Shiftboard has managed to stay under the radar for quite some time, despite a slew of big name clients, but that is starting to change.

The Seattle-based scheduling and dynamic workforce management software developer, founded in 2002, has started to come out of stealth mode, so I figured it was time to sit down with CEO Rob Eleveld to hear the story. Turns out that Shiftboard really got going with one prominent local customer back in 2005—the Seattle International Film Festival, which practically runs on volunteer efforts, was the first organization to use Shiftboard’s software-as-a-service platform to manage its complicated employee and volunteer scheduling. Five years later, the company now has more than 500 customers around the world, including nonprofits, to academic institutions, to government agencies, and small to large companies.

Through the Shiftboard system, organizations can easily manage their employee and/or volunteer databases—whether they range from 25 to 10,000 people—oversee shift availability and scheduling, initiate online recruitment campaigns, communicate with employee and volunteer groups online and through mobile devices, and view coverage and schedule reports in real time.

While online, mobile scheduling and workforce management may not sound like the most exciting software being developed out there, Eleveld says the market is booming, largely because of growth on the Internet. Online, self-service scheduling could only be useful to companies if at least 80 percent of its employees had adequate access to use this service, according to Eleveld, a mark that has only recently been met. And as broadband access and email have become more readily available to people across all socioeconomic climates, the market has evolved.

Rob Eleveld

“Companies are scheduling in almost every time zone worldwide through Shiftboard,” Eleveld says.

Though the company has stayed outside of the spotlight, its clients certainly haven’t. Its customer pool boasts more than a few big names, including the American Red Cross, National Public Radio, the Los Angeles Film Festival, and Harvard University are just a few of the national names using Shiftboard services. Here in the Northwest, Shiftboard’s services are used at the City of Mercer Island, KEXP 90.3 FM, Centerplate at Safeco Field, the Puget Sound Blood Center, Bumbershoot, Teatro Zinzanni, and the Family 4th at Lake Union, to name a few. I have even used the Shiftboard system without realizing it (back in college I used to stack up summer volunteer hours with One Reel, the local nonprofit arts and events production organization behind Bumbershoot and other local events).

Shiftboard isn’t the only company in the Web-based scheduling space. Tustin, CA-based WhenToWork also offers online employee scheduling software, as does Austin, TX-based HotSchedules, though the latter focuses on the restaurant industry. Montreal-based Tungle offers a similar online calendar scheduling application, but for the consumer market, rather than for businesses. What sets Shiftboard apart, Eleveld says, is that the system is compatible with a number of mobile and online systems, is highly customizable to meet the needs of organizations and businesses across a variety of markets, and works from the workforce back to the organization, rather than the other way around.

“The vast majority [of competitors] are desktop systems directed at niche markets,” he says. And while most systems give the employee capability to assign schedules top-down online, Shiftboard is “direct to the workforce,” building from the employee or volunteer in. The employee or volunteer selects their schedule, and that information is sent back to the organization. The system is unique in that it “lets folks decide when they want to work and volunteer,” Eleveld says.

Bryan Lhuillier

Company founder and chief product and technology officer Bryan Lhuillier says the company kept a low profile in its early days but is ready to be more transparent now that it is primed to expand internationally.

To date Shiftboard hasn’t raised much venture capital, Lhuillier says (according to regulatory filings, the company brought in $460,000 in equity in May 2009, and another $750,000 this last April). But they haven’t seemed to need it either.

At a time when many companies “were forced to streamline”—faced with cutting costs, or laying off employees—Lhuillier says Shiftboard is doing well. He couldn’t comment on the specifics of the companies financials, but did say that it has seen triple digit growth rates, both in customers and finances, over the last two years.

“Many times we think the economy has actually been good for us,” he says, noting, with a laugh, that “The jury’s still out…the investor community is much more gun shy than it was a few years back.”

Nevertheless, Eleveld says Shiftboard has more than enough work to keep the around 25-person staff (split between half full time and half contract/part time) busy. This fall the company plans to roll out a “big push” in its application programming interface (API) offering, including making a product available on the Google App exchange, and offering the Shiftboard software as a white label product so that customers can package it under their own brand. The company is also looking to expand its brand through partnerships, and is actively hiring in all areas to meet growth demands.

“One of the big focuses here is we don’t want to do everything ourselves,” he says. “We want to partner and build out a partner ecosystem of folks who are incented to sell Shiftboard.”

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Not everyone understands the way that new medical treatments, diagnostics, medicines, therapies and the like are created. It’s a long, expensive process, mostly the realm of scientists and engineers. But anyone who’s ever been concerned about a sick family member, or a loved one succumbing to disease, can appreciate what these scientists and their discoveries have done to improve health prospects for all of us.

Insofar as medical innovation is the future of health care, however, we are now seeing that health care plays a central role in the future of our economy. The U.S. Bureau of Labor Statistics estimates that the health care industry has added nearly 700,000 jobs since the start of the recession. Many experts believe that medical innovation is an industry where our country will shine brightest.

But a recently released report by Battelle suggests that American leadership in this area is no longer a sure thing. There are some troubling data points. For the U.S. health innovation industry to remain the global leader, it needs a growing pool of talented scientists. Yet the average science, technology, engineering, and mathematics assessment scores for American eighth-graders is 520, trailing Russia, England and Japan’s rates of 530, 553 and 561 respectively. According to a 2006 Association of American Universities analysis, 15 percent of U.S. undergraduates pursue a degree in natural science or engineering, compared to 50 percent in China.

Battelle found that life sciences leaders around the country are concerned that the United States is losing its edge. Thus, the Council for American Medical Innovation, a national group that commissioned the Battelle study, has been calling for the federal government to do more to foster medical innovation-and fast. It recommends tasking a federal office with maintaining leadership in medical innovation. It also recommends advancing public-private collaboration, strengthening investments in R&D and manufacturing, enhancing regulatory science at the FDA, and providing federal support for the biosciences in K-12 education.

Washington state’s business leaders and policymakers recognize the substantial potential of medical innovation. The Governor and the legislature displayed foresight in 2005 when they created the Life Sciences Discovery Fund to provide grants for research. The goal of this groundbreaking program was to invest in the two major benefits of the biosciences sector: economic growth and improved health care. The fund has since provided more than $50 million to researchers throughout the state.

In 2007, the City of Bothell and the University of Washington brought key public and private sector partners together to obtain a Washington State Innovation Partnership Zone (IPZ) designation from Governor Gregoire. The Bothell Technology Corridor IPZ is a regional center of excellence for medical device manufacturing and ultra sound activities, and provides leadership and a focal point for this growing industry.

As a result of this most recent legislative session, the development, manufacture, and delivery of global health products should become an even more dynamic part of the state’s economy. Tax incentives for contributions to the new global health technology and product development fund established this year will provide a sustainable grant program to ensure Washington remains competitive.

Meanwhile, the South Lake Union … Next Page »

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Seattle-based Amazon.com has leased 180,000 square feet of office space at Vulcan Real Estate’s 2201 Westlake building in the South Lake Union neighborhood, as first reported by the Seattle Times. That space is in addition to the 1.7 million square feet that Vulcan is constructing for Amazon’s new headquarters a few blocks north. Amazon employees are slated to begin moving into those offices next month, while 2201 Westlake will be occupied by Amazon by mid-year, the Times reported. The company’s current headquarters is on Beacon Hill.

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Microsoft has been angling toward the life sciences software market for years, and yesterday it made a significant play in the sector by scooping up an industry pioneer just a few miles away.

The Redmond, WA-based software company said yesterday it is acquiring the assets of Rosetta Biosoftware, a Seattle-based division of Merck that has been marked for downsizing since back in October.

So what did Microsoft get for the undisclosed amount it paid? A pioneering computational biology operation that’s been around more than 10 years; a profitable cash stream; an existing customer base of almost 100 names from academia and major drugmakers; and partnerships with major genetic instrument companies like Santa Clara, CA-based Affymetrix and San Diego-based Illumina. Then there is a talent pool of 53 experienced employees that it will get to interview and choose from. Microsoft isn’t saying how many people it plans to retain, but it will move the Rosetta operation from Seattle’s South Lake Union to the main campus in Redmond.

Microsoft has had its eye on Rosetta for years, and knew what it was getting, says Jim Karkanias, senior director of Microsoft’s Health Solutions Group. Karkanias was at Merck when the pharmaceutical giant purchased Rosetta Inpharmatics, the parent operation of Biosoftware, back in 2001, and he said he has seen it grow in value ever since. Microsoft thought about whether to try to build its own software to get in the same game, but it’s easier said than done. It probably would have taken Microsoft at least three years on its own, Karkanias says.

“Rosetta really pioneered its way in this space,” Karkanias says. “I’ve been following them for years, and I was at Merck when it made the acquisition and really started to understand Rosetta value proposition. It’s only increased over time.”

Now Karkanias will be in charge of the remnants of Rosetta Biosoftware as it is integrated into Microsoft’s beefed-up Amalga Life Sciences by early 2010. This means it will get product lines by the names of Rosetta Resolver, Rosetta Elucidator, and Syllego. Getting this stuff integrated will be no small feat, and an easy one to botch. These are highly technical products … Next Page »

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Seattle biotech had a little something for everybody this past week. There was drama (Dendreon), politics (Life Sciences Discovery Fund getting whacked), a scientist’s life story (David Baker), and young competitors vying to make the world a better place (UW Environmental Innovation Challenge).

—Dendreon (NASDAQ: DNDN), the Seattle developer of an immune-stimulating therapy for prostate cancer, has been waiting for months to see whether its drug can help men live longer with minimal side effects. This month, it will find out, and this long-running saga could take yet another twist.

—Gov. Chris Gregoire staked much of her economic development strategy on the 10-year, $350 million Life Sciences Discovery Fund, and now the fund is in jeopardy of being shut down, as we reported in this exclusive. Lawmakers are still ironing out the differences between bills to see how deep to cut. The legislative session is scheduled to end April 26.

—I took out some time to profile one of the leading innovators at the University of Washington, biochemistry professor David Baker. His lab has been fascinated for years by how a linear sequence of genetic code gets transformed into a 3-D protein structure. The Baker lab has gotten good enough at this that it can now design new proteins from scratch on a computer, with potential to do things like create new cellulosic biofuels.

—Elsewhere on campus, we reported on the winners of the first-ever UW Environmental Innovation Challenge. The winning team, calling themselves HydroSense, envision a way to help consumers monitor their household water consumption in real-time, which ought to help people better conserve this precious resource.

—VLST and Novo Nordisk are cementing their new partnership to … Next Page »

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One of the things we believe at Xconomy is that innovation happens in geographic clusters, especially when people can easily interact across multiple disciplines. I got a sense of how one of those important interactions is starting to blossom in pockets of a massive construction zone otherwise known as Seattle’s South Lake Union.

Smack in the middle of the neighborhood on Westlake Avenue is VLST, a classic startup that, like most biotechs, needs cash and outside validation of its ideas. About a five-minute walk away on Fairview Avenue North is a budding research center for Denmark’s Novo Nordisk. It’s the classic Big Pharma company, loaded with dough, but in need of innovative product ideas to keep its shareholders happy. To hear VLST CEO Martin Simonetti tell the story, the proximity and familiarity of these two companies makes all the difference between success and failure in their partnership.

“It’s not like we show up four times a year in Copenhagen and say ‘here you go, here’s our stuff,’ and then leave,” Simonetti says. “We lay the groundwork with regular communications, so there are no surprises. The partnership is really off to a great start.”

When I stopped by VLST’s offices a few weeks ago, Simonetti still looked like a guy who was counting his blessings. He was thankful to have secured the Novo partnership in December. It brought in $12 million to his company immediately, paid the salaries for 12 of his 40 employees, and gave him enough cash to keep VLST operating at least through the end of 2010. This was a coup for any small biotech, but especially one like VLST that doesn’t have any drugs of its own advancing yet through clinical trials. That’s where the most value is created in the eyes of venture capitalists.

The value at VLST is largely being assigned to its “platform,” which is biotech-lingo for a special technology that represents the opportunity to create a lot of potential new drugs. The company’s core idea is that it can learn something from the insidious tricks viruses use to infect people. More specifically, the company studies proteins that viruses secrete (known as “virulence factors”) that help tamp down an inflammatory immune defense reaction that might otherwise kill them. Tamping down the immune system is a huge deal if you’re one of the estimated 14 million to 24 million people in the U.S. with diseases in which the immune system flips into overdrive, like rheumatoid arthritis, multiple sclerosis, and Type 1 diabetes. VLST hopes to identify these viral proteins, and uncover how they interact with other proteins, which might lead to genetically engineered drugs.

The folks at Novo Nordisk’s new Seattle research center, which is planning to expand to house 80 people, are now starting to sort through some of VLST’s basic biology to see what might provide the basis for good drug targets. Site head Don Foster made plain to me in this January feature that Novo sees autoimmune disease as one of the biggest opportunities in pharmaceuticals. That, and Seattle’s historically strong immunology talent pool, are the big reasons Novo has placed this multi-million dollar bet in South Lake Union.

Scientists frequently make the short walk between these two companies to keep each other informed. When they feel like meeting on neutral ground in a laid-back atmosphere, they gather at Uptown Espresso on Westlake and Republican, Simonetti says.

It could take years for these interactions to bear fruit. But at least for the next couple years, it means VLST can stay in the game long enough to show the venture capitalists what kind of progress they can make. If they succeed, it might create a little more demand to fill up all that office space under construction in the neighborhood.

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For those of you suffering from Microsoft overload these past few days, I’ve put together a quick roundup of the most locally relevant news from the software giant. Most of it happened away from CEO Steve Ballmer’s keynote at the Consumer Electronics Show in Las Vegas last night.

—Microsoft beat out Google and Yahoo to land a deal with Verizon Wireless to provide Internet search services on the carrier’s cell phones. The news was reported by Reuters and other media outlets in advance of Ballmer’s official announcement at CES. The five-year agreement is rumored to be worth more than $500 million (paid by Microsoft to Verizon). It’s not yet clear what the deal means for Medio Systems, the Seattle startup that handles some mobile search for Verizon and was reportedly involved in deal talks between Verizon and Google last summer.

—Closer to home, Microsoft said it is dropping out of negotiations to lease 300,000 square feet of new office space in the South Lake Union neighborhood of Seattle. A Microsoft spokesman cited the economy and changing market conditions as reasons for backing out of a possible lease. This comes on the heels of Google looking to sublease parts of its Kirkland offices. We’re going to see a lot more of this kind of thing in the next few months, I suspect.

—Lastly, Marcelo Calbucci of the Seattle 2.0 blog site has posted some predictions about what a hypothetical Microsoft layoff would mean to the Seattle startup scene. He predicts an influx of ex-Microsofties into startups, more “silly startups,” and more crowded coffee shops around town—not too surprising. But he also predicts higher costs for office space, not lower, because of increased demand. And further difficulties in the housing market. “It’ll be absolutely tough on the local economy in general,” he writes.

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Microsoft has dropped out of negotiations to lease 300,000 square feet of Seattle office space at 2201 Westlake in South Lake Union, according to a report in the Seattle P-I. The report says a Microsoft spokesman cited the economy and market conditions as reasons for the move. In 2007, Microsoft leased a total of 166,000 square feet of space in South Lake Union, Pioneer Square, and Union Station.

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There’s a small company in downtown Seattle called 3Tier Group that has a goal of no less than “Remapping the World” for alternative energy. T. Boone Pickens, the billionaire Texas oilman, is such a big fan, he used 3Tier’s maps to draw a bold conclusion-that the United States has the potential to be “the Saudi Arabia of Wind.”

3Tier might sound a little New-Agey in its goals, maybe a little pie-in-the-sky in a world where Exxon Mobil has enough money in the bank ($36.7 billion on Sept. 30) to bury all U.S. cleantech startups. So I decided to check it out personally, meeting with Kenneth Westrick, the founder and CEO, at his 21st floor offices in the Westin Building in downtown Seattle. Westrick, an atmospheric scientist with a master’s from the University of Washington, greeted me with a boisterous handshake. He was wearing a long brown leather jacket like the one worn by Jimmy McNulty, the protagonist of HBO’s “The Wire.” (One of my all-time favorite shows.)

When we sat down in a conference room looking out over South Lake Union, I asked what he really meant with his “Remapping the World” initiative. It’s about using high-powered computers to crunch data that helps developers, financiers, and governments decide where the best places are to put a wind farm, solar panels, or hydropower turbines. This isn’t nearly as easy as it sounds, because wind ebbs and flows at different times of day, different seasons of the year. Some years are El Nino, some La Nina. Measurement instruments at Sea-Tac airport don’t always capture wind speed at the corner of 1st Avenue and Pike Street. Same goes for solar, and hydro.

That’s a lot of variables to account for, especially if you’re General Electric and looking to invest $300 million in a wind farm that’s supposed to pay off over two or three decades. So 3Tier inhales huge amounts of climate data into its computers, and analyzes it in models to come up with an accurate forecast of what kind of power a particular wind farm is going to produce over time. It can also take measurements at a site over a year’s time, and crunch numbers that may spot a better site a few miles away from one the developer originally scoped out, Westrick says.

“The greatest risk is in the availability of fuel,” Westrick says. “We can create a map of where the wind blows. We can ask where is it abundant? Will it be abundant when we need it?” He added later, “Only a couple of companies can do this.”

Westrick started this company in 1999 in his bedroom. It has grown to about 70 employees. About one-third were trained in earth sciences, one-third are software programmers, and the rest in are in administration, support and business development, he says. 3Tier doesn’t disclose its financials as a private company, but he says the company has boosted sales growth by more than … Next Page »

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Merck is saying goodbye to Seattle, and it’s really trying to entice its people to say hello to Beantown. Following up on Wednesday’s announcement that the Pharma giant is shutting down its Rosetta Inpharmatics research facility here in Seattle, yesterday I got the scoop on what’s happening from Douglas Bassett, Merck’s executive director of molecular profiling, and the head of the Merck Seattle site.

First off, Bassett says that Merck is trying to lure something like 100 of the 300 Rosetta employees in Seattle to move to a consolidated research center in Boston, although the number of offers isn’t final. The company wants to retain what it calls the “molecular profiling” skills of the Rosetta team, he says. Merck wants those people to stick around to help analyze human genetics in a way that helps the company determine which patients are likely to benefit from a drug and which aren’t, and which drug candidates ought to be pushed forward or scrapped.

Seattle ultimately got the axe because it didn’t have the full sweep of chemistry, animal testing, and clinical research capabilities that Merck already has at a cancer research center in Boston, Bassett says. The Rosetta group’s molecular profiling will help enhance the work going on in Boston, he says. It had better. Merck has gotten itself in this cost-cutting mode partly because it hasn’t been able to improve upon the industry batting average, which says that only 1-in-10 drugs that enter clinical trials ever turns into a marketed product. Merck bought Rosetta for more than $620 million in July 2001, but despite Wednesday’s new, Bassett makes it sound like the company considers it money well-spent.

“Merck is still extremely excited about the opportunities with molecular profiling and the capability that Rosetta has built up over the years,” says Bassett, an 11-year veteran of the company.

Seattle employees will have more than a year or “well into 2009″ to complete the transition to Boston, to make it easier to manage moving logistics for families with kids in school, for instance, Bassett says. Employees will get severance payments if they aren’t offered a transfer, or if they turn down a transfer to Boston, Bassett says. The Rosetta Biosoftware unit, which operated as a subsidiary that sold software for protein analysis, has about 60 employees, and may still remain in Seattle, although it’s unknown if they will keep a subleased portion of their current home in the South Lake Union neighborhood, he says.

The Merck employees in Seattle first heard the news in an all-hands-on-deck meeting on Tuesday night, before the fateful Wednesday press release. The meeting was led by Rosetta’s key founder, Stephen Friend, now a senior vice president at Merck headquarters. The assembly with Friend, a revered figure among employees, was “emotional,” Bassett says. Friend tried to cheer the team up by pointing out they “built some amazing capabilities” and that the work will live on at a center of research excellence in Boston.

Bassett declined to answer how employees responded to this. He said he couldn’t yet say what Merck plans to do with its lease on its 133,000-square-foot property in South Lake Union, although Vulcan real estate head Ada Healey told me on Wednesday that a negotiated buyout or sublease are possibilities.

All of this seemed intended to soften the blow to Rosetta employees, but I also had to ask how this is going to affect the larger community. Merck, after all, brought an important amount of stability and credibility to Seattle biotech when it bought Rosetta in 2001, and invested in the South Lake Union property a year later. In the volatile business of biotech, pharmaceutical companies that have diversified product lines can usually weather tough economic times, and provide steady paychecks for scientists.

“It’s certainly a blow to the Seattle-based biotech community,” Bassett said. “But Merck as an organization has collaborations with individual researchers and those will continue.”

It sounds like small consolation for Rosetta employees with roots in the local community. Caroline Lappetito, a Merck spokeswoman based in North Wales, PA, tried to put on a happier face by pointing out the virtues of life as a scientist in Beantown. “If you’re looking for a rich, intellectually stimulating environment, this is a hotbed,” she says. That’s certainly true, but this move by Merck builds up one hotbed in Boston, while subtracting from this one in the Northwest.

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Vulcan’s Ada Healey got a rude awakening this morning with news on the wires that Merck, one of her company’s main tenants in South Lake Union, is shutting down its Seattle research center to cut costs. Regardless, she says Paul Allen’s real estate portfolio isn’t going to take a serious hit in the neighborhood, and she even has a few prospective tenants in mind who just might be able to fill the void.

“It’s certainly disappointing, we’ll miss Merck. They’ve been a great community partner,” says Healey, Vulcan’s vice president of real estate. “But the fact is that we have a long-term financial commitment from them, and several other users looking for space. This may be an opportunity to make lemonade out of lemons.”

Merck’s shutdown of the Rosetta Inpharmatics subsidiary comes six years after it became one of the early tenants to commit to the real estate boom in South Lake Union. Vulcan, which owns more than 50 acres in the neighborhood, is protected from Merck’s decision, Healey says, because it has a long-term lease (although she wouldn’t say exactly how long it runs.) That means Merck could sub-lease the space after it winds down the Rosetta operation, or possibly negotiate a buyout of its remaining lease with Vulcan, she says.

The Rosetta offices have about 133,000 square feet, and room for 300 employees, Healey says. Vulcan has had discussions with “several prospective tenants” who are shopping for about that much space, so it’s possible that it could be filled up shortly after Merck gets out. Vulcan hasn’t had a chance to discuss Merck’s plans for the shutdown, she says.

As an aside, she mentioned that Vulcan is moving forward with the master planning for the third phase of the University of Washington’s expansion in South Lake Union, which would roughly double the university’s research capacity in the neighborhood. That new phase of construction would have room for 365,000 to 400,000 square feet of research space, or more than triple the room occupied by Merck.

Healey also notes that one of Vulcan’s competitors, Biomed Realty Trust, just scored a lease with Danish pharmaceutical giant Novo Nordisk on an immunology research center will have 80 employees by 2010 at the corner of Fairview Avenue and Mercer Street. It sounds like Vulcan may have a little competition on its hands, which might not be bad news for tenants looking to grow, and maybe even get a decent deal on rent.

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Merck is leaving Seattle, and cutting 300 local jobs. The Whitehouse Station, NJ-based drug giant said today in its third-quarter earnings report that it is shutting down its Rosetta Inpharmatics research site in Seattle’s South Lake Union neighborhood as part of a global cost-cutting plan to eliminate 7,200 jobs and save as much as $4.2 billion over the next five years.

The shutdown marks the end for one of Seattle’s most promising biotech companies of the late 1990s. Rosetta was founded in 1996 by Institute for Systems Biology president Leroy Hood, Fred Hutchinson Cancer Research Center president Lee Hartwell, and “Hutch” researcher Stephen Friend. The company was sold for more than $620 million to Merck in July 2001, and a year later Merck decided to move the Kirkland, WA-based company to become one of the early biotech tenants to support Paul Allen’s vision for growth in South Lake Union, as described in this story I wrote for The Seattle Times.

It’s ironic that Merck says it’s dumping Rosetta now because it needs to cut costs. When it bought Rosetta’s technology in 2001, it integrated it throughout the company, to make the parent more efficient. Rosetta’s technology was used to analyze which genes are switched on and off in diseased tissues, giving scientists a better idea of where to aim potential new drugs, and which patients might respond differently than others. The new technology was supposed to help Merck decide which drugs to shelve, and which to move forward, to improve upon the dismal 1-in-10 industry success rate for drugs that enter clinical trials.

Merck CEO Richard Clark insisted in today’s release that the company is committed to “fully funding innovative R&D” even though its lack of R&D productivity is one of the big reasons it’s being forced to cut costs.

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Allozyne will find out soon whether it has a disruptive technology for treating multiple sclerosis. The fledgling Seattle biotech company plans to start its first clinical trial within the next six months, which will give it an early glimpse into whether it can do something that giant companies have been unable to do. It plans to develop an MS drug that works better, lasts longer, has fewer side effects, and requires less-frequent injections than the current standard of care.

Allozyne bears watching as one of the “graduates” of the Accelerator, the Seattle-based startup incubator affiliated with Leroy Hood’s Institute for Systems Biology. Almost exactly a year ago, it raised $30 million from MPM Capital, OVP Venture Partners, Amgen Ventures, Arch Venture Partners, and Alexandria Real Estate Equities. While that deal was getting done, the venture capital backers recruited Meenu Chhabra from her no-doubt lucrative job as a top dealmaker at Switzerland-based pharmaceutical giant Novartis to be the founding CEO. Hood himself, MIT biologist Harvey Lodish, and Nobel Laureate K. Barry Sharpless of the The Scripps Research Institute serve as scientific advisers, so this idea seems to have a little more shine to it than your average startup in town.

The concept has major implications for patients. Without getting too deep into the science (more on that later), Allozyne thinks it has discovered an improved treatment for multiple sclerosis. It’s a disease in which the immune system goes haywire, attacking nerve cells, and ultimately robbing patients of their vision, speech, and walking ability. More than 400,000 patients in the U.S. have this disease (including a disproportionate percentage in the Northwest).

The staple drugs for these patients are from a class of drugs called interferon beta products, which tamp down the part of the immune system that attacks nerves. The drugs are marketed as Biogen Idec’s Avonex, Merck KGaA’s Rebif, and Bayer’s Betaseron. These medicines are huge moneymakers, generating more than $3.5 billion a year in annual sales. But they are far from perfect. The drugs cause flu-like symptoms, have to be taken by injection at least once a week, and sometimes as often as daily, and don’t stop the progressive decline patients have to endure.

Allozyne’s technology aims to enable what is known as “pegylation” of an interferon beta drug. That means scientists can attach a polymer that helps the drug remain stable for a longer period of time in the bloodstream to do its job. Instead of weekly injections, Allozyne thinks its candidate can be given every other week, or even once a month, Chhabra says. By avoiding the peaks and valleys in bloodstream concentration between injections, the drug might offer improved effectiveness at reducing brain lesions in MS patients, Chhabra says.

“This can supplant interferon beta,” Chhabra says.

Of course, Allozyne isn’t the only company trying to come up with a more convenient way to treat MS. Cambridge, MA-based Biogen (NASDAQ: BIIB) is developing an oral pill called BG-12, Merck KGaA has a tablet called cladribine in the works, and Chhabra’s former employer, Novartis, has another oral pill in development called FTY-720. These drugs are further along in clinical trials, so if they succeed, they could beat Allozyne to the punch with a more convenient MS treatment.

“If the oral drugs in the pipeline fizzle out, there might be a significant market for Allozyne’s product because of its reduced frequency of administration,” says John Richert, executive vice president of research and clinical programs for the National MS Society in New York.

So how is this technology really supposed to work? Allozyne has licensed technology from the lab of Caltech chemists William Goddard and David Tirrell. They discovered a way to essentially snip out a certain amino acid found in the backbone of protein drugs (methionine), and replace it with a genetically modified amino acid that can stick like Velcro to other molecules.

This means that Allozyne should be able to efficiently attach the polymer in exactly the same place on the protein, providing the kind of consistency the FDA likes to see in a product, says Hans van Houte, Allozyne’s vice president of finance and administration.

But if this concept can be proven in MS, then the implications could be profound for other diseases, because the method from Goddard and Tirrell can be applied to attach polymers to any number of genetically engineered drugs to improve their properties, Chhabra says. … Next Page »

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Hibernation-on-demand is one of those enduring concepts of science fiction. If you can slow down breathing, heartbeat, and other metabolic functions without going too far and suffocating people, you could possibly send them on long voyages into space. Here on Earth, it might buy time for a surgeon trying to save someone before he or she bleeds to death.

Nobody has ever gotten close to developing a drug to do this in people. Yet Ikaria Holdings, a privately held biotech company based in Clinton, NJ, with a research center in Seattle’s South Lake Union neighborhood, may be the first. The company has shown its liquid, injectable form of sodium sulfide can cause mice to go into a metabolic slowdown, without risks associated with cooling the body, and at low enough doses that it doesn’t cause toxic side effects. In May, a study of 36 healthy volunteers in Australia showed the drug, called IK-1001, was safe in people.

By the end of this year, Ikaria should be ready to start a larger study to show whether IK-1001 can work for patients with a certain disease, although Ikaria isn’t yet saying what that will be, says Csaba Szabo, Ikaria’s chief scientific officer and the head of the company’s Seattle research center.

“This company has substance,” says Szabo, a Hungarian whose name is pronounced Chah-buh Sah-bow. “I’ve never been in a company so efficient, so productive for a group this size.”

Ikaria has said previously that such a drug could buy extra time for doctors hurrying to treat patients with traumatic injuries, strokes, and heart attacks, and people undergoing heart bypass surgery or suffering surgical complications. The list is so long, the medical and business implications of making this work are huge.

I was amazed to learn that Ikaria is on the verge of entering a Phase II clinical trial with its hibernation-on-demand drug. Mark Roth, a scientist at the Fred Hutchinson Cancer Research Center, made waves in the journal Science in 2005 when he was the first to show hibernation-on-demand could be accomplished in mice. When Ikaria was founded shortly after, he predicted it would take the company five years to begin human clinical trials, in an interview with me when I was with The Seattle Times. The drug in its raw form—hydrogen sulfide gas—isn’t stable enough to be a drug, so Ikaria had to turn it into a liquid form and show regulators it had at least a year of shelf life.

In May, Roth said this in a statement: … Next Page »

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Barack Obama probably doesn’t have to worry much about the cleantech vote. A handful of renewable energy entrepreneurs couldn’t say enough good things about the Democratic presidential candidate in a press conference this morning at the Propel Biofuels station in Seattle’s South Lake Union neighborhood.

The cleantechies gave me a series of blank stares when I asked if they know a single soul in the renewable energy industry who’s supporting Sen. John McCain, the Republican candidate. They were brought in to the event by the Obama campaign, which is advocating a 10-year, $150 billion plan to boost alternative energy. The plan includes a goal of getting 1 million plug-in hybrid cars on the road by 2015, and aims to generate one-fourth of the nation’s electricity comes from renewable sources by 2025.

“I’m an independent, I’ve voted for Republicans and Democrats in the past,” said Michael Weaver, CEO of Redmond, WA-based Bionavitas, a developer of algae-based biofuels. “I think the key issue this election is energy security, both in terms of the economy and the military. The strongest candidate is clearly Senator Obama.”

Before the event started, I chatted with Imperium Renewables CEO John Plaza, who has been pretty tight-lipped about recent struggles with his own company, including layoffs. He didn’t want to say anything more about that situation, but he livened up on the subject of Obama’s energy plan.

“You and I have never seen an aggressive, forward-thinking perspective on energy like this from a presidential campaign,” he says. “I just turned 43, so I’ve been following politics for 20 years. You look at Reagan, he took the solar panels off the White House. The first Bush never talked about alternative energy, it was about securing petroleum. Clinton talked about it, but oil was at record lows of $15 to $20 a barrel in the 1990s. Now we realize we have a real problem.”

During the press conference, Plaza turned a bit more combative, saying with McCain, “all he gives are platitudes and generalities.” He criticized the Arizona Senator’s support for more offshore oil drilling. (Nobody mentioned that Obama also is willing to support some more offshore drilling, in addition to conservation and investment in alternatives.)

There was some irony in the setting of the press conference, too. It was hard to hear many of the speakers, who stood at a podium between a pair of biodiesel pumps. They were drowned out by the noise coming from a lot of conventional diesel-powered dump trucks rumbling along Valley Street to construction sites.

Just when I started wondering if high prices of renewable fuels are sinking consumer demand, and possibly dragging down enthusiasm for Obama’s energy plan, a sign emerged. Just as I was interviewing Propel Biofuels CEO Rob Elam about how business has gone since the station opened in June, a customer in a Mercedes SUV pulled up for some biodiesel.

After some brief chit-chat with the customer, Elam pointed out that his 20 percent biodiesel blend fuel, called B20, was selling for $4.78 a gallon, about a dime cheaper than a conventional diesel station nearby. He didn’t disclose sales figures, but said they are climbing every week. I bet Obama’s people are keeping their fingers crossed that the trends stay that way through November, which will make it a little bit easier to fuel the American public’s fire for a big new alternative energy plan.

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Not in my back yard. Just kidding, always wanted to say that. This morning I stopped by the media launch of Seattle-based Propel‘s new biodiesel station on the corner of Westlake Avenue and Valley Street, which becomes Broad Street—just blocks from my home in South Lake Union. (In fact, I can see the green canopy from my living room.) The station is Propel’s sixth biodiesel fueling facility in Washington, but it’s the largest, and the first one dedicated to only biodiesel—no regular diesel. It officially opens for business tomorrow.

Biodiesel is derived from crops such as soybeans and canola, as well as recycled cooking oil. It is touted as being much better for the environment than petroleum-based diesel and gas, but it’s not without controversy—such as the issue of whether it contributes to rising food prices. This morning, Propel founder and CEO Rob Elam deflected the criticism, sticking to the theme that relying on petroleum is the real problem.

Elam pointed out that petroleum is up to $142 a barrel today, an all-time high. Meanwhile, the two 5,000-gallon biofuel tanks behind him spoke to the benefits of biodiesel, with the following stats printed on them: 1,126,000 pounds of carbon dioxide saved in total, 1,496 barrels of oil displaced, and the carbon equivalent of 87,647 mature trees saved annually. Regular cars won’t run on the bio stuff, but any diesel vehicle will.

Propel seems to have picked this location carefully—a very busy intersection in what Elam calls the “most sustainable neighborhood” in Seattle. Like a lot of residents, I don’t own a car here and I don’t plan on buying one anytime soon—not even a fancy diesel car that can run on biofuel (the Jetta model in the photo above will be available in August). But with all the construction and development going on in the neighborhood, it’s a good bet the station will get its share of business, as long as biofuel prices stay competitive with regular diesel. “This is an industrial area, and we want to fuel those trucks,” said Elam.

I couldn’t help but notice that this sustainable neighborhood with the “greenest” drivers also has a drive-through espresso store, right across the street from the Propel station (see right—photos courtesy of Mara E. Vatz). Let’s keep our priorities straight…

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