat by PR handlers—but he is one of the pioneers of the biotechnology industry both in Seattle and nationally.

For those who don’t know, Gillis was a charismatic 28-year-old immunologist when he left a faculty post at the Fred Hutchinson Cancer Research Center to start Immunex in 1981. He and co-founder Christopher Henney rode the early wave of investor enthusiasm for genetically engineered drugs to an IPO, recruited top scientific talent from around the world to Seattle, and persevered through some dark days to create a breakthrough drug for autoimmune diseases that generates more than $7 billion a year in worldwide sales for biotech giants Amgen and Wyeth.

Talk to any scientist who worked at Immunex in the early days, and they’ll tell you they adored Gillis, the inspirational scientist with an irreverent brand of humor. Legend has it he used to dare scientists to dream big, and instead of bashing them for running a failed experiment, he’d honor goof-ups with the “Pons & Fleischmann award for achievement in dubious science,” named after the guys who once claimed to discover cold fusion.

Gillis didn’t have as much success in his second career act from 1994 to 2005, as the founder and CEO at Seattle-based Corixa. But when GlaxoSmithKline bought that company for a little more than $300 million, he took a new direction in his career, joining one of the most active life sciences venture firms in Seattle, Arch Venture Partners.

This role at Arch allows Gillis, now 56, to put his fingers in a lot more pots. He serves on the boards of six life sciences companies in Seattle: Accelerator, Trubion Pharmaceuticals (NASDAQ: TRBN), VLST, Theraclone Sciences, Qwell Pharmaceuticals, and VentiRx. He also serves on the board of two other Arch companies in Massachusetts—Brighton, MA-based Surface Logix and Cambridge, MA-based Variation Biotechnologies.

This new perspective as a venture capitalist provides Gillis an opportunity to be even more influential in the community, says one of his protégés from the Immunex days, ZymoGenetics CEO Doug Williams. “He can be enormously helpful to the local biotech scene at Arch, and in fact I think if you look at the companies he’s involved with locally, you’d have to conclude that he already is. Steve is one of those rare people with an equal dose of talent in science and the business of biotech. He’s pretty much done and seen it all, and for him to be able to convey that to many companies instead of just one is of great benefit to the local scene,” Williams says.

I sat down with Gillis a few days ago to talk about life as a venture capitalist, how the biotech investing model has changed, and Seattle’s strengths and weaknesses. Here are the highlights of the conversation.

Xconomy: Can you bring us back to your thought process when you came to Arch? It was the summer of 2005, you had a long run at Corixa, and could have done a lot of different things. Why did you decide to become a venture capitalist?

Steve Gillis: After whatever it was, 14 years at Immunex and 11 at Corixa, that was 25 years of being involved in operations of a public company. I didn’t want to jump back into doing that. I needed some sort of break. Because sometimes running public companies isn’t a lot of fun. A lot of what you do is …Next Page »

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Paul Allen, the Seattle-area billionaire who co-founded Microsoft, has agreed to sell 24 licenses for wireless spectrum in Washington and Oregon to AT&T, according to a report by Bloomberg News, which cites filings with the Federal Communications Commission. The price of the sale, which has not yet been approved by the FCC, is not disclosed.

A unit of AT&T called Mobility II is acquiring the licenses from Allen’s Vulcan Spectrum, based in Seattle. The spectrum covers airwaves in the 700 megahertz frequency range—the former “UHF” television band freed up for wireless use this year. According to Bloomberg, AT&T (NYSE: ATT) wants the licenses to support its introduction of “long-term evolution,” a next-generation wireless broadband service that competes with the WiMax service from Clearwire (NASDAQ: CLWR). Vulcan still owns licenses for other parts of the wireless spectrum in Seattle, Portland, and other areas.

Back in May, managing director Steve Hall of Vulcan Capital, Allen’s venture organization, told us that the investments in wireless spectrum fit into a broader focus on the mobile industry. Vulcan invested in two spectrum auctions, Hall said—one in 2003 (where the licenses in question come from) and one in 2008, deploying about $130 million in total. “We saw the scarcity of spectrum, running against what we believe demand is for appliances, devices, smartphones, iPhone,” Hall said at the time. Vulcan’s view, he added, was that infrastructure was “the best way to play.”

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Every time I look at Gist, it’s a little different. Given it’s a scrappy startup trying to navigate the worlds of e-mail, social networking, business software, and Web search—each a huge market opportunity, each hugely competitive—this is probably a good thing.

The Seattle company, backed by Paul Allen’s Vulcan Capital and Colorado-based Foundry Group, is announcing today that its software, which has been in private beta trials for the past year, is now available to the general public. Gist bills itself as an online service that helps people manage their personal and professional relationships more efficiently.

The basic idea is to provide a Web dashboard that finds your contacts from your e-mail inbox and social networks (Outlook, Gmail, Twitter, Salesforce.com), and keeps you up to date about these contacts—even ranking their importance—through online information from blogs, articles, tweets, and updates on Facebook and LinkedIn. So, before your next business meeting, instead of having to Google around or search on Twitter to get up to speed on notable developments, Gist will surface any recent activity involving your contact, says Gist founder and CEO T.A. McCann.

It’s an ambitious product. Since the company’s $6.75 million Series A funding round from Vulcan and Foundry Group was announced in May, Gist has buckled down and focused on listening to customers (about 10,000 and counting) and improving its software and interface. It also moved into new office space near Qwest Field.

Among the new wrinkles in the software: Gist can filter information based on which people you’re meeting with this week, or which people you’ve exchanged new e-mail with; the software can also hook into customer relationship management through your Salesforce.com contacts; you can invite other people to try Gist, so there’s a viral component to the product distribution.

“There are probably a whole bunch of users who can get a lot out of Gist,” McCann says. “We think Gist is something people will want to talk about and share with other professionals.”

For now, the software is free, and will remain so for the rest of the year. But come early next …Next Page »

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The early afternoon sun was bearing down on us, and it was about 100 degrees Fahrenheit the other day when J.D. Sitton walked behind his office, squinted, and pointed to the future of his company.

Sitton, the CEO of Kennewick, WA-based Infinia, showed me a device resembling a satellite dish that has attracted some deep-pocketed investors, including Paul Allen and Vinod Khosla. Their hope is that Infinia’s dishes will finally turn solar energy into a workhorse for meeting more of the world’s electricity demand. If Sitton and his backers are right, he’ll be running a multi-billion dollar company five years from now. If he’s wrong, Infinia will be written off as just another costly pipe dream.

“We didn’t want to just launch a company in a cute little industry,” Sitton says. “We want to launch a company that can build a major global industry.”

Solar power has been talked up since the 1970s as one of the main ways the U.S. can wean itself off foreign oil. The field has picked up renewed momentum lately as a way to meet growing demand for electricity while reducing carbon emissions that contribute to climate change. But the current breed of photovoltaic systems, or solar cells, are notoriously heavy, expensive, and inefficient at converting the sun’s energy into electricity, so solar still amounts to a drop in the bucket, generating less than 1 percent of the world’s electricity, Sitton says. If Infinia can help spark a new market for converting solar heat (instead of light) into electricity, then it will have a chance to reach some of the projections of enthusiasts, like Greenpeace, who want to see 15 percent or more of the world’s electricity coming from solar, Sitton says.

Infinia says it already has $2 billion worth of orders for its solar power generation product in hand, which it expects to start rolling out commercially before the end of September 2010. So we shouldn’t have to wait 20 years to find out if this is for real.

“Solar has got to step up in a much bigger way,” Sitton says. “We have to prove it can be done.”

Here’s how this is supposed to work. That satellite dish I mentioned earlier? It has a little motor attached to it that keeps it in the right position to capture as many direct rays of sun as possible during daylight hours. Like any dish, it uses mirrors to reflect something, in this case, sunlight, back up to a focal point. That’s where Infinia has the business end of its device.

It’s a Stirling engine, made to convert that concentrated heat from the sun into mechanical work. It’s like a steam engine, except it doesn’t need water—it powers its internal piston through the expansion and contraction of helium. The heat moves the piston, which generates electricity. These engines are thought to be attractive for this kind of work, partly because they are highly efficient at converting heat into electricity, and they don’t require water, or oil. They are supposed to be able to last 25 years with zero maintenance, Sitton says.

Infinia has been around as a company longer than that since the 1960s, mostly working on Stirling engines to make them reliable, long-lasting, and efficient, Sitton says. Before 2005, when it settled on its solar strategy, Infinia worked mostly on Stirling engines for a number of different applications, including artificial hearts and exploration vehicles for outer space.

The most important question any investor today asks is how much power gets generated by one of these Infinia units, and at what cost. The short answer is …Next Page »

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Money keeps going in, but it isn’t coming out. If you’re a venture capitalist, this is what you call a serious problem.

Innovation will go on. So will entrepreneurship. But when I spoke to a handful of venture capitalists yesterday morning about the trends in their industry, and about their role in financing startups, they were fairly candid that they need to start hitting some paydays soon, or find new strategic paths pretty quick, if they themselves are all going to make it.

This didn’t strike me as some kind of self-pity, or grandstanding act, but rather sounded more like a sober analysis of what needs to change in order for this high-risk, high-reward group to survive amid the context of all the other places where people can put money—stocks, bonds, money markets, real estate, etc. Since we’ve had VC on the brain from national and local quarterly reports this week, I sought some color commentary from three of the more active VCs in Seattle—Andy Dale of Buerk Dale Victor, Greg Gottesman of Madrona Venture Group, and Thong Le of WRF Capital.

Dale had sort of a good news/bad news take on the VC industry. On the good side, he found that 10 of the 15 members of the Evergreen Venture Capital Association made investments during the quarter, so that at least suggests they aren’t in “Walking Dead” territory, as PE Hub’s Dan Primack likes to put it. Polaris Venture Partners saw one of its portfolio companies, Woburn, MA-based LogMeIn.com, go public. Probably the most encouraging thing he cited on the Northwest investing scene came in May when the Alliance of Angels assembled a $4.25 million seed fund for startups at their most formative stages.

Then again, there was plenty to worry about. There weren’t many first-time financings, …Next Page »

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With just under two weeks to go until Seattle’s first-ever Battle of the Tech Bands, I thought I’d give you a quick preview of the event. It’s all taking place on July 30 at the WTIA Summer Celebration, at the Pyramid Alehouse (registration and ticket info here). The music will start at 6pm, and we’ll stick to a pretty tight schedule.

Five bands will compete for two prizes—Audience Favorite (voted on by you, the attendees) and Most Innovative Band (voted on by the event judges). Each of the five finalists will get a 15-minute set. I’ll follow up next week with a more extensive preview of the bands, but for now you can check out their music on their respective sites:

Afraid of Figs
(representing MorphoTrak and Robert Half Technology)

Between These Lines
(representing Hewlett-Packard)

Indigo Soul
(representing Microsoft and Adobe)

Juda’s Wake
(representing Microsoft)

Lions Ambition
(representing Boeing)

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And last, but not least, we have an honorary sixth entrant that will be there in spirit—that is, unless Paul Allen and Bill Gates decide to drop in for an unannounced set (one can always hope…stranger things have happened. OK, maybe not). It’s the Protingent Man comic, the latest installment of which appears below, courtesy of David J. Locher and Donn Harvey of Protingent Staffing:
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Seattle-based Evri, an Internet startup backed by Paul Allen’s Vulcan Capital, announced a new chief executive today, Will Hunsinger, the former CEO of San Francisco-based Adeze and entrepreneur-in-residence at Seattle venture firm Maveron. Hunsinger succeeds Neil Roseman, who is leaving Evri to become an entrepreneur-in-residence at Vulcan Capital. Evri focuses on information discovery and browsing, and has partnerships with the Washington Post and the Times of London.

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We are in the final stages of selecting the five finalist bands who will perform on July 30 at the Xconomy Battle of the Tech Bands, to be featured at the Washington Technology Industry Association’s Summer Celebration at the Pyramid Alehouse across from Safeco Field in Seattle.

We will announce the finalists very soon, but suffice to say that our esteemed judges were suitably impressed by the quality and diversity of the bands who entered. It is going to be a really rocking show, with a great mix of musical styles and companies represented.

The WTIA has also secured two Seattle-based charitable partners for the event, who will receive the proceeds from all raffle tickets sold. They are Technology Access Foundation, a nonprofit that prepares children of color for academic and professional success through a rigorous K-12 curriculum (Luke profiled TAF here), and Jack Straw Productions, a multidisciplinary arts center that fosters communication of art and ideas to diverse audiences through audio media and artist residency programs. To register for the event, click here.

In the meantime, here’s a quick behind-the-scenes look at Bill Gates and Paul Allen’s exploits in cartoon-land, as they prepared to send in their band demo to the contest. It’s the latest installment of Protingent Man, courtesy of Donn Harvey and David J. Locher:

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Paul Allen has still got it. The Microsoft co-founder and philanthropist announced today the launch of a new Seattle company, Xiant, and the public beta version of its software tools for organizing your e-mail inbox. Xiant (pronounced “Zi-ant,” which rhymes with “giant”) is being run in-house at Vulcan Technologies, the company that handles all of Allen’s tech work. Chris Purcell, the vice president of Vulcan Technologies, is in charge of the startup, which is apparently Allen’s first foray into consumer software since he left Microsoft back in 1983.

The Xiant software being released today (Xiant Filer) is a Microsoft Office Outlook add-on designed to make e-mail systems more efficient by learning your filing preferences, making filing recommendations automatically, and filing long threads of related e-mails all at once. Other software tools are currently under development. The startup currently has no outside employees or additional funding.

The project began as a personal project for Allen, who grew tired of manually filing huge volumes of e-mails in his Outlook inbox. According to Vulcan Technologies, it worked so well for Allen that the whole organization started using it.

Xiant will sell the software online only (”no sales force or packaged product”), according to Vulcan spokesman David Postman, and version 1.0 should be on sale in about 60 days. In the meantime, you can download the beta version for free at http://www.xiant.com.

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Not long ago, drug companies would break out quarterly income streams from the U.S., Europe, Japan, and something called ROW, as in rest-of-world. Investors usually didn’t care about the last numbers, because they were little more than a rounding error.

That’s not the case anymore, as these countries are often called “emerging markets.” They’ve grown enough that Chris Viehbacher, CEO of one of the world’s largest drug companies, Paris-based Sanofi-Aventis (NYSE: SNY), traveled to Seattle this week to curry favor with global health officials at the Pacific Health Summit. The head of a major drug company might have gotten a cold shoulder at a meeting like this a decade ago, but these officials welcomed Viehbacher. Sanofi made headlines at the summit, as it said it plans to donate as many as 100 million doses of flu vaccine to the World Health Organization to help poor countries cope with the swine flu pandemic.

This could all be written off as some kind of public relations exercise, but I wondered if there’s more to the story. The pharmaceutical industry is terrified by a series of patent expirations coming over the next few years, which will allow a flood of cheap generic copies to grab market share away from franchise products that generate an estimated $67 billion in annual sales. Not much has emerged in the industry’s R&D pipeline to replace all these aging blockbusters. Some analysts predict pharma companies will have to continue acquiring and partnering with innovative biotech companies to sustain themselves.

Sanofi has made a couple aggressive moves like this since Viehbacher took over Sanofi in December. Earlier this year, it acquired cancer drugmaker BiPar Sciences for $500 million (giving BiPar investor Paul Allen a big payday), and partnering with South San Francisco-based cancer drug developer Exelixis for a deal possibly worth more than $1 billion.

But Viehbacher also has his sights on making money on low profit-margin, high-volume products in parts of the world that are off the pharma industry’s beaten track. It’s part of a strategy to make Sanofi a more globally diversified company, rather than placing all its chips on the U.S. and Europe—where governments are looking for ways to trim healthcare spending.

Here are edited highlights of a wide-ranging conversation we had about industry trends, the reasons for donating flu vaccine, and how he likes to deal with biotechs.

Xconomy: Why come here to the Pacific Health Summit?

Chris Viehbacher: I laid out a strategy for the company in February, to become a global healthcare company, versus a pharmaceutical company focused on the U.S. and Europe. That means we want to be present in all countries, and therefore, you have to address all diseases in all countries. You can’t just take medicines doing well in the U.S., and try to find people rich enough in other countries to buy them. So, the company is hugely committed to these huge global health issues. We probably, I think, do more than just about anybody. We are very significant in malaria. We are the only company doing things for Sleeping Sickness. We have a new antibiotic coming for tuberculosis, which could cut the treatment time down to four months [from six months], which is huge in the area of TB. We are spending huge amounts of money developing a Dengue Fever vaccine and developing facilities for it. We have partnered with a lot of people in that room, whether it’s the Gates Foundation, GAVI[Global Alliance for Vaccines and Immunization], the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Those are all people we try to work with on a regular basis. It’s very much in line with our strategy. I take a personal interest in these global health issues, and it’s good to meet folks.

X: To what extent does the donation of flu vaccine amplify the company’s global health effort, or show that you’re serious?

CV: The pandemic flu donation is exceptional. I’d normally say donations are not the way to deal with issues of access to medicine. It’s not sustainable. If we were dealing with malaria, or tuberculosis, then I wouldn’t …Next Page »

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Here at Xconomy, preparations are in full swing for our Battle of the Tech Bands, which is happening at the WTIA Summer Celebration on Thursday, July 30, at the Pyramid Alehouse in Seattle. If you or anyone you know plays in a band with at least one member from a Northwest tech, life sciences, or tech investing firm, please submit your band’s stuff to techbands@xconomy.com (full details and event info here).

The deadline for submissions is coming up fast—next week, June 12—so don’t delay. We’ve already got a bunch of worthy competitors, but a few more bands from the tech powerhouses (Microsoft? Amazon? Real?), as well as the gaming cluster, certainly wouldn’t hurt. We know you’re out there.

We’ve lined up a team of stellar judges, and are working on a few more, as well as some great music-related prizes. Stay tuned for details on those.

Meanwhile, in cartoon land, Bill Gates and Paul Allen have some extra time on their hands to devote to getting their musical act together in time to participate in the Battle. It’s the latest installment of the Protingent Man comic, courtesy of David J. Locher and Donn Harvey (see the last installment here and the full strip here):

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Lots of news from the world of cancer research came out over the weekend at the American Society of Clinical Oncology meeting in Orlando, FL. There was a lot of impressive data coming out of Northwest companies (although most of it is still quite preliminary), so here’s a quick recap to catch up. The conference, which drew 30,000 cancer specialists, continues today and tomorrow.

—OncoGenex Pharmaceuticals. The Bothell, WA-based biotech company was heralded by a Rodman & Renshaw analyst as one of ASCO’s “sleeper hits” heading into the meeting, so a lot of inquiring minds flocked to its presentation. The company reported that its drug, OGX-011, in combination with standard docetaxel chemotherapy, was able to help men with terminal prostate cancer live a median of 6.9 months longer than if they got docetaxel alone.

Framed a little differently, this drug lowered the risk of death during the study by 39 percent. This is known as the hazard ratio, an important statistical measure of a drug’s benefit. For comparison, Seattle-based Dendreon showed its much-heralded prostate cancer drug, sipuleucel-T (Provenge), was able to lower the risk of dying by 22.5 percent when using this statistical measurement.

Of course, the OncoGenex result needs to be taken with a grain of salt because the trial only had 82 patients. OncoGenex will need money and clinical development manpower from a partner to really confirm this result is real in pivotal clinical trials. CEO Scott Cormack has been so busy trying to get those stars to align for the company that he told me before the conference, “I might fall over.” (He was exaggerating a little for dramatic effect, but he did sound a bit tired on the phone.)

—Billionaire Paul Allen doesn’t get much attention for his biotech investing, but one company he helped get started in 2005, Brisbane, CA-based BiPar Sciences, dropped a “bombshell” at ASCO. The company showed that when its drug is combined with chemotherapy, it was able to shrink tumors, slow down their spread, and help people live longer, without adding any new side effects. This was seen in a 116-patient clinical trial of women with an aggressive form of breast cancer known as the “triple negative” variety.

The data was compelling enough to earn a coveted plenary presentation in front of thousands of doctors at ASCO, and prompted Paris-based Sanofi-Aventis to pay $500 million to buy the company last month. That payday was enough to earn Allen a windfall proft of an estimated $100 million, after he invested just $13 million over the past four years.

This result is so impressive that Powel Brown, a cancer prevention researcher at the Baylor College of Medicine told Bloomberg News that BiPar’s drug and another in its class represent “the biggest story in breast cancer, by far, and it’s going to be a huge bombshell.” The result is so positive, he predicted the drug would be FDA approved in a year or two.

—Seattle Genetics offered some more evidence, albeit quite preliminary, that suggests it may have a powerful new drug for Hodgkin’s disease and …Next Page »

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