Sports fans know how a knee injury ruined the last season for beloved New England Patriots quarterback Tom Brady, and many other athletes before him. Now Connective Orthopaedics , a Waltham, MA, medical devices startup, is quietly researching new products that could potentially improve recoveries for people after they undergo knee surgery.

Connective CEO Dean Banks told me that the vision of the company is to eventually provide products that help torn ACLs (short for anterior cruciate ligaments) in the knee to heal themselves, as opposed to the standard treatment of replacing the damaged ligaments with tissue taken from other parts of a patient’s body or from a donor source. The startup has been attracting attention in the sports world by adding Boston Celtics CEO Wyc Grousbeck to its board of directors in June. (It turns out that Connective’s Banks and the Celtics’ Grousbeck go way back—they used to work together at Highland Capital Partners in Lexington, MA.)

Banks declined to give specifics about his company’s technology, but he showed me a recently published study to give me an idea. The study indicated that pigs that had reconstructed ACLs that were wrapped in a collagen-platelet scaffold healed back to normal better than the pigs that went without the scaffolds to help mend their ACLs after reconstructive surgery. Collagen is the ubiquitous protein that supports organ structure in the body, and platelets are blood cells that contain growth-stimulating proteins. Though Connective isn’t saying whether it’s developing a collagen-platelet product, the firm is clear that it wants to develop products that promote tissue healing. The secrecy is one indication of the fierce competition Connective is facing.

“We are really, really intent on staying in stealth mode because …Next Page »

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San Diego’s Cytori Therapeutics (NASDAQ: CYTX) says it is raising $850,000 today by selling shares to Seaside 88, a fund managed by Orlando, FL-based Seaside Capital Management, under a private placement agreement. Cytori, which has been developing regenerative medicine technologies for breast reconstruction and other treatments, says Seaside has agreed to purchase as many as 7.15 million shares over the next year—enabling the biotech to raise roughly $20 million, depending on share price. Cytori, which is selling shares to Seaside 88 through a shelf registration, says the purchases are scheduled to take place every two weeks, at a price determined by applying a 13 percent discount to the volume weighted average price per share of Cytori’s common stock.

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CellCyte Genetics, the Bothell, WA-based biotech company, has tentatively agreed to a settlement of a yearlong investigation by the Securities and Exchange Commission. The company entered a consent decree in which it will neither admit nor deny any wrongdoing, according to its annual report. The company hasn’t disclosed the nature of the investigation, although its stock price briefly topped $7 in December 2007, and now is worth six cents, according to this report in The Seattle Times.

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Acceleron Pharma, a Cambridge, MA-based developer of biotech drugs designed to effect the growth of cells and tissues to treat diseases, plans to expand its workforce from 114 people now employed at the company to 160 or more workers by the end of 2009, company spokesman Steven Ertel says. The venture-backed biotech firm held an event today to celebrate the opening of its second Cambridge facility, where it keeps its corporate headquarters and one of its two protein manufacturing operations, according to a press release. The firm is also leasing 19,700 square feet of lab and office space in a third facility in Cambridge, bringing its total footprint in the city to 95,000 square feet, Ertel says.

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It was a busy week for San Diego’s innovation economy, with reports on new products, new deals, and some insights into how startup companies can survive virtually. So read on!

—Zeebo, a new San Diego-based company, launched its game console, entering a multi-billion dollar industry dominated by the Wii, Xbox, and Playstation. Backed by Qualcomm, Zeebo uses a Qualcomm chipset that allows users to connect over a cellular network (instead of broadband or Wi-Fi) to purchase and download games—much like Amazon’s Kindle.

—The U.S. cleantech industry is said to be benefiting from an “Obama bounce,” based on the billions of dollars designated for renewable energy and cleantech spending in the federal economic stimulus package. So it seemed like a good time to put together a comprehensive list of San Diego cleantech companies.

—Pure Bioscience of El Cajon, CA, told Xconomy’s innovation journalism fellow, Juha-Pekka Tikka, the company expects hundreds of products based on Pure’s germ-killing agent, silver dihyrdogen citrate, to soon hit the market. Pure later announced it has found an Indian distributor to immediately begin marketing Enviroguard, a disinfectant cleaner, in India.

—A special committee of the board at San Diego’s Hollis-Eden Pharmaceuticals (NASDAQ: [[ticker: HEPH]]) fired founding CEO and namesake Richard Hollis for cause and named the company’s chief operating officer, James Frincke, as interim chief executive.

—During my recent stopover at San Diego’s DriveCam, CEO Brandon Nixon explained how the company, which began with a dashboard-mounted video recorder, has evolved into …Next Page »

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The Salk Institute says it has formed a new stem cell research partnership with Sanofi-Aventis, the international pharmaceutical giant based in Paris. Financial terms of the five-year alliance were not disclosed, and some details of the deal remain to be worked out, Salk spokesman Mauricio Minotta told me this afternoon.

The Sanofi-Aventis regenerative medicine program will sponsor grants in promising research areas, and is intended to provide long-term, multi-participant collaborations between scientists at San Diego-based Salk and Sanofi-Aventis. “It’s meant to be a true collaboration, it’s not just funding,” says Michael White, who oversees the institute’s office of technology management and development. Sanofi-Aventis has about 16,000 employees in the United States, mostly at its U.S. headquarters in Bridgewater, NJ, and about 100,000 employees worldwide.

The program also will provide unrestricted support for the Salk Institute’s stem cell facility, which was created as a separate laboratory supported by private funding during the years the Bush Administration had placed restrictions on federal stem cell funding.

In a statement, Salk president William Brody says there are no preconditions concerning the collaborative alliance. “Our scientists will continue to freely explore cutting-edge research and publish their work,” Brody says. (That’s important to academic freedom, because companies have been known to try to squelch research findings if they don’t support the company’s marketing message.) Under this deal, Salk will also gain access to “extensive resources” at Sanofi-Aventis, which includes a large-scale facility in Tucson, AZ, for screening compounds with potential to be new drugs.

“That’s something that’s very attractive to us, to be able to screen our targets with their drugs,”White says.

Such industry collaborations could be a sign of the times. In January, San Diego’s Burnham Institute for Medical Research announced a multi-year agreement with Johnson & Johnson’s Pharmaceutical Research and Development unit.

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Biogen Idec’s scientists have a vision for regenerative medicine, and it has nothing to do with what’s been written and said about embryonic stem cells.

Deep in Biogen’s pipeline, on the verge of entering clinical trials, are a pair of regenerative medicines that the company hopes will become trailblazers in the world of neurological diseases. I got the rundown on one candidate for multiple sclerosis back in August. Yesterday I gathered more about the other contender, neublastin, for neuropathic pain.

This second candidate grabbed scientists’ attention a year ago, when Biogen researchers published experimental data in Nature Neuroscience with collaborators at the University of Arizona and Tufts University. They found that when rats suffered damage to a bundle of nerves that feed into the spinal cord, then got neublastin injections, the nerves grew back into the spinal cord and, importantly, restored the rats’ ability to feel sensations in their paws and perform complex movements like grabbing onto objects. After a half-dozen shots over 11 days, the effectiveness endured for six months. This ability to restore function came after studies had already shown neublastin can relieve chronic neuropathic pain in animals.

If anything like this can be repeated in people—always a big if—the business opportunity would be big. An estimated one in 100 people in the U.S., or about 3 million people, suffer from nerve dysfunction that causes neuropathic pain. This is the mysterious kind of pain many people suffer, like back pain, that doesn’t respond to conventional analgesic or narcotic pain relievers. Pfizer’s gabapentin (Neurontin) became a $2.4 billion drug in 2003 largely from treating this type of pain, even though it was never explicitly approved by the FDA for that purpose.

“There’s a high level of excitement here. This is beautiful biology,” says Al Sandrock, Biogen’s senior vice president of neurology R&D, and an assistant clinical professor of neurology at Harvard Medical School. “These are admittedly high-risk programs, but if we succeed in restoring nerve function, there are not many other people who are working on this.”

Biogen has been eyeing this field for more than a decade. The company got an exclusive license to develop neublastin from NsGene, a Danish company that discovered the protein in 1998 from research into a family of proteins called glial-derived neurotrophic factors (GDNF). These proteins work to help keep nerve cells alive. Neublastin is particularly interesting, because it interacts with cells that sense pain and temperature changes, Sandrock says.

When these “sensory neurons” get injured, people feel neuropathic pain, Sandrock says. One leading theory is that these pain-sensing cells turn hyperactive, which might explain why people feel back pain when sophisticated imaging tools like MRI can’t detect an obvious tissue injury. Another is that when these sensory neurons get damaged, the normal feeling of “touch” gets converted erroneously into a pain sensation, Sandrock says. Injecting a genetically engineered copy of the neublastin protein may work against this condition …Next Page »

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The world’s largest drugmaker is turning to a San Diego-based biotech company to jumpstart its foray into the world of stem cell research. Pfizer (NYSE: PFE) has agreed to form a two-year collaboration with Novocell to advance the biotech’s work, which concentrates on turning human embryonic stem cells into pancreas cells that might one day help treat diabetes.

Under the deal, Novocell will get an upfront fee, research funding to pay the salaries of “a few” of its 40 employees, and potential milestone payments if the collaboration reaches certain goals, said Liz Bui, Novocell’s director of intellectual property. Novocell will also receive payments from Pfizer if any moneymaking product emerges from the collaboration.

Novocell formed a high-profile scientific collaboration last week with Japanese researcher Shinya Yamanaka, who has shown how to “reprogram” adult skin cells so they can turn into any other cell type in the body, the same characteristic of stem cells. But this is the first time Novocell has formed a collaboration with a Big Pharma company, Bui says. It’s an intriguing sign, because Pfizer and other major drugmakers have been slow to embrace human embryonic stem cells, which have sparked intense interest in academic labs, but haven’t yet advanced to their first human clinical trial. Last month, Pfizer opened a new center for regenerative medicine, and Novocell hopes that other Big Pharma companies will come knocking to learn more about how to do it themselves, Bui says.

“For Pfizer, this will help them stay on the edge of science,” Bui says.

Novocell, like other biotech companies pursing stem cells, has a long road ahead before it can enter clinical trials. It has shown an ability to coax human embryonic stem cells to become fully functioning pancreatic beta cells that secrete insulin in mice. It’s an effect that mimics what the pancreas normally does, said Ed Baetge, the company’s chief scientific officer, in a company profile I did last month.

The catch is that about 15 percent of the animals got teratomas, a type of tumor, which the company will have to prevent in its future work. For now, Novocell can take some comfort knowing that some of the deepest pockets in the pharmaceutical industry are shelling out at least a little spare change to help it crack daunting challenges like that.

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It has been seven years since the Bush Administration restricted federal funding on human embryonic stem cells, and four years since California voters responded by passing Proposition 71. The initiative jump-started stem cell research here by providing $3 billion in state funding for “regenerative medicine” over the next decade.

Since then, the term “stem cells” has become a rallying cry in San Diego for a new wave of industrial development in the life sciences.

So as several hundred biomedical researchers and others gathered Friday for San Diego’s third annual “Stem Cell Meeting on the Mesa,” a sense of expectation, anticipation, and even germination filled the air. “We’re talking about the dawn of a new era in how we replace hearts and kidneys, muscle and liver,” says Babak Esmaeli-Azad, president of privately held DNAmicroarray in San Diego.

While it is not yet clear exactly how stem cell research can be commercialized, Esmaeli-Azad and others already have moved to provide research tools—the so-called shovels and blue jeans—to the scientists panning for gold.

DNAmicroarray provides proprietary systems for controlling the differentiation of human stem cells. But Esmaeli-Azad says he also has personally invested $2 million on internal stem cell research for potential therapies.

“We did not do any stem cell business three years ago,” Esmaeli-Azad says. But now, with a new U.S. president preparing to take office and state funding flowing from Prop 71 through the California Institute for Regenerative Medicine, Esmaeli-Azad says he expects some big changes in the field. “So I am here as a very interested and excited stem cell researcher, but also as a very cautious businessman,” Esmaeli-Azad said.

The one-day forum at the Salk Institute was coordinated by the Sanford Consortium for Regenerative Medicine, an umbrella organization that includes stem cell researchers from Salk, the Burnham Institute for Medical Research, The Scripps Research Institute and UC San Diego. The consortium happily renamed itself in September, after announcing a $30 million donation from South Dakota philanthropist T. Denny Sanford. Sanford’s funding has been combined with a $43 million grant in Prop 71 funding to build a four-story facility on North Torrey Pines Mesa for research in regenerative medicine. The new research center is expected to open by 2010, with groundbreaking set to begin this January.

Funding from Prop 71 also is expected to be available to biotech startups in the form of loans early next year to support the commercialization of stem cell research, said Floyd Bloom, a neuroscientist and professor emeritus at The Scripps Research Institute. “Venture capital at the moment doesn’t happen to believe that stem cells are going to be a viable business, so we think the loan program will really help move the commercialization process along,” said Bloom, who sits on a citizens committee overseeing the allocation of Prop 71 funds.

Sponsors of the conference range from established behemoths such as Invitrogen, the Carlsbad maker of laboratory research tools, to San Diego startup Histogen and Boston, MA-based Stemgent, which have also targeted stem cell researchers.

Histogen, founded last year, provides a human extra-cellular matrix that can be used to grow stem cell lines. Stemgent, founded earlier this year, has almost 40 employees in Boston and San Diego developing specialized antibody panels, cytokine kits, and other research tools.

Duane Roth, the chief executive of Connect (and a San Diego Xconomist), says this year’s Stem Cell Meeting on the Mesa was organized to focus on research in four specific areas: heart disease, neurodegenerative disease, diabetes, and cancer.

A keynote presentation by Harvard’s Kenneth Chien, for example, outlined recent progress in identifying the primogenitor heart cells and the myriad ways in which they differentiate into different types of heart cells. He also showed how it may someday be possible to use stem cells to grow new heart tissue on a thin film membrane that could be used as a graft to repair damaged heart tissue.

Like many others, Roth is encouraged by San Diego’s progress so far. As he put it, “We’re a lot farther along than we thought we’d be.”

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Pervasis Therapeutics, a Cambridge, MA-based cell therapy company, has hired a veteran businessman from Genzyme as its first CEO. Frederic Chereau, a former vice president and general manager of the cardiovascular business unit of Genzyme, takes over a company that aims to create a cell-based product that will help stop excessive inflammation and promote healing.

Pervasis is associated with some big name inventors, including MIT Institute professor Robert Langer, and has gotten backing from Polaris Venture Partners, Flagship Ventures, and Highland Capital Partners. Chereau, 42, said he decided to take on this challenge partly because he got a glimpse of Pervasis’ technology while it was being manufactured under contract at Genzyme, and he’s seen clinical trial data that suggest the product will improve the treatment of patients undergoing kidney dialysis. Chereau also spent a few months of soul-searching, and decided he wanted to push himself to try to do something big with a startup.

“My father once said he wished he had started a company and never did because of good reasons,” Chereau says. “You can always find good reasons not to take on this kind of risk. But if I waited five years, maybe I wouldn’t have the energy or the passion to do this.”

Chereau certainly sounded fired up in our conversation. His main goal is to further develop Pervasis’ product, which it calls Vascugel, which consists of a sponge-like material seeded with cells that line blood vessels. When the material is placed against an injured blood vessel, the cells produce certain proteins that seep through the blood vessel wall, where they can tamp down inflammation and scarring. The cells aren’t personalized to the patient, but rather are from a standard off-the-shelf line of cells.

The initial application that Pervasis is targeting with the technology is treating the blood vessels of kidney dialysis patients. These patients typically get hooked up to dialysis machines to have their blood filtered every other day, and it takes rather large needles to handle the stream of blood to and from the machine, Chereau says. To prepare an access point for those needles, surgeons create a sort of bubble below the skin in the upper arm by joining and artery and vein together directly (called a fistula) or with a plastic tube (called a graft). Eventually, though, inflammation and scarring slow the flow of blood through the site of the surgery, and a new bubble needs to get formed further up the arm. This can’t go on forever: As Chereau points out. “You only have two arms.”

Vascugel, applied to the blood vessel at the time the fistula or graft is created, could promote natural healing, preventing the excess inflammation and scarring, Chereau says. About 300,000 patients in the U.S. are on kidney dialysis, so there’s potentially a large initial market for this sort of therapy that might promote healing around those injection sites.

Data of the Vascugel technique from a mid-stage clinical trial is available internally at the company, although it isn’t being presented publicly until the American Society of Nephrology meeting in Philadelphia November 4 to 9. So far, about 65 patients have been entered into the safety database, and the product doesn’t appear to provoke patients’ immune systems to reject the cells as foreign invaders, Chereau says. The data are encouraging enough that his primary goal for the next year is to begin a pivotal study of Vascugel before the end of June, he says.

Pervasis has its sights on other applications of this cell-therapy approach as well. It wants to test the method against a disease of scarring and inflammation in leg arteries—peripheral artery disease—as well as carotid artery disease. That puts Chereau into a very competitive space with companies trying all sorts of techniques to reduce arterial inflammation. “Everybody is trying to solve vascular issues, but we have a very promising technology,” he says.

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Biogen Idec has made a lot of its money on Avonex and Tysabri, drugs that slow down the rate of flare-ups for people with multiple sclerosis. Now the Cambridge, MA-based biotech company (NASDAQ: BIIB) is pursuing a loftier goal. It is working on the first experimental drug that may reverse the symptoms of the neurodegenerative disease.

The drug, being tested in animals and prepped for its first human trial, is designed to block a protein called Lingo-1 that interferes with body’s production of myelin, the fatty protective coating around nerve fibers. People with multiple sclerosis have an overactive immune system that eats away at the myelin layer, and they have no ability to regenerate myelin in the brain or spinal cord, says Sha Mi, a Biogen researcher. That means nerve impulses that control speech, vision, and movement get short-circuited, sort of like when an electrical wire is stripped of its insulation. Biogen thinks it now has engineered a drug that can stop Lingo-1 from doing its dirty work, allowing the body to regenerate myelin coating around nerves. That could restore normal functions, like walking.

“People around the company are very excited about this,” says Kenneth Rhodes, Biogen’s vice president of discovery neurobiology. “It’s potentially a transformational therapy.” Sha Mi, the Biogen scientist who discovered the molecular switch that paved the way for the program, put it this way, “As a scientist, I came all the way from China. If we can create a new medicine to affect patients, that is my dream.”

The drug hasn’t even entered clinical trials yet, and it’s already been an eight-year odyssey. Sha Mi (who goes by the name Misha) joined the company in 2000 from Wyeth’s Genetics Institute unit in Cambridge, MA. Not long after joining Biogen, she found the Lingo-1 protein in a database and learned it was expressed solely in the central nervous system and, then, only in neurons. Later experiments showed that when scientists delete the gene that makes Lingo-1 in mice, those altered mice would recover from a disease in which the immune system eats away at myelin, called autoimmune encephalomyelitis. The same recovery was seen in mice when they were given an antibody drug designed to block the Lingo-1 protein. There were no side effects or dangers seen from producing too much myelin, because the body will only produce the amount needed to cover nerves, Sha Mi says. The combination of experiments, conducted by Biogen scientists and collaborators in China, made the cover of Nature Medicine last October.

Other researchers are working on myelin repair, such as a group led by Bruce Trapp at the Cleveland Clinic, says Rhodes, the Biogen vice president. Madison, NJ-based Wyeth (NYSE: WYE) has attempted to develop conventional small molecule drugs against Lingo, but hasn’t been successful, he says.

Biogen is developing a genetically engineered antibody against Lingo because that approach should do a better job of binding with the Lingo protein target on the surface of cells, Rhodes says. The first version, however, wasn’t quite “optimal,” and a newer one is being engineered with better properties, he says. The latest version is made with fully human DNA, instead of partial mouse DNA, because researchers want to be confident that the drug won’t spark the immune system to reject it, especially if it needs to be given chronically. The company is planning to ask the FDA for permission to start its first human clinical trials, although he wouldn’t say when.

No details are available yet on how the trials will be crafted, but Rhodes made clear that the company’s vision is for Lingo to be used in combination with Avonex or Tysabri. The idea is that those drugs can reduce the immune system’s assault on neurons, quieting the storm. That would give an opportunity for the anti-Lingo-1 drug to step in and regenerate myelin around the nerves.

Since 400,000 people in the U.S. suffer from MS, and there’s nothing else quite like this program poised for clinical trials, it seems unlikely that Biogen will have much trouble recruiting patients in the first study. If they show they can regenerate myelin in even a few people, Biogen will be a few steps closer to fulfilling Sha Mi’s dream.

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