Bellevue, WA-based Innovative Pulmonary Solutions has raised $3 million to pursue its vision of a new way of helping people with common lung disorders to breathe better.

The company raised $3 million in new equity out of a financing round that could be worth as much as $8 million, according to a regulatory filing. The cash came from Versant Ventures and Split Rock Partners, according to a recent report from VentureWire.

Innovative Pulmonary Solutions (IPS) is led by CEO Steven Dimmer, the former vice president of R&D at one of the established players in Seattle’s medical device scene—Calypso Medical Technologies. The new company is developing a method for treating chronic obstructive pulmonary disease without leaving any implant behind in the patients’ lung tissue. Dimmer discussed the technology back in April at the inaugural meeting of Wings, the Northwest’s new angel investing network for medical device companies.

If IPS truly has hit upon a practical idea for this condition, it will be able to tap into a big market. An estimated 16 million people in the U.S. (mostly smokers) have what is called chronic obstructive pulmonary disease, COPD, an umbrella term for emphysema and chronic bronchitis. It is the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation. Emphysema alone is estimated to cost the U.S. health system an estimated $5 billion to $9 billion a year.

A number of medical device companies have sought to create minimally invasive treatment strategies against COPD. Redmond, WA-based Spiration, recently purchased by Olympus, has developed an implantable valve that’s supposed to block air from getting into diseased parts of the lung, where the air can get trapped. Seattle-based Uptake Medical, which raised $17.5 million in venture capital in July, has been working on a different technique in which it uses a catheter to deliver steam water vapor that scars and seals shut airways that lead to the bad part of the lung.

IPS is remaining pretty stealthy about its technology, so there’s no way for me to say how this might be different from what Uptake and Spiration are doing, or what advantage it might offer. But like you’d expect from any entrepreneur who just got funded, Dimmer sounds pretty excited.

“Needless to say, we are delighted to close Series A with such high quality investors. We plan on remaining in stealth mode for the immediate future,” Dimmer says.

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Uptake Medical has closed a financing round worth $17.5 million. The Seattle-based company says it will use the money to get clearance to start selling a device to treat emphysema in Europe, to start marketing it outside the U.S., and to pursue FDA approval.

The Series B financing was led by Maverick Capital, and included Uptake’s existing investors: GBS Venture Partners, Onset Ventures, WRF Capital, Arboretum Ventures and Affinity Capital. Uptake has now raised a  total of more than $30 million since it was founded in December 2004.

Uptake has captured interest because it is developing a new way of preventing air from getting trapped in damaged regions of the lungs of people with emphysema. Other companies, like Redmond, WA-based Spiration (recently acquired by Japan’s Olympus), have spent years trying to accomplish this with minimally invasive implantable devices, as an alternative to surgery. Uptake is pursuing a different way, using a catheter to deliver steam water vapor that scars and seals shut airways that lead to the bad part of the lung. This way, Uptake says, it can allow the remaining healthy lung to expand more fully and function more normally.

Emphysema, a disease that often strikes smokers and makes it difficult to breathe, costs the U.S. health system an estimated $5 to $9 billion a year, making treatments for the condition a huge potential market, Uptake says. An estimated 16 million people in the U.S. (mostly smokers) have what is called chronic obstructive pulmonary disease, COPD, an umbrella term for emphysema and chronic bronchitis. It is the fourth-leading cause of death in the U.S., killing 100,000 people a year, according to the National Emphysema Foundation.

“Annually hundreds of thousands of severe emphysema patients seek meaningful clinical treatment that is safe and effective only to be disappointed by a limited set of options,” said Eric Kim of Maverick Capital, in a company statement. Uptake’s technology “offers a much-needed solution to help those patients.”

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This week was so busy with companies breaking news before the holiday weekend that I didn’t have time to immediately jump on the latest tempest affecting Dendreon. Alas, tomorrow is another day.

—Seattle-based Calistoga Pharmaceuticals generated the big news of the week, by raising $40 million in the biggest venture deal of the year so far in Washington state. The company will use the cash to finance the expensive late-stage clinical trials needed to win FDA approval for its lead drug, CAL-101, for blood cancers.

—NanoString Technologies has been operating without a permanent CEO for more than a year, but has finally found its new leader in Brad Gray. A veteran of Genzyme’s diagnostics business, Gray is going to map out a plan to help NanoString branch beyond its original customer base in academic research, and into the world of molecular diagnostics.

—Redmond, WA-based Spiration, the developer of a minimally invasive valve to treat lung diseases, said it agreed to be acquired by Japan-based Olympus for an undisclosed sum. The two companies have been partners for a couple years, and considered themselves a natural fit, because Olympus makes the bronchoscopes which doctors use to implant the Spiration valves, which block off air flow to damaged regions of the lungs.

—We had a head-scratcher to report on from the personnel files this week. Seattle Sensor Systems, a startup seeking to develop a miniaturized technology for detecting a wide variety of contaminants, parted ways with CEO Carole Spangler. No reason was given for Spangler’s departure, although she says she had a disagreement with the board and chose to resign.

—Emerald Biostructures, the Bainbridge Island, WA-based company that narrowly escaped the bankruptcy of deCode Genetics, took another step as an independent company this week when it said it struck a multi-year collaboration with Cambridge, MA-based Forma Therapeutics.

—Roger Longman, the CEO of Real Endpoints, made an interesting case last week about how biotech and pharma companies need to start thinking more seriously about measuring the value their products can deliver to the healthcare system if they want insurers to keep writing checks. This is hard stuff to measure, and the insurers don’t always agree on what’s important, but the message is that running a clinical trial to win FDA approval just isn’t going to be enough anymore.

—Last, but not least, we are having a little open house here at Xconomy Seattle’s humble abode to celebrate a couple important changes around here. Say goodbye to Greg Huang as he heads off to a new adventure for Xconomy Boston, and come by to say hello to Thea Chard, our new assistant editor covering all things tech-related in the Northwest. This event will be from 4 pm to 7 pm today at our building, 1102 Columbia Street in Seattle. I’m taking care of the wine, beer, and snacks, so if you’d like to join us, please send me a note at ltimmerman@xconomy.com.

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[Update: 10:45 am] Spiration’s independent days are over. The Redmond, WA-based company, the developer of a minimally-invasive valve to treat lung diseases, has agreed to be acquired by Japan-based Olympus for an undisclosed sum.

The acquisition is really the culmination of a relationship that’s been growing between the two companies since 2008, when Olympus obtained rights to be the exclusive distributor of Spiration’s lung valve in Europe and Japan. Olympus has a lot of interest in lung diseases, as the world’s leading maker of endobronchial ultrasound technologies to help physicians look inside the lungs, as well as flexible bronchoscopes to help perform minimally invasive lung procedures.

The takeover marks the end of a long journey for Spiration. The company, founded in 1999, won FDA clearance to start selling its first product in the U.S. back in October 2008. It was for Spiration’s IBV Valve System, which uses tiny valves that can be implanted in the airway via a catheter threaded down a patient’s windpipe. The valves are intended to block off air flow to the diseased lung, so air doesn’t get trapped there and make it hard to breathe. The device can be removed if necessary. The device was initially approved by the FDA for a small subgroup of patients who suffer from air leaks after they get lung surgery, but the Spiration device is being tested in a much broader market of patients with chronic obstructive pulmonary disease. An estimated 16 million people in the U.S. (mostly smokers) have COPD. The potential market for this device could reach more than $1 billion a year, Spiration has said.

“I am pleased that our partnership with Spiration has led to this agreement which makes Spiration a part of the Olympus Group,” said Haruhito Morishima, president of Olympus Medical, in a statement. “Spiration possesses a high level of technological capability and deep insights into the respiratory field. Their products are also an ideal complement to the Olympus portfolio of bronchoscopes and equipment.”

It’s impossible to say what this deal means for investors without seeing the terms, but a price of anything less than at least $200 to $300 million would probably be considered a disappointment. The company has raised more than $100 million in equity and debt financing since its founding from Three Arch Partners, New Enterprise Associates, Versant Ventures, Sprout Group, InterWest Partners, Investor Growth Capital, GE Capital, Saints Capital, and Olympus.

[Update: 10:45 am, with comments from Spiration chief operating officer Greg Sessler.] Olympus plans to retain the entire 50-person staff that Spiration had assembled in Redmond to carry out R&D, sales and marketing, and manufacturing, Sessler says. That includes senior executives like CEO Rick Shea and Sessler. The operation will be re-named Olympus Respiratory America, Sessler says.

The new Olympus respiratory group here in Redmond will be focused on completing enrollment of patients in a pivotal clinical trial, and possibly submitting an application for broader FDA approval next year, Sessler says.

If all goes according to plan, the local operation could continue to grow as part of Olympus, with its greater resources and strategic interest in becoming a player in respiratory diseases. Although many acquisitions end up throwing people out of work, this deal could end up like Gilead Sciences’ acquisition of Corus Pharma, in which the parent company invests significant money in creating a respiratory disease hub in the Northwest, Sessler says. Selling to Olympus gives the Spiration team “staying power,” Sessler says.

“I’m really pleased with the outcome for Seattle,” Sessler says. “The unit will stay intact, and will have more resources, and opportunities for growth as opposed to some other situations we’ve seen with acquisitions in which a company purchases something and moves away.” He added: “We have a long list of technologies we’d love to develop.”

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There was quiet before the storm this week, as Dendreon is eagerly awaiting the FDA’s decision by May 1 on whether it will clear the company’s prostate cancer drug for sale. Buckle your seat belts for that one.

—Accelerator’s microRNA startup, Mirina, has made enough progress in its early days that it has secured an undisclosed “expansion” round of financing led by Versant Ventures. The company says its microRNA drugs are not just more potent than ones being developed by rivals, but they also have “unexpected properties” that should offer another advantage, once it pins down the necessary intellectual property.

—If having a famous investor syndicate were the only key to success, then Qliance Medical Management would be well on its way. The Seattle-based company, which deals directly with patients and doesn’t accept health insurance for primary care medical services, nailed down a $6 million financing from Jeff Bezos, Michael Dell, Drew Carey and others. These guys, no dummies, wrote their checks AFTER President Obama signed the health care reform bill that allows direct primary care services to compete in every state with regular insurance by 2014.

—Spiration, the Redmond, WA-based maker of devices for lung diseases, has collected another $6.5 million in debt financing from a single investor, according to a regulatory filing. Spiration raised $7 million in debt back in September from its partner, Olympus Medical Systems.

—Anybody who works in the local life sciences industry will tell you it can be hard to hold down a steady paycheck. Most drugs and devices fail in development, after all. But Chris Rivera, the president of the Washington Biotechnology & Biomedical Association, says the latest stats show 22,349 people statewide employed in life sciences work, making it the state’s fifth-biggest employer among industries.

—Speaking of WBBA, the local trade association just added a very well-known name to its team—H. Stewart Parker. The founder and longtime CEO of Targeted Genetics is taking on a new role for the WBBA as a commercialization advisor to life sciences entrepreneurs on a part-time basis.

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Spiration, the Redmond, WA-based maker of devices for lung disease, has raised $6.5 million in debt and options from a single investor, according to a regulatory filing. The company borrowed $7 million last September from its partner, Olympus Medical Systems. Spiration’s IBV valve device is designed to cut off air flow to diseased parts of the lung, where air gets trapped in patients with emphysema.

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Venture financing perked up last month, at least for a handful of Seattle-area startups and young companies. VCs and corporate investors poured $76.9 million into five Washington-based companies in September, according to data provided to Xconomy by ChubbyBrain, a New York-based information services company that develops tools for investors, startups, and entrepreneurs. There were also two debt financings worth a total of $8 million.

The total funding of Washington companies, $84.9 million, is up from $51.4 million in the previous month (and that figure included a couple of companies whose headquarters are out of state). But the September increase is largely due to one especially big transaction.

The largest deal by far was Seattle-based Calypso Medical’s $50 million Series E financing, led by Skyline Ventures and Frazier Healthcare Ventures. It’s the biggest venture deal in the Northwest so far this year, and you can read about the story behind the financing here—Calypso has overcome some challenges in the past year. The company makes a medical device that pinpoints radiation in ways that are supposed to help minimize the side effects of prostate cancer treatment.

The September deals were concentrated in medical devices and healthcare, with a few smaller deals in software and tech. The biggest financing in software was Bellevue-based VoiceBox Technologies, which raised about $13 million from corporate investors in Asia, including AutoNavi, Inventec, MiTAC, and the Morningside investment fund. But that money was raised over the course of the past year, with the company officially announcing it in September after a regulatory filing let the cat out of the bag. VoiceBox makes speech recognition systems for cars and mobile applications.

The venture deals (see Table below) were spread evenly among early, mid, and late-stage financings. The only Series A deal was Seattle-based Integrative Diagnostics, which raised $7.5 million for early cancer detection. The company was founded by biotech pioneer Leroy Hood.

In addition to the venture deals, Redmond-based Spiration (which makes a medical device for treating lung diseases) raised $7 million, and Kirkland-based SchemaLogic (which makes software to manage metadata) raised $1 million in a pair of debt financings.

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In the past week, the Northwest has seen its share of debt financings in medical devices and bio-IT, small funding deals and partnerships in Internet software, and mounting interest in an impending IPO.

—Amazon (NASDAQ: AMZN) rolled out a new mobile payments service that lets applications developers and distributors tap into the e-commerce giant’s one-click checkout system on mobile devices. As part of the rollout, Amazon has formed partnerships with mobile content distributors like Kansas City, MO-based Handmark, which sells games, apps, ringtones, and the like. Financial terms were not given.

—Seattle’s Theraclone Sciences formed a partnership with Tokyo-based Zenyaku Kogyo, worth up to $18 million over time, to discover antibodies that could protect millions of people in a flu pandemic, as Luke reported. Under the deal’s terms, Theraclone has given Zenyaku an option for exclusive rights to new flu antibodies in certain Asia-Pacific countries, while Theraclone gets an undisclosed amount of upfront cash and royalties on future product sales in Zenyaku’s territories.

—Seattle-based Omeros, the developer of anti-inflammatory treatments and other biotech therapies, is on the docket to go public this week and raise more than $80 million, as Luke reported. The company is also defending itself against accusations from its former chief financial officer that it filed false records with the National Institutes of Health and then wrongfully terminated him after he reported it to the board’s audit committee under the company’s whistleblower policy.

—Seattle-based Teranode raised $900,000 in debt financing, as Luke reported. The investors weren’t disclosed, although Bellevue, WA-based Ignition Partners has invested in the past. Teranode, a maker of software to organize life sciences labs, was founded in 2002 out of the University of Washington.

—Seattle-based Founder’s Co-op, a seed-stage investment organization, has backed two local Internet startups, Nearlyweds and BigDoor Media. Financial details of the deals were not announced, but Founder’s Co-op says it typically invests $250,000 or less in its portfolio companies.

—Redmond, WA-based Spiration raised $7 million in debt financing out of a $10 million offering, as Luke reported. The financing came from the company’s partner in Europe and Japan, Olympus Medical Systems. Spiration, which makes an implantable device to treat deadly lung diseases like emphysema and chronic bronchitis, has raised about $97 million since its founding in 1999.

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Dendreon watchers got all hyped up in anticipation of the company’s analyst day in New York, but there really wasn’t much in the way of news. So I dug up some other stuff for your reading enjoyment.

—The biggest piece of news out of Seattle-based Dendreon‘s analyst day was that the company says it plans to file its application by mid-November to seek approval from the FDA to start selling Provenge in the U.S. Dendreon (NASDAQ: DNDN) had already said this was coming in the fourth quarter, so this added specificity is nice, but not exactly big breaking news. But the company is still hiring quite a bit, which you can read about how much here in case you missed it.

—Dendreon’s former CEO Christopher Henney has moved on to other endeavors, one of which involves being the chairman of AVI Biopharma (NASDAQ: AVII). So it shouldn’t have been a big surprise when this developer of RNA-based therapies recently moved headquarters from Portland, OR to Bothell, WA, under Henney’s watch. I checked out the company’s new digs in person with AVI Biopharma CEO Les Hudson, who’s enjoying his new surroundings, even while he’s trying to find out how to run the building’s HVAC system.

—ZymoGenetics (NASDAQ: ZGEN) released some bad news first thing Monday morning in an SEC filing, in which it said its partner, Merck KGaA, pulled the plug on a couple of trials for an experimental drug for multiple sclerosis called atacicept. This is just the latest in a string of setbacks for this drug, which was once the shining star in the Zymo pipeline.

—Charlotte Hubbert, a Kauffman Fellow at Seattle-based Accelerator, wrote a downright funny and insightful guest editorial for the Xconomist Forum on her journey from academic science to the supposed “dark side” of biotech and venture capital. I can only imagine what her parents think about the remark she made about hosiery.

—Fate Therapeutics, the La Jolla, CA-based company that counts Xconomist and University of Washington stem cell scientist Randall Moon as one of its big-name co-founders, has been on a growth spurt over the past year, as I discovered on an in-depth tour of the company’s labs.

—Redmond, WA-based Spiration, the maker of a minimally invasive device for treating chronic lung diseases, raised another $7 million in debt financing to keep supporting its work to commercialize the device in Europe and complete a pivotal trial in the U.S.

—Larry Corey, a scientist at the Fred Hutchinson Cancer Research Center and world leader in the quest to develop an HIV vaccine (he’s also an Xconomist), weighed in this week with an editorial about why he’s encouraged by findings of a clinical trial of a vaccine that protected about one out of every three people tested.

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[Update: 1:55 pm, 09/30/09. See below] Spiration, the Redmond, WA-based maker of a device to treat deadly lung diseases like emphysema and chronic bronchitis, has raised $7 million in debt out of a $10 million financing, according to a regulatory filing.

The financing is coming entirely from Spiration’s partner in Europe and Japan, Olympus Medical Systems, according to Spiration CEO Rick Shea. News of the financing was first reported by TechFlash.

[Updated with company comment.] “It’s important to us because this further establishes our relationship with Olympus,” Shea says. “It’s at a point when money is tight, and partnerships are important.”

Spiration won a limited FDA approval last October to start selling its device to a small population of about 4,000 people in the U.S. who have prolonged air leaks after undergoing surgery to remove a diseased part of their lungs. The Spiration device, a tiny implantable valve that doctors use to block off air flow to a diseased region of the lung, is currently being tested in a rigorous trial of 250 patients that will determine whether it is good enough to be used for a much bigger percentage of the 300,000 U.S. patients with chronic obstructive pulmonary disease who might be candidates for the treatment. The market for treating these patients is worth at least $1 billion a year, Spiration has said.

Spiration is looking to complete enrollment in its pivotal clinical trial by the end of this year, Shea says. That study, which directly compares the company’s product to a sham procedure, will follow patients for another six months to see if they perform better on the experimental device. The company is still blinded to results of the study while it is still ongoing, Shea says. He wouldn’t say how long the money should last Spiration.

The company, which has about 50 employees, has raised about $97 million since it was founded in 1999. Its syndicate includes Three Arch Partners, New Enterprise Associates, Sprout Group, InterWest Partners, Investor Growth Capital, GE Capital, Saints Capital, and Japan-based Olympus. Spiration has had a partnership with Olympus since July 2008 to commercialize its IBV Valve System in Europe.

Competition has been following fast behind Spiration in its quest to come up with a minimally invasive alternative to lung surgery for patients with severe emphysema. One of the key technical people from the early days of Spiration, Robert Barry, has since moved on to a cross-town competitor in Seattle called Uptake Medical. Uptake, which raised $3.4 million out of a $13 million equity round earlier this month, uses a method that seals off damaged parts of the lung without leaving behind an implantable device. Uptake hasn’t yet advanced to the final stage of clinical trials.

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Uptake Medical, the Seattle-based developer of a minimally invasive device to treat chronic obstructive pulmonary disease, has raised $3.4 million out of a total equity offering worth $13.3 million, according to a regulatory filing. Uptake is developing a device that’s supposed to seal off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind. It is competing with Redmond, WA-based Spiration, among others. Uptake raised another $3.1 million in debt back in May, according to a regulatory filing.

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Uptake Medical, the Seattle-based company developing minimally invasive technology to treat emphysema, has raised $3.1 million in a debt financing, according to a regulatory filing. Uptake is developing a device that’s supposed to seal off access to diseased parts of the lung where air gets trapped, without leaving any implantable device behind. It is competing with Redmond, WA-based Spiration, among others. The latest round is in addition to the $3 million bridge financing the company raised for its clinical trials in December.

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Uptake Medical, a Seattle-based medical device company, has raised $3 million to carry out a pair of small clinical trials that could show it has a viable technique for treating emphysema, and other deadly lung-obstructing diseases.

The company got the cash as a “bridge” financing to carry out trials in Australia and Germany, which should help it get to the next step of raising a Series B round in 2009, says CEO King Nelson. The company, which has 20 employees in Belltown, raised the capital from all of its previous investors: Prism VentureWorks, Onset Ventures, Arboretum Ventures, GBS Venture Partners, Affinity Capital, and WRF Capital, Nelson says.

Uptake is working on a technique that would let doctors thread a catheter to a damaged part of lung where air gets in, but can’t get out. Uptake’s idea is to deliver a burst of steam water vapor that scars and seals shut airways that lead to the bad part of the lung, allowing the patient to breathe better with the healthy regions of his or her lung. This is a different approach from its regional rival, Redmond, WA-based Spiration, which is developing a tiny valve that can be implanted in the lung to block off air to the diseased part.

“The encouraging sign is that our existing investors are supportive of what we’re doing,” Nelson says. “As you know, the economic environment is very tough now.”

The world of minimally-invasive devices for emphysema has taken a couple steps forward, and one step back since I profiled Uptake’s effort back in July. Spiration won FDA approval of its valve device in a narrow group of patients who suffer prolonged air leaks after they’ve had surgery to remove a diseased part of lung. Another competitor, Broncus Technologies of Mountain View, CA, raised $38 million in a new round of funding earlier this month. But a third competitor, Redwood City, CA-based Emphasys Medical, failed to get a recommendation for its product from an FDA advisory panel earlier this month.

Uptake’s trial in Australia is enrolling 30 patients, and the one in Germany is recruiting about 20, Nelson says. Results should start rolling in during February, with more follow-up data coming three to six months later in 2009. He plans to have talks with investors next month at the JP Morgan Healthcare conference in San Francisco about what to expect from these trials, at a higher dose. If the Australian and Germany trials go well, they should lay the groundwork for a larger round of funding in 2009, and the first trial in the U.S., he says.

The failure of Emphasys should help Uptake learn how to best design its trials to satisfy the FDA’s standards for clinical benefit, and get the statistical significance to prove it’s no fluke, Nelson says.

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The big news of the past couple weeks came before Thanksgiving, when one of Seattle’s biotech pioneers, Bruce Carter, decided to exit stage left. Here is that and other highlights of the past two weeks:

—ZymoGenetics’ charismatic CEO Bruce Carter, 65, has decided to retire at year’s end, and promote Doug Williams to take his place. Carter’s going to stay on as Zymo’s chairman, and serve on the boards of the TB Alliance and Dr. Reddy’s Laboratories, so local biotechies shouldn’t expect him to vanish.

—Targeted Genetics said it is cutting its payroll by 25 percent, through a combination of seven layoffs, deferring salaries of executives, and cutting some of their pay by half. The Seattle biotech company (NASDAQ: TGEN) is actively shopping some of its assets in a bid to stay alive, with just enough cash to operate into the first quarter of 2009.

—Some bona fide good news emerged this week from OncoGenex Pharmaceuticals, the cancer company with headquarters in Vancouver, BC, and Bothell, WA. It said a mid-stage clinical trial of 82 men with prostate cancer found its experimental drug in combination with standard treatment was able to boost median survival times by 10.6 months when compared to the standard drugs alone. Shares of OncoGenex (NASDAQ: OGXI) rocketed up 75 percent on the news.

—University of Washington epidemiologist Laura Koutsky gave a fascinating talk about the pros and cons of HPV vaccines, as part of the local “Science on Tap” discussion series. Koutsky played a pioneering role in the development of Merck’s Gardasil, and she had a few choice words for the evangelicals who argue that the vaccine encourages young girls to be sexually promiscuous.

—Scout Medical Technologies never did much to blow its own horn, but in a where-are-they-now feature piece, I discovered that this medical device incubator (which no longer exists) gave birth to three successful emerging companies in Seattle. Click here to read updates about its descendants—Archus Orthopedics, EndoGastric Solutions, and Cardiac Dimensions.

—Accelerator, the best-known incubator of life sciences companies on the local scene, unveiled its game plan for its latest creation, GPC-Rx. The company aims … Next Page »

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Spiration, the Redmond, WA-based medical device company, said today it has promoted Greg Sessler from chief financial officer to chief operating officer. Sessler takes on the new responsibility two months after Spiration won FDA clearance to sell its first product—a tiny valve that doctors insert to block off air to damaged parts of the lung. The initial approval is for a small group of patients who suffer from air leaks after lung surgery, and the company is working to expand the market through a clinical trial of 250 patients with chronic obstructive pulmonary disease.

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Seattle biotech had its usual highlights and lowlights this week. One local company won its first FDA approval, of a minimally invasive device for lung disease. Another regional bellwether had a clinical trial failure that sent its stock down 29 percent in a day. Lots of politicians were showing up on the innovation scene this week, and if there was a uniform message, I’d say it could be boiled down to this: stay focused.

With that, we’ll help you review the week that was:

—ZymoGenetics had a bad news/good news week. First, the bad: one of ZymoGenetics most important drug candidates, atacicept, was linked to infections in a trial of patients with lupus of the kidneys, forcing that trial to be halted and sparking a 29 percent one-day stock decline. Now the good: ZymoGenetics got Bristol-Myers Squibb to cough up $21 million to settle a patent lawsuit, which gives them a little more cash to weather the current storm.

—Redmond, WA-based Spiration won FDA approval of its first product, a minimally invasive device for patients with complications following lung surgery. It’s not a huge market—fewer than 4,000 patients each year—but it’s certainly a bit of good news for the local medical device sector.

—Amgen is putting its anemia drug woes behind it, with budding excitement over its experimental drug, denosumab. This week, I profiled Amgen scientist Bill Dougall, who is one of the key players in development of this drug for bone cancer uses, in addition to osteoporosis.

—Gov. Christine Gregoire was the headliner at the WBBA’s annual meeting, despite the pressures of dealing with a tight re-election race, and what she called a “dramatic downturn” in the economy. She urged biotechies to stay focused on their goals.

—Politicians were showing up everywhere on the life sciences scene this week. Rep. Jay Inslee gave a fiery talk at the Renewable Energy Finance Forum-West meeting in downtown Seattle. He encouraged renewable energy entrepreneurs and investors to organize a march on Washington in Feburary or March, because a “cavalry” of Democrats will sweep in to the nation’s capital to make changes in energy policy, he said.

—Ikaria had some bad news with its lead drug candidate, INOT27, for premature infants with bronchopulmonary disease. This is different from the sodium sulfide product it’s developing to induce hibernation on demand, which its Seattle group is developing.

—I profiled S3, a startup that aims to deliver research lab supplies faster, cheaper, and in a more environmentally sustainable way. They are pitching a reusable cold storage box that could wean biologists off the standard Styrofoam boxes that get chucked into the landfill.

—Sen. Patty Murray was part of a parade of big-name speakers at the Seattle Chamber of Commerce’s annual leadership retreat at Suncadia Resort last week. She urged leaders in global health to continue doing what they do, and not get distracted by the hard economic times.

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Nine years after its founding, Spiration has gotten its first product cleared by the FDA for sale in the U.S. The Redmond, WA-based medical device maker said U.S. regulators approved its device for patients who suffer from prolonged air leaks after surgery to remove a diseased part of their lungs.

This is the first time the FDA has ever approved a minimally-invasive bronchial valve for the market, says Spiration CEO Rick Shea. The agency gave clearance for the device based on results from 58 patients, which demonstrated that the product is safe and may show benefit for a small patient population of less than 4,000 people in the U.S. The FDA cleared it for that segment of patients under what is known as a “Humanitarian Device Exemption” without having to wait for data from a 250-patient trial that’s expected to last another year, Shea says.

“It’s huge,” Shea says. “For a company like ours, a lot of them don’t ever get to the revenue stage. Now we’re at the revenue stage.”

The Spiration IBV Valve System consists of tiny valves that can be implanted in the airway via a catheter threaded down a patient’s windpipe; the valves block off air flow to the diseased lung, so air doesn’t get trapped there and the patient can better use other parts of the lung that still work. The device can be removed if necessary. It is being tested now in a randomized, placebo-controlled study of 250 patients with chronic obstructive pulmonary disease, a much larger potential market than the group of patients who suffer from prolonged air leaks after surgery. An estimated 16 million people in the U.S. (mostly smokers) have COPD.

The FDA noted in a statement that most air leaks heal on their own after surgery, but when they last longer than seven days, they can increase the length of hospital stays and require additional surgeries to repair. “This valve may ease post-operative recovery of patients undergoing certain kinds of lung surgery,” said Daniel Schultz, director of the FDA’s Center for Devices and Radiological Health, in a statement.

This wasn’t the only big news of the month for Spiration. Its partner in Europe, Olympus, began marketing the IBV Valve System in those markets this month, Shea says.

Spiration has been working closely with regulators on the FDA application for months, but it wasn’t exactly banking on getting this approval, since it’s just the third humanitarian exemption the agency has granted this year, Shea says. So Spiration’s management team needs to huddle over the next two weeks to work on its marketing and commercialization plans, he says. For now, the company plans to market the device on its own for use among as many as 4,000 patients, Shea says. Spiration has about 54 employees now, and will need to hire some additional marketing staff, he says.

The company should have enough capital to continue running the clinical trial in the bigger patient population, although it may need to raise more money for the commercial roll-out in that group, Shea says.

Spiration’s approval gives it the first-mover advantage with a minimally-invasive valve approach, ahead of Emphasys Medical of Redwood, City, CA, Broncus Technologies of Mountain View, CA, and Seattle-based Uptake Medical.

Shea said he’s been making a habit for the past several weeks, when he arrives at work in the morning, to ask Linda Rismondo, Spiration’s head of regulatory affairs, “Did we get approval today?” This morning, the answer was “You bet we did,” Shea related. The approval letter from the FDA was sitting there on the fax machine. It will be a much bigger deal if they get another letter like that in 2010 that says they can market broadly to patients with chronic obstructive pulmonary disease, but this should give Spiration a boost of cash flow that will make it easier to get there.

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