San Diego-based CareFusion (NYSE: CFN) says today that David Schlotterbeck, the chairman and CEO who led the company’s spinoff last year from Ohio-based Cardinal Health, plans to retire on Feb. 28, 2011. Schlotterbeck previously worked at Cardinal, and had led San Diego’s Alaris Medical Systems, a leading maker of intravenous drug pumps, when Cardinal acquired Alaris for $2 billion in 2004. In a statement, CareFusion board member J. Michael Losh says the company has formed a special committee to manage the search for Schlotterbeck’s successor, who is expected to be in place before Schlotterbeck’s departure.

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Three Silicon Valley standbys—HP, Apple, and Google—captured most of the tech news headlines last week. But VMware and Intel were busy too.

—Hewlett-Packard won its bidding war with Dell for Fremont, CA-based 3Par. The final price: $33 per share, or about $2.35 billion, more than twice Dell’s original offer.

—SocialDeck, a Waterloo, Ontario-based maker of cross-platform social games for iPhones, BlackBerry devices, and Facebook, revealed that Google has acquired it. The news inspired me to put together a list of all of the ingredients Google is assembling for its rumored “Google Me” social networking service, from Aardvark to Zynga.

—Udemy, a Palo Alto startup building an online platform for “casual learning” courseware, said that it has collected $1 million in seed funding from a group of Silicon Valley angel investors including Keith Rabois and Russ Fradin. I profiled the startup.

—I indulged in a rant about my least favorite Apple product, iTunes. On top of all of its other functions, from storing music to activating iPhones to printing jewel case inserts, Steve Jobs unveiled a new social networking service built into iTunes, called Ping. My essay must have hit a nerve, as it has attracted almost 100 comments from readers.

—I delved into the details of the patent infringement lawsuit filed by Paul Allen’s intellectual property holding company, Interval Licensing, against 11 Silicon Valley giants and retail chains. At issue is whether products offered by AOL, Apple, eBay, Facebook, Google, Netflix, Yahoo, and others tread on Interval patents relating to information browsing and displays. The suit was filed September 3 in United States District Court in Seattle.

—The benefits and challenges of spinning off corporate R&D projects as independent companies was the focus of my two-part conversation with David Tennenhouse, a partner at New Venture Partners in San Mateo, CA. We published Part 1 on September 1 and Part 2 on September 2.

—VMware, the Palo Alto, CA-based virtualization subsidiary of EMC, announced at its annual VMworld conference in San Francisco that it had purchased both Integrien, an Irvine, CA-based maker of real-time infrastructure analytics software, and TriCipher, a Los Gatos, CA-based cloud security company, as Erin reported.

—Greg took a closer look at 10 once-dead technology ideas that are have come back from the grave, from group buying sites to TV on the Web.

—Speaking of Internet TV, Greg also analyzed the implications of Steve Jobs’ unveiling of the overhauled Apple TV device for the rivalry between Apple and Amazon.

—The World Economic Forum announced its list of 31 “Technology Pioneers” for 2011. Five of the companies—Aster Data, GetJar Networks, OpenDNS, ReputationDefender, and Scribd—are based in the Bay Area.

—Palo Alto, CA-based Inflection launched a new people search engine called PeopleSmart and said that it had raised $30 million in Series A funding from Matrix Partners and Sutter Hill Ventures.

—Intel in Santa Clara, CA, announced plans to buy the wireless services division of German chipmaker Infineon for $1.4 billion.

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The “two guys in a garage” story of how technology companies get started is a powerful one in Silicon Valley. And it does happen: there really was a garage at Hewlett-Packard in the 1930s, Apple in the 1970s, and Google in the 1990s. The Mountain View, CA-based Y Combinator startup incubator, where most companies consist of two or three co-founders, is essentially one big garage. But startups can also come from other places—including large technology companies, where there’s often a surfeit of creative researchers and product developers, but a shortage of vision among company leadership about how to bring their promising ideas to market. (Or, to put it more charitably, a disconnect between the researchers’ ideas and the companies’ existing markets.)

That’s where New Venture Partners comes in. At this one-of-a-kind firm, which has offices in San Mateo, CA, Murray Hill, NJ, Ipswich, England, and Bussum, The Netherlands, the specialty of the house is finding promising technologies that aren’t going anywhere inside their native corporate R&D labs and spinning them out into successful companies. With more than $700 million under management, including a $300 million fund that closed in 2006, NVP has unearthed buried jewels at more than 50 technology, cleantech, and healthcare organizations, including big names like Boeing, British Telecom, Intel, Lucent, and Philips. Many of the spinouts it has helped to birth have gone on to lucrative exits, including Flarion Technologies (acquired by Qualcomm), Celiant (acquired by Andrew Corporation), SyChip (acquired by Murata), and Vallent (acquired by IBM).

NVP is a spinout itself. It was originally formed in 1997 as the New Ventures Group at Lucent Technologies, the telecom giant that had inherited most of Bell Labs from AT&T. Many technology corporations were experimenting at the time with corporate venture groups as a way to manage disruptive innovation—in fact, Xconomy CEO and editor-in-chief Bob Buderi wrote a feature article about the New Ventures Group and its implications for Lucent and the wider industry for the November 2000 issue of Technology Review. But the group’s tenure inside Lucent turned out to be short-lived. In 2001, with the telecom industry flailing and Lucent in financial disarray, a “special situations” fund called Coller Capital bought most of Lucent’s equity stake in the group’s portfolio, and spun out the core team as New Venture Partners.

NVP went on to raise its own funds and to absorb the corporate venture groups at British Telecom in 2003 and Philips in 2004. In 2007, the firm reeled in one of its biggest catches: David Tennenhouse. A computer scientist who trained at the University of Toronto and the University of Cambridge, Tennenhouse has a ridiculously broad resume that spans the worlds of academia, defense, corporate research, and e-commerce. Most recently, he’s served as chief scientist and director of the Information Technology office at the Defense Advanced Research Projects Agency; vice president and director of research at Intel Corporation; and vice president of platform strategy at Amazon and CEO of its A9.com research subsidiary.

I got to know Tennenhouse in the early 2000s when he was at Intel. When I returned to the Bay Area this summer to open Xconomy San Francisco and learned that he was at NVP, I contacted him right away to arrange an interview. I wanted to know how the spinout business is going, and how NVP’s challenges differ from those encountered by the average venture capital firm.

Our conversation was in-depth and fascinating, so I’ve broken it up below into two parts. In Part 1 today, Tennenhouse talks about the firm’s basic mission, why large corporations so often fail to find a commercial home for their own promising technologies, and how NVP operates. In Part 2, coming later this week, Tennenhouse talks about specific spinout examples that illustrate his firm’s approach.

Xconomy: What is the mission of New Venture Partners?

David Tennenhouse: The mission is pretty straightforward. To me, it is a bit of a personal mission. It’s identifying “stranded” research and trying to spin that out into stand-alone ventures that can create value for the company that sponsored it, for the employees, and more importantly, at some level, for society as a whole. People always talk about putting research “on the shelf.” There is no shelf. Teams dissipate. Some number of years later, another team comes along and reinvents it.

There are a lot of different reasons why research gets stranded. Applied research is not curiosity-driven, so we usually have a goal of figuring out how to … Next Page »

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There’s a new cleantech player in town. As we and other media outlets reported last week, Watertown, MA-based A123Systems (NASDAQ: AONE) has spun out a new company called 24M Technologies, which is developing a new kind of energy storage system that combines aspects of lithium-ion and flow battery technologies. The company announced today it has raised $10 million in Series A venture capital from Charles River Ventures and North Bridge Venture Partners. It also said it is collaborating with MIT and Rutgers University on a project supported by a $6 million grant from ARPA-E, the relatively new research agency within the U.S. Department of Energy.

The announcement is a strong PR push for Cambridge, MA-based 24M as a separate entity, but the company isn’t giving many details about its technology or business strategy just yet. A123 and North Bridge Venture Partners did not respond to requests for comment last week. (It’s not totally clear to me why A123 would spin this company out instead of keeping it in-house, where it would seem to have enough resources.)

Here’s what we know so far. 24M’s technology originated at A123, the lithium ion battery maker, and was further developed at MIT. It combines aspects of rechargeable batteries, fuel cells, and flow batteries. A flow battery pumps liquid electrolyte (often stored in external tanks) through an electrochemical cell to produce electricity. 24M says it is targeting energy-storage applications such as transportation—presumably hybrid and electric vehicles—and the power grid.

The latter is certainly a long-term problem in renewable energy; solar power and wind farms won’t go very far without more efficient ways to store the electricity generated. It sounds like 24M, like many other companies, is looking to develop technology that will store more energy in a given amount of space, for less cost than existing batteries.

A123 has an unspecified equity stake in 24M, which is led by president and co-founder Throop Wilder, who is a veteran of the IT world. Wilder was previously involved with Crossbeam Systems and American Internet Corp, among other tech companies. His fellow 24M co-founders are MIT scientists Yet-Ming Chiang (co-founder of A123) and W. Craig Carter.

“We believe that 24M’s technology has the potential to reduce energy storage costs for transportation and grid applications, and we look forward to helping the company as it leverages our research innovations for the development of commercially viable systems,” said A123’s CEO, David Vieau, in a statement.

Some other interesting details about 24M have been reported elsewhere. For those interested in the technical aspects, Martin LaMonica of CNET pointed to a patent for a “redox flow device” filed by Chiang, Carter, and others on behalf of A123 and MIT. This may or may not be related to the technology that 24M is working on. And 24M’s Wilder told Scott Kirsner of the Boston Globe that he originally met Chiang through North Bridge (which invested in A123), while Wilder was an entrepreneur-in-residence at Charles River. Wilder also said that 24M will be expanding to 10 to 20 employees within the next six months.

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A123Systems’ $370 million IPO last September was the shot heard around the world—at least the alternative-energy world. I can personally attest to the fact that energy storage and electric vehicle companies from coast to coast were following the Watertown, MA-based battery maker’s performance very closely. Now they have some new things to chew on.

Late yesterday, A123 (NASDAQ: AONE) reported its second-quarter financial results, and they were a bit disappointing—revenues rose 14 percent to $22.6 million but the firm’s net loss increased to $34.2 million, up from $21.9 million in the same period last year.

The company says it is scaling up its lithium ion battery production for big customers like power utilities, and automakers who want to expand their hybrid and electric vehicle offerings. A123 also plans to open a new manufacturing facility in Michigan, where it has a growing presence.

More interesting, perhaps, is the news that A123 has spun off a separate company, called 24M Technologies, which is being supported by A123 and unspecified venture capitalists, to develop a hybrid energy-storage system (tested in part at MIT) that combines aspects of lithium-ion and flow battery technologies. The news was reported by CNET, Earth2Tech, Mass High Tech, and other media outlets.

And lastly, A123 said it has dropped out of Chrysler’s electric vehicle development program (which had been announced last year), because of a competing bid from an unnamed technology vendor. To balance that news, the company said it has been chosen by an unnamed major automaker to be the sole development partner for an expanded hybrid-electric vehicle line.

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A couple of years ago, a $999 iPhone app called “I Am Rich” made headlines for being the most expensive item in Apple’s iTunes App Store. (It was the ultimate symbol of conspicuous consumption, doing nothing but displaying a glowing red icon.) But compared to Siri—the “virtual personal assistant” app that can make restaurant reservations, book concert tickets, or look up weather forecasts based on spoken commands—I Am Rich was a steal.

The Siri app itself isn’t expensive; in fact, it’s free to iPhone, iPad, or iPod Touch users. The algorithms that make the app work, however, are the product of years of defense-sponsored research at Menlo Park, CA-based SRI International and other institutions that cost taxpayers at least $150 million. After SRI spun out Siri, Inc., to commercialize this work in 2008, Silicon Valley venture capital firms Menlo Ventures and Morgenthaler Ventures poured another $24 million into the technology. And finally, this April, Apple itself acquired the startup for a reported $150 million to $250 million.

How could a single mobile application have caused so much money to change hands?

The answer, of course, is that the fuss isn’t about the Siri app. It’s about the artificial-intelligence insights behind it: the chain of machine-learning, natural-language processing, and Web search algorithms that swing into action with every Siri query. When you can access these algorithms from a mobile device like the iPhone, and prime them with a bit of contextual awareness such as a GPS location reading or an understanding of the user’s preferences, you have a powerful personal tool that Norman Winarsky, SRI’s vice president of ventures, licensing, and strategic programs, likes to describe as a “do engine” rather than a search engine.

Right now, Siri can handle a limited range of jobs, such as checking a flight time, sending a tweet or an e-mail reminder, or finding out when a movie is showing—all things that can be achieved by connecting with existing Web services or tapping the structured information in open Web databases. But as the technology evolves, it could help to change consumers’ expectations of their mobile devices, gradually weaning them away from the keyword-driven thinking inculcated by traditional search engines and allowing them to interact with their gadgets in more conversational ways. So it’s not hard to understand why Apple (NASDAQ: AAPL), which is betting a large part of its future on the iPhone and the iPad, would pay to bring Siri in-house (and, not incidentally, to keep it away from Google).

Now that Siri’s technologists are behind the walls in Cupertino, they aren’t talking with the press. But in a recent conversation with Winarsky and William Mark, the head of SRI’s Information and Computing Sciences Division, I got a deep view of the project that gave birth to Siri—which is still underway and, as it turns out, will soon produce more progeny. The story of Siri’s emergence within SRI reveals quite a lot about the future of mobile technology, the undiminished role of defense spending in Silicon Valley’s success, the art of the spinoff, and the way researchers think inside this legendary Silicon Valley institution.

As a non-profit R&D center doing contract research for the government and other clients, SRI International has a fixation on real-world problems that reaches all the way back its founding as the Stanford Research Institute in 1946. The automated check reading technology developed at SRI in the 1950s, for example, is still in use by banks today. And the first computer mouse and other fundamental innovations in human-computer interfaces were loosed upon the world by … Next Page »

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Motorola (NYSE: MOT), the mobile communications technology giant based in Schaumburg, IL, is scouting sites in Chicago, Dallas, and California for the headquarters of its cell phone spinoff set for next year, according to Crain’s Chicago Business. San Diego is among the California cities under consideration, according to an interview with Motorola co-chief executive (and former Qualcomm COO) Sanjay Jha that was published yesterday in the San Diego Union-Tribune.

Motorola recruited Jha in 2008 as its turnaround man, naming him co-CEO and head of its mobile phone and cable set-top box businesses. The company initially planned a spin off in late 2008, a split that got postponed until 2011. Motorola’s core infrastructure business (which makes wireless network gear and police radios) will remain in Schaumburg.

Jha also has suggested Silicon Valley as a possible headquarters for the new company, citing the deep pool of high-tech talent during an interview three months ago. In Sunday’s Union-Tribune interview, Jha says a key factor in deciding where the mobile and spinoff should be located depends on how much business it does in China.

“In San Diego, we already have a very big facility,” Jha told the Union-Tribune. “As you know, I have the mobile business as well as the set-top box business. The set-top box business has very deep roots in San Diego. I think my links to San Diego, if anything, deepened as a result of having that business.

“But I don’t know that we have made that decision. Is San Diego a possibility? When we get engaged with it, we’ll definitely consider San Diego. My family, you know, still lives there. I have a special place for San Diego in heart.”

I sent queries to several Motorola public relations staffers by e-mail earlier today, but they didn’t immediately respond. The company did issue a statement today in its home media market, which was picked up by the website Chicago Breaking Business, which is affiliated with the Chicago Tribune and WGN.

“If Mobile Devices and Home make the decision to relocate its headquarters, this would affect less than 200 people and would not occur in 2010,” the company said in a statement. Motorola has more than 10,000 employees in the Chicago area. The company’s mobile devices division is currently based near Chicago, in Libertyville, IL.

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In today’s RealNetworks earnings call, we heard from president and acting CEO Bob Kimball for the first time. Kimball recently took over from founder Rob Glaser, who stepped down as CEO a month ago.

Kimball originally joined RealNetworks (NASDAQ: RNWK) in 1999 and served for 10-plus years as the senior executive responsible for all legal matters and business development. Prior to Real, he was senior attorney and manager of business relations at IBM Global Services.

2009 was a rough year for Real financially, but Kimball is all about the future. And about getting things done quickly and decisively, starting now. He spoke on the call about the company’s retooled strategy and his plans to “transform RealNetworks” into a “far more focused and simple company” with a “strong new sense of purpose.” He also thanked Glaser for providing the leadership and innovation that “forms the bedrock of Real today.”

The bottom line is that Real is spinning out its music service, Rhapsody, as a separate company (announced earlier this week), and will separate out its games division soon after that’s complete. The ownership, financial, and legal structure of the gaming entity is yet to be determined. That leaves two main focuses for Real, both built around its media entertainment software platform: its software-as-a-service business for wireless carriers, and its RealPlayer business for consumers. (These two divisions create virtually all of Real’s cash flow today.)

Here are some more highlights from Kimball:

—“I know where our strengths are, and, perhaps more importantly, I know where our weaknesses are,” he said. “I know how we make money, and how we don’t.”

—“I haven’t seen this level of excitement in the hallways of RealNetworks in many years,” Kimball said. Besides the talent and determination of Real’s employees, he pointed to the company’s “pristine balance sheet,” which includes nearly $400 million in the bank, and no debt.

—“We plan to be content agnostic. We will make it easy and fun for consumers to enjoy their content anywhere, anytime,” he said.

—Kimball outlined a three-step plan for Real: simplify, restructure, and grow. Not necessarily one after the other, but in parallel. “We must move quickly,” he said. “By the end of the year, we will … Next Page »

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Seattle-based RealNetworks and MTV Networks announced today they will spin off their digital music service joint venture, Rhapsody, into a separate company. Under the terms of the deal, RealNetworks (NASDAQ: RNWK) will no longer be the majority owner and operator of Rhapsody; the new company will not have a single majority owner. Real says this is a significant first step in making itself more focused and profitable. More information on the restructuring can be found in the Form 8-K that Real filed with the SEC today. The deal is expected to close at the end of this quarter.

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[Updated 9/15/09 8:15 am. See below.]San Diego-based Gen-Probe (NASDAQ: [[ticker: GPRO]]) says it is spinning off its industrial testing business into an independent company, called Roka Bioscience, that is developing real-time molecular tests for biopharmaceutical, food, and water safety testing.

Gen-Probe plans to initially own 19.9 percent of the new company. Affiliates of three private equity firms, OrbiMed Advisors, TPG (TPG Biotechnology), and New Enterprise Associates have agreed to provide $37.2 million to complete development of several industrial-scale molecular assays. Gen-Probe says 18 of its employees with expertise in industrial testing have joined Roka, which begins operating immediately as an independent company.

A Gen-Probe spokesman says the new company initially will operate out of Gen-Probe’s headquarters, and will be based in San Diego. [Updated to include information that was not immediately available from the company.]

Gen-Probe says it also is contributing industrial assets that include its Closed Unit Dose Assay (CUDA) system, a portable testing instrument that can deliver highly accurate molecular results in roughly an hour. Roka also will have rights to develop tests for new markets, including veterinary, environmental, and bioterrorism testing. Gen-Probe says it also is transferring its partnership agreements with Millipore Corp. of Billerica, MA, and GE Water (a business unit of CT-based General Electric).

Roka’s CEO is Paul G. Thomas, who was most recently chairman and CEO of LifeCell, a regenerative medicine company sold last year to Kinetic Concepts for $1.8 billion. In a statement, Gen-Probe CEO Carl Hull says, “We believe establishing a highly focused, standalone company is the best way to maximize the considerable long-term potential of our molecular technologies in industrial markets.”

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CareFusion, a medical technology company, got its official start earlier this week and is already one of the largest companies in San Diego, with 15,000 employees and $3.7 billion in annual revenue. Find out how that happened and read up on other local biotech news.

—Shares of San Diego’s Acadia Pharmaceuticals (NASDAQ: ACAD), which had run up nearly six-fold since late April on hopes for its lead experimental drug, collapsed after the biotech said Tuesday that the anti-psychosis drug, pimavanserin, had failed in a trial. Acadia’s announcement also was a blow to Biovail, the Toronto-based collaborator that had provided $30 million in funding to help develop pimavanserin for Parkinson’s patients.

—CareFusion, a San Diego medical technology company spun off by Ohio-based Cardinal Health (NYSE: CAH), officially became an independent company with shares traded on the New York Stock Exchange (NYSE: CFN). CareFusion’s business, which includes technologies created by San Diego’s Pyxis and Alaris, has about 15,000 employees and $3.7 billion in annual sales. The company’s stock was included in the S&P 500 index.

—Carlsbad, CA-based Medsphere Systems says it raised $12 million in venture funding to expand sales of its OpenVista electronic health record technology. The healthcare IT company’s announcement was among several funding deals in the San Diego region, according to a series of regulatory filings with the Securities and Exchange Commission. Those deals included:

—Aubrey, the Carlsbad, CA-based developer of advanced biosynthetic dressings for treating wounds and burns, raised nearly $3.9 million from investors and wants to raise another $2.1 million.

—Animal Cell Therapies, the San Diego company developing methods to produce and store animal stem cells, has raised $1.1 million of a planned … Next Page »

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San Diego has long been known as an incubator for new technology companies. But as the hometown for established Fortune 500 companies, San Diego is barely on the map. You can count San Diego’s Fortune 500 companies on three fingers: Qualcomm (at No. 244), Sempra Energy (No. 252), and SAIC (No. 266).

This is because San Diego operates like a botanical nursery. Technology startups seeded here are typically sold and often transplanted. Sometimes part of a company’s operations remain in San Diego while corporate finance and other executive functions are consolidated elsewhere. That’s the way it was in 1996 when Dublin, OH-based Cardinal Health paid $920 million to acquire San Diego-based Pyxis, a medical technology startup that pioneered the development of computerized drug dispensing systems for hospitals. And again in 2004, when Cardinal paid $2 billion to acquire San Diego’s Alaris Medical Systems, a leading maker of intravenous drug pumps.

But now we’re watching a complete turn of the great corporate circle of life. Cardinal decided more than a year ago it was time to spin off its medical technology business—which includes Pyxis and Alaris—as CareFusion, a full-blown publicly traded company with 15,000 employees and roughly $3.7 billion in annual sales. David Schlotterbeck, who was a vice chairman at Cardinal and the CEO of Alaris, is heading CareFusion—which is headquartered in San Diego.

“I am very happy to see San Diego regain a large publicly traded company headquarters,” Pyxis CEO Ron Taylor said in an e-mail last week. “Over the years we have sold many local companies to bigger out-of-town buyers and lost the HQ.”

The spinoff becomes official tomorrow (September 1), when trading in CareFusion shares begins on the New York Stock Exchange under the symbol CFN. CareFusion shares began trading provisionally under the symbol CFN-WI just over a week ago, on Aug. 21, to establish a market for the stock, according to CareFusion spokesman Jim Mazzola. At noon today,  they were trading at $19.02 a share, giving the new San Diego company a market valuation of more than $4.3 billion.

The split leaves Cardinal Health, the country’s No. 2 drug distribution company, with a more centralized focus on its core business. It also enables CareFusion to focus … Next Page »

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Microsoft’s IP Ventures program announced today it has launched a new startup called InishTech, based in Dublin, Ireland. The company will handle Microsoft’s Software Licensing and Protection Services, an existing business since 2007. Microsoft is providing an undisclosed amount of startup funding, as well as support through its BizSpark program. Its IP Ventures program has previously helped launch startups like Seattle-based Zumobi.

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Harvard’s Office of Technology Development has been grabbing headlines this week. On Sunday, it went public with news about a Beverly, MA-based spinoff called SiOnyx that hopes to commercialize “black silicon,” a highly light-absorbant form of the material discovered in a Harvard physics lab. And today it took the lid off Crimson Hexagon, which plans to market an online opinion-tracking system based on the work of Gary King, a professor in Harvard’s Department of Government.

King, a quantitatively oriented political scientist and software engineer who is also director of Harvard’s Institute for Quantitative Social Science, developed an automated statistical algorithm that can sift through large bodies of text such as blog posts and extract themes and opinions in a way that is supposedly immune to the usual biases built into opinion polls and early online brand monitoring technologies. Crimson Hexagon, based in Cambridge, MA, has obtained an exclusive license from Harvard to apply the algorithm to the area of automated opinion analysis in blogs, online communities, and other social media.

Many companies already use similar systems to track the success of product launches and marketing campaigns and to identify (and respond faster to) problems such as product defects. Crimson Hexagon claims that King’s algorithm can encompass a broader swath of consumer sentiments about brands or products—or, for that matter, personalities and political candidates—and help companies to answer more specific questions. A drug company, for example, might use Crimson Hexagon’s system to find out which side effects are mentioned most often by people taking the company’s medications.

“With the Internet, information is free but meaning is expensive—or at least difficult to find given the onslaught of information available,” King said in Crimson Hexagon’s statement today. “The technology we developed was designed especially for this problem of making sense of huge quantities of expressed opinion.”

Crimson Hexagon was founded in 2007 and has been in stealth mode up to now; it’s funded by several angel investing groups including New York- and Boston-based Golden Seeds, Boston-based Beacon Angels, and East Hartford, CT-based Angel Investor Forum. King is serving as the startup’s chief scientist, and the company’s CEO is Candace Fleming, the former president of Icosystem, another Cambridge startup focused on business analytics applications of advanced math.

“While one might not associate social media and Web 2.0 technology with Harvard, this is but one example of a variety of timely research initiatives being advanced across our campus, benefiting society and researchers alike,” Isaac Kohlberg, Harvard’s chief technology development officer, said in a statement. Kohlberg is widely credited with resurrecting Harvard’s technology licensing efforts after a long spinoff draught.

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In 1996, I received a $40M+, 11-year grant from the National Science Foundation to launch University of Washington Engineered Biomaterials (UWEB). UWEB focused on the biomaterials used to make medical devices and medical diagnostics. Medical devices and diagnostics are estimated to be a $150B+ endeavor. Though devices manufactured by the medical industry save lives and improve the quality of life for millions, there are significant issues that impede device performance and increase costs to the healthcare system and the patient. These issues include blood clotting, infection, poor healing, fouling, mineralization, degradation, and scarring. UWEB approached these compelling problems though collaborative, interdisciplinary teams that included engineers, materials scientists, chemists, biologists, physicians, and dentists.

The research program addressed issues confronting biomaterials and medical devices with an eye toward the needs of patients and the industry. In 11 years, UWEB revolutionized implant healing, developed new strategies to address calcification, evolved fouling-resistant surfaces, proposed new blood compatible surfaces, invented approaches to reduce infection on biomaterials, and invented drug delivery strategies. Also, UWEB expanded its scope to include tissue engineering (heart, esophagus, bladder, cornea, bone, cartilage, etc.). UWEB innovations led to at least 6 spin-off companies, including Asemblon and Healionics. Finally, a generation of students was trained in understanding modern biomaterials and also how industry works. These students now fill numerous positions in major companies, research labs, hospitals, and universities.

It’s time to take the next step and get industry more directly involved. UWEB-21 will take UWEB and expand it to the next level—a program to address needs for 21st-century biomaterials. My proposal is that UWEB laboratories and scientists will partner with UWEB-21 consortium companies to provide analytical services, to collaborate on research and device development, to pursue funding opportunities, to review IP licensing opportunities, and to assist with recruitment and training.

So I’m looking to the community for involvement and commitment. UWEB-21 is now seeking partners in our industrial consortium. Partnership is the key concept—all players reap rewards. The Puget Sound region has numerous medical device and diagnostics companies. The resources and expertise available at the University of Washington are widely acknowledged to be among the best in the world. UWEB-21 is set up to offer real value to companies partnering with this program. If you join UWEB-21, you will help support Washington as a world center for biomaterials and also open new resources for your company. For further information, write to me at: ratner@uweb.engr.washington.edu.

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I haven’t done a careful analysis, but I have the impression that there were a few more life sciences venture financings last week than has been typical as of late. Or maybe it just seems that way because this first one made such a splash with our readers.

—Fast on the heels of its $5.5 million Series A financing round last January, Boston-based Follica closed an $11 million B round led by Polaris Venture Partners of Waltham, MA. The startup will use the funds to advance its work on a treatment for male- and female-pattern baldness.

—Activist investor Carl Icahn upped his holdings in Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) from 4.3 percent to 6 percent—taking advantage of a dramatic drop in the stock’s price prompted by the news that two multiple sclerosis patients taking the company’s drug Tysabri had contracted a rare and potentially fatal brain infection.

—Alnylam Pharmaceuticals (NASDAQ: ALNY) of Cambridge, MA, won a $7.5 million contract from the National Institutes of Health to continue its effort, begun two years ago, to develop RNAi-based treatments against hemorrhagic fever viruses, including Ebola.

—Watertown, MA-based antibiotic developer Tetraphase Pharmaceuticals—a Harvard spinoff—announced a $15 million second close of its $25 million Series A financing. Mediphase Venture Partners, CMEA Ventures, Fidelity Biosciences, Flagship Ventures, and Skyline Ventures participated in the deal.

—Cambridge, MA-based Genzyme (NASDAQ: GENZ) launched a pivotal clinical trial with its partner, Carlsbad, CA-based Isis Pharmaceuticals (NASDAQ: ISIS), of the cholesterol-lowering drug mipomersen.

—Luke profiled the efforts of Thousand Oaks, CA-based Amgen to make clinical trials less of a crapshoot, drawing on the expertise of the molecular biologists in its Cambridge, MA, outpost and the clinical immunology and computational biology specialists in its Seattle offices.

—Newton, MA-based medical software maker PatientKeeper raised $7.5 million in a Series F round of financing from Frazier Healthcare Ventures and New Enterprise Associates.

—Stromedix of Cambridge, MA, won orphan-drug status for its treatment for chronic allograft nephropathy, a leading cause of kidney-transplant failure. The drug is the lead candidate for the startup, which is aiming to commercialize anti-fibrosis technology licensed from Biogen Idec.

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Looks like Intel is officially entering the renewable-energy space. The Santa Clara, CA-based chipmaker, which has major operations in the Northwest, has announced that it is spinning out an independent solar-energy company called SpectraWatt (an awful name, can we all agree). Intel (NASDAQ: INTC) said in a statement that the company was formed “to spur new development and demand for renewable energy sources.”

Intel Capital is leading a $50 million round of financing in SpectraWatt, joined by Cogentrix Energy (a wholly owned subsidiary of The Goldman Sachs Group), PCG Clean Energy and Technology Fund, and Solon AG.

SpectraWatt will build photovoltaic cells for solar module suppliers. It will focus on advancing the technology while reducing manufacturing costs, which has always been the issue with solar cells. (We’ll be following closely to see how they do there—a Moore’s Law equivalent for solar, anyone?) The company’s manufacturing and technology development facility is expected to be up and running in Oregon, presumably near Portland, later this year. Its first products are supposed to ship in mid-2009.

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Solar cells have been around for 30 years, but have never made huge inroads into the energy market because they’ve always been more expensive than other ways of producing electricity. Now an MIT spinoff claims it’s going to make solar power cheaper than coal, not through any dramatic change in the technology but with a suite of more subtle improvements.

Electricity produced by today’s solar cells costs the consumer about 25 cents per kilowatt-hour, says Frank van Mierlo, president and CEO of 1366 Technologies, based in Lexington, MA. By contrast, van Mierlo says he pays about 19 cents per kilowatt-hour in Lexington, with the electrical grid fed by coal-powered and nuclear plants. By the year 2012, van Mierlo’s company hopes to bring the cost of solar power down to 10 cents per kilowatt-hour.

That proposition sounds valuable to local VCs. North Bridge Venture Partners and Polaris Venture Partners together led a Series A funding round for 1366 worth $12.4 million, the company announced today. MIT, which is licensing patents related to the solar cells to 1366, also has a “significant equity stake” in the company, van Mierlo says.

Carmichael Roberts of North Bridge says the climate is ripe for a renewable energy venture. “Obviously cleantech is a big deal, solar is a big deal,” he says. With the rising cost of oil, the difficulties inherent in depending on foreign energy sources, and growing concern about greenhouse gases, the market is ready for solar power if the costs can be competitive with coal, one of the cheapest energy sources, Roberts says. “Whole countries are betting on solar, so we feel pretty good about the demand.”

Van Mierlo says that 1366 is taking a “plain vanilla” approach to improving solar cells. The company will concentrate on cells made of multicrystalline silicon, which is already the lowest-cost type of solar cell. (More than half of today’s solar cells are of this type, with the majority of the rest based on monocrystalline silicon, which is more efficient but also more expensive—and so ultimately about the same cost per watt.) 1366 plans to boost the efficiency of multicrystalline-silicon-based cells using a series of design improvements developed by Emanuel Sachs, who specializes in the design of manufacturing processes at MIT’s Laboratory for Manufacturing and Productivity. Sachs, who cofounded 1366 with van Mierlo, has years of experience in photovoltaics, having founded Evergreen Solar of Marlborough, MA, in 1994, based on his invention of the “string ribbon,” a cheaper way of making solar cells. (He also invented a three-dimensional printing technology that was commercialized through another MIT spinoff, Z Corporation.)

One of Sachs’ innovations that 1366 will employ is a replacement for the flat copper wires currently used to connect several solar cells within a larger, glass-encased module. “All the light that hits those wires is reflected right back out of the module and lost,” Sachs says. His new wires have tiny mirrors embedded in them at just the right angle so that the reflected light hits the inner surface of the glass at an angle and is reflected again, this time back into the silicon, so more of it can be absorbed and converted to electricity. The wires alone, which don’t require any change in the manufacturing process for the modules, increase efficiency by about 3 percent.

But changes to the architecture of the solar cell itself bring about an even greater efficiency bump … Next Page »

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The diagnostics business unit formerly known as Bristol-Myers Squibb Medical Imaging is now an independent firm called Lantheus Medical Imaging, the N. Billerica, MA–based company announced today. The news follows the sale of the unit to private equity firm Avista Capital Partners, which was announced in December. Lantheus makes a suite of diagnostic products including the heart imaging agent Cardiolite, one of the top royalty earners in MIT’s patent portfolio.

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What if printers became so small that you could attach one to the back of a television, a video game console, a camera, a digital photo frame, or even a cell phone? And what if these tiny printers never required ink—just tiny little packs of paper? You’d have the makings of a rebirth in instant-print photography, with every digital device that captures or displays images potentially acting as its own photo lab.

That’s the vision of Zink Imaging, a Waltham, MA, startup that’s taken technology conceived eight years ago at Polaroid Research Labs and turned it into practical devices that will make their public debut today at the International Consumer Electronics Show (CES) in Las Vegas.

“We think it’s a game changer,” Zink CEO Wendy Caswell told me in an interview last month. “We are going where no printer company can go, which is into the pocket of the consumer. There isn’t any ink to spill; you just add paper. It’s a classic disruptive technology.” Which may be why innovation guru Clay Christensen is one of the company’s strategic investors—and is definitely why you don’t see Polaroid itself developing the technology. But more on that in a bit.

Zink doesn’t manufacture printing devices itself, but is licensing its technology to manufacturing partners such as Alps Electric, FoxConn, Japanese toymaker Tomy, and even a reborn Polaroid, which has recently emerged from bankruptcy as a purveyor of consumer electronics. At CES today, Polaroid will unveil a “Digital Instant Mobile Photo Printer”—based on Zink’s technology and manufactured by Alps—that’s not much bigger than the 2-inch-by-3-inch, peel-and-stick photos it produces. That means it’s small enough to attach to digital cameras and even camera phones. Caswell says Tomy is building a similar printer into an instant camera aimed at school-age children.

What Zink is making, from a 385,000-square-foot plant in North Carolina that was about to be closed by former owner Konica-Minolta until Zink bought it last year, is the paper for those printers. And at an anticipated $0.20 per print, selling paper could turn into a lucrative business all on its own—in much the same way that ink-jet cartridges are more profitable for companies like Hewlett Packard than the printers that use them.

Zink’s paper isn’t actually paper at all, but rather a phyllo-like composite of three layers of dye crystals encased in polymer film. In fact, the idea at the core of the company’s intellectual property is encapsulated in its name, which stands for “zero ink.”

Around 2000, the way Zink CTO Steve Herchen explains it, scientists at Polaroid Research Labs realized that it might be possible to build an inkless digital printer by embedding all the necessary color-producing materials in the paper itself—an approach reminiscent of the self-developing instant film that Edwin Land developed in the 1940s and that made Polaroid famous, except that unlike with Land’s film, optics would play no part. Instead, this type of printing would be driven by thermal print heads, like those used in fax machines and gas-pump receipt printers.

The Polaroid researchers embarked on a hunt for temperature-sensitive materials that would be colorless in their solid, crystalline state but become brightly colored when melted. They eventually found crystals that … Next Page »

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