[Update: 4:15 pm] Redmond, WA-based Cerevast Therapeutics has raised $6.6 million in venture capital to develop a new ultrasound technology to treat stroke patients.

The company, led by Icos veteran Bradford Zakes, said today that that it raised the money from seven investors in a Series C preferred stock offering. The round could be worth as much as $15.7 million over time, according to a regulatory filing. The money comes in addition to about $3.2 million from a series of financings the company has put together since it was formed in September 2009, following the purchase of assets from a previous company, ImaRx Therapeutics. The new financing was led by an unnamed “global medical device company” and included angel investors, Zakes says.

Cerevast seeks to use ultrasound waves to help provide an extra bit of oomph to clot-busting drugs that doctors use to treat strokes. As Zakes put it in an interview with Xconomy two years ago, today’s clot-busting technology has its limits. The Cerevast technology uses an automated device, put on the patient’s head, that sends ultrasound waves into the brain to gently jostle the clot so that it loosens up, and allows a clot-busting drug like Genentech’s TPA to fully penetrate the clot and dissolve it. The Cerevast technique is now going to be tested in a worldwide study of 800 patients next year, which will look to see if the new ultrasound device is safe, and whether it can help patients more fully recover from strokes, when compared with people who get the clot-busting drug alone. Stroke is the third-leading cause of death in the U.S., killing 160,000 people each year, and the No. 1 cause of adult disability, according to the National Stroke Association.

Cerevast’s plan is to use the new financing to support the 800-patient trial to help it tap into the European marketplace, and to form the basis of an application for FDA approval of its technology.

“We’ve got a lot ahead of us,” Zakes said.

Cerevast isn’t the only company in the Seattle area using ultrasound as a way to improve the effectiveness of clot-busting drugs. Bothell, WA-based Ekos is developing a system for fighting a different kind of stroke—the kind that comes when a blood vessel ruptures, creating a pool of blood that clots in the brain. The Ekos technology won approval in the European Union back in January for this treatment of so-called hemorrhagic stroke.

The predecessor to Cerevast, ImaRx, used a combination of ultrasound, the standard clot-busting drug, and a microbubble technolgy that was supposed to help further open up the clots. Cerevast chose to drop the microbubble component, because of the regulatory challenge of getting a more complex regimen cleared for sale, Zakes says.

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Tom Clement spent more than a year poking around the University of Washington, looking for the next hot medical device idea to develop after his long run at Kirkland, WA-based Pathway Medical Technologies. And now he’s latched onto a new technology he says could become a low-cost, disposable, and accurate way to diagnose a leading cause of stroke.

The technology is now taking shape at Bellevue, WA-based Cardiac Insight, which is putting the finishing touches this week on a $700,000 financing in Series A preferred stock, Clement says. The company has its license from the UW lab of cardiologist David Linker, and has attracted some well-known directors to its board, including former SonoSite chairman Kirby Cramer and former Physio-Control president Richard Martin. Clement is the CEO, and is now splitting time between Cardiac Insight and another UW spinoff, Aqueduct Neurosciences.

The idea at Cardiac Insight is to develop a new tool for diagnosing atrial fibrillation, or “afib,” which is an irregular heartbeat that affects 2.2 million people in the U.S. each year. This is a hard-to-diagnose condition, since many people with it just feel fatigue. Yet it ends up causing an estimated 90,000 strokes a year in the U.S. among people who weren’t aware of their higher risk from afib, Clement says. There are various devices known as Holter monitors on the market today from big companies like GE, Philips Healthcare, and from startups like San Francisco-based iRhythm. Cardiac Insight is seeking its advantage with a low-cost, convenient device, that’s accurate enough to avoid setting off lots of false alarms.

“Basically this is a super-elegant, 7-day continuous Holter monitor that’s the size of a Band-Aid,” Clement says.

There are a number of problems with the existing technologies for monitoring afib today, Clement says. They depend on electrodes that attach to the chest to pick up the heart rhythm, and sometimes the electrodes are attached to a device that clips onto a belt, making it a bit bulky. Some of the devices record and store heart rhythm data for several days to a week, but then the data needs to be sent to a reading center where expert technicians try to suss out whether the device is picking up a genuine case of afib, or a false alarm, Clement says. Some don’t have much data storage capacity, and are essentially “event monitors” that allow people to push a button when they think something is going on, but which don’t capture the heart rhythm context around that event.

Tom Clement, CEO of Cardiac Insight

Linker, a cardiologist and bioengineer, has sought to come up with a simple way to diagnose afib with a combination of hardware and software. The device gets stuck onto the patient’s chest with an adhesive, like a bandage that’s four inches long and one inch wide, Clement says. Inside that light bandage there is an electrode to pick up the heart rhythm, a flexible circuit board with memory to store data, and software with an algorithm that processes the data. The patient will wear the device for seven days to collect continuous data on the heart rhythm, or maybe a couple of seven-day periods that aren’t back-to-back, to get enough of a sample size to reach a conclusion. When the patient comes back to the doctor, they rip off the device, plug its USB cord into a computer, and upload the data.

Part of Cardiac Insight’s special sauce is in its software algorithm, which is supposed to … Next Page »

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In 2007, New York-based pharmaceutical giants Bristol-Myers Squibb (NYSE: BMY) and Pfizer (NYSE: PFE) formed a deal to develop Bristol’s anti-clotting drug, apixaban (Eliquis). The partnership hit a high point on August 28, when the two companies announced positive results from a Phase 3 trial of the drug in patients with the heart-rhythm disorder atrial fibrillation—data that will be key when they apply for FDA approval later this year.

But an event happening today at the FDA may be equally important to the future of apixaban. An advisory panel to the agency is meeting to discuss rivaroxaban (Xarelto), an anti-clotting drug that Johnson & Johnson (NYSE: JNJ) and Bayer developed. They are hoping to win FDA approval in November to market rivaroxaban to patients with atrial fibrillation.

Both apixaban and rivaroxaban are in a new class of drugs known as “factor Xa inhibitors.” Factor X is one of the enzymes that promotes clotting, so inhibiting it helps to prevent strokes or embolisms—common risks in patients with atrial fibrillation. The two drugs were developed with the goal of offering alternatives to warfarin, a 60-year-old anti-clotting product that can cause dangerous side effects such as severe bleeding.

In an interview yesterday, Jack Lawrence, a VP at Bristol and development lead for apixaban, said he was looking forward to the FDA’s discussion on J&J and Bayer’s competing drug. “There are always learnings in how other sponsors approach the FDA’s questions,” he says. “It will be a fascinating discussion. And sometimes it helps not to be the first to go through that process.”

The FDA review is shaping up to be a painful process for J&J and Bayer. On September 6, the FDA posted a nasty review of rivaroxaban on the Web, the upshot of which was to … Next Page »

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Incubator, schmincubator. The innovation community has had its fill of incubators and accelerators, hasn’t it? Well, this one is a little different.

As echoes of Commencement speeches die down around town, it’s fitting that the 12-week startup bootcamp known as TechStars Boston is graduating its newest class of companies tomorrow. What’s interesting about this group—compared with the two previous Boston classes, and indeed, other TechStars classes from Boulder, Seattle, and New York—might be its diversity across industry and geography, and its potential to bring fresh talent to the area.

The 12 companies presenting to investors and media at tomorrow’s Demo Day in Boston range in sector from mobile/social gaming (The Tap Lab), online promotions (Promoboxx), and alumni networking (EverTrue), to health and wellness (Ginger.io) and medical devices (Strohl Medical). Their founders come from Israel (Senexx), England (Memrise), and Estonia (GrabCAD, which just announced a seed-financing round); as well as Wisconsin (Student Spill), Tennessee (Help Scout), Texas (Kinvey), and the Boston area (the rest). I’m hearing that several of the teams from outside are planning to stay local, which should help Boston’s talent pool.

The group’s diversity is notable because tech incubators tend to draw most of their talent from founders who are already based locally—and they tend to focus on Web and social/mobile software to the exclusion of other fields like healthcare or hardware. There is still plenty of Web and mobile in this year’s crop, but its variety of startups stands out for a small incubator.

As does the group’s camaraderie, if you listen to the program’s leader. “The amount of support and help they’ve given each other, that’s really been fun for me to watch,” says Katie Rae, managing director of TechStars Boston. She calls the group “stunningly close.”

The narrative arc of a TechStars company is a classic hero’s journey—complete with a call to action, meetings with mentors, a series of tests and conflicts, and a resolution and reward. Yet this year’s companies did not enter the program as a wide-eyed or naïve bunch.

“We were skeptical about incubator programs. There’s a ton of them popping up everywhere,” says Karan Singh, co-founder of Ginger.io, which develops software for tracking people’s health and wellness by interpreting communication and movement patterns gleaned from their mobile phones. The algorithms are based on research done at the MIT Media Lab. While Ginger was already in Boston prior to TechStars (at Dogpatch Labs), Singh, an MIT Sloan MBA, is another example of imported talent—he came from the Bay Area after graduating from UC Berkeley.

Partly through TechStars, Singh says, he has learned that the key to building a business … Next Page »

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South San Francisco-based Portola Pharmaceuticals said today that Merck has agreed to return the full commercial rights to betrixaban to Portola. The drug is designed to stop excessive blood clotting to prevent strokes in patients with an abnormal heartbeat known as atrial fibrillation. Merck said it made the decision to part ways with the drug after a review of its portfolio. Portola CEO William Lis said in a statement that the move represents a “transformational opportunity,” for Portola.

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PhysioSonics, a University of Washington spinoff developing ultrasound imaging technology to monitor blood flow in the brain, has raised its second round of equity financing. The deal was led by medical device giant Medtronic (NYSE: MDT) and the prominent local investor Kirby Cramer, Xconomy has learned.

Brad Harlow, the CEO of Bellevue, WA-based PhysioSonics, says his company has closed its Series B round of equity financing. He isn’t disclosing the size of this financing, but says it’s in the “multi-millions,” yet is smaller than the $8 million he raised in his Series A round. The company plans to use the cash to complete development of the PhysioSonics ultrasound technology, hire another 10 people to boost its staff to about 15 people, and hopefully win FDA clearance in the next 12 to 15 months, Harlow says.

“This is really a capstone event for us,” Harlow says.

While Medtronic and Johnson & Johnson—two traditional acquirers of medtech startups—have both invested in PhysioSonics, not a single dollar from a VC firm has gone into the company, Harlow says. Most venture capitalists have lost the hunger they once had to get in on the ground floor with cutting-edge medical devices, and can’t stomach the tribulations these companies often experience with the FDA, and with insurance reimbursement. So Harlow, who previously worked in investment banking, tapped his network of big strategic investors.

Cramer, someone you could call a local super angel for medical technology, met Harlow for the first time last June. They met and talked about PhysioSonics through a meeting of Wings, the new Seattle-area angel investing network for medical device startups. Cramer already had a deep understanding of ultrasound through his experience as the longtime chairman of Bothell, WA-based SonoSite (NASDAQ: SONO). Cramer also helped connect Harlow with other angel investors who ended up putting money in the deal, Harlow says.

Cramer says he followed up on the first meeting with Harlow, by meeting the scientific founders of PhysioSonics—Michel Kliot, Pierre Mourad, and Bob Frederickson. He says he liked what he heard.

“A blind man could see they are very talented people with a great idea!” Cramer wrote in an e-mail. He liked the combination of its intellectual property, and its big corporate partners. “After doing further due diligence, I decided to lead a group of private investors to take PSI [PhysioSonics] to the next level. They are all sophisticated investors who are well experienced in medical device investing. This confirmed my belief that this is a terrific investment opportunity.”

The PhysioSonics technology, as I described in a story back in June 2009, could be used to help doctors and nurses monitor a stroke patient for signs of complications in an easier, more automated way than can be done with today’s ultrasound.

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Natick, MA-based medical devices maker Boston Scientific has expanded its cardiovascular products business with the purchase of Atritech, a Plymouth, MN, developer of a device alternative to treating patients with atrial fibrillation who are at risk of stroke, the company says today. Boston Scientific (NYSE:BSX) is paying $100 million upfront for Atritech as up to $275 million in regulatory and commercial milestone fees through 2015, according to Boston Scientific. Atritech’s device is cleared for sale in Europe and but is still in development for the U.S. market.

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The conventional wisdom about stroke victims is that after about 12 months of rehabilitation aimed at restoring motor control, recovery levels off. Patients never regain more movement, never get beyond whatever plateau they’ve reached by that time.

But there’s a company in Sunnyvale, CA, that may be proving otherwise. Tibion makes a robotic, battery-powered exoskeleton—in effect, a wearable bionic leg—that’s helping stroke victims make significant gains long after other therapies have stopped working.

The Tibion leg isn’t something stroke patients wear continuously. It’s meant as a new tool for physical therapy clinics, where patients with one-sided weakness, or hemiparesis, wear the device for 15 minutes at a time, three times a week. Only a few hundred patients have used it so far, but after just 12 sessions with the device, most patients studied have gained significant walking speed. One patient improved from 0.6 meters per second to 0.8, another from 0.8 to 1.0. (A normal walking speed is about 1.2 meters per second). Most importantly, these gains held—and, indeed, seemed to unleash further recovery. Six months after his sessions with the Tibion leg, the patient who had reached 0.8 meters per second had accelerated to 0.95 meters per second, according to Charles Remsberg, a veteran of the medical-device industry who joined Tibion as CEO in 2009.

It took some ingenious engineering simply to make the Tibion leg powerful enough to lift someone out of a chair, while still being compact enough to wear. But the company thinks that a different feature is what makes the device so effective at spurring motor recovery: sensors that allow the device to respond to patients’ intentions.

Strokes damage the neural pathways in the brain responsible for executing motor movements—meaning that “All the thinking in the world that ‘I am going to use my leg’ will not allow an affected leg to support you in standing,” as Remsberg puts it. But a pressure sensor placed inside a patient’s shoe and attached to the Tibion leg’s electronics can detect even a slight shift in weight—the first stage in standing up from a sitting position or taking a step. Such a shift triggers the robotic leg to extend, raising a patient up or swinging their leg forward. And this movement provides proprioceptive feedback that, over time, helps patients’ brains rewire themselves, so that they are eventually able to carry out the motion on their own.

At least, that’s the theory. “I can’t tell you for a fact, but the hypothesis is that we are amplifying residual intention,” says Remsberg. “This allows for an intensive level of training, which appears to capitalize on neuroplasticity, the ability of the brain to rewire around regions destroyed by stroke.” (Remsberg expands on this idea in the video on page 3.)

If larger studies prove that the device is as effective as the early results seem to suggest, Tibion exoskeletons could become standard equipment at the 15,000 skilled nursing facilities and 2,000 rehabilitation hospitals in the United States. And that could be big business for Tibion, which raised Series A funding from Oakland, CA-based Claremont Creek Ventures in 2006, as well as a $3 million “Series A extension” this May. (Remsberg himself contributed to the May round, and is the startup’s third largest shareholder.) The list price of a Tibion leg is $40,000, but the company rents them out for $700 to $1,000 per month, depending on … Next Page »

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It’s keep-your-fingers-crossed time for the people at Arch Venture Partners and the Fred Hutchinson Cancer Research Center in Seattle. Both organizations have millions of dollars at stake in the upcoming initial public offering of Ikaria.

Ikaria, a Clinton, NJ-based company developing futuristic “hibernation-on-demand” technology with roots at the Hutch, is hoping to cash in on its promise next week. The company is seeking to sell 10 million shares to IPO investors at a proposed range of $15 to $17 next week, according to Renaissance Capital. The deal could bring in as much as $195 million if Ikaria can command the high end of its price range, and underwriters like Goldman Sachs and Morgan Stanley exercise their right to buy another 1.5 million shares, according to a filing with the Securities and Exchange Commission.

If Ikaria can pull the trigger on this deal, it will be a windfall for Arch, the largest life sciences venture investor in Washington state. Arch, one of the founding investors in Ikaria back in 2005, has 3.5 million shares the company, which will be equal to a 7.8 percent ownership stake once the IPO is complete, according to the most recent SEC filing on October 26. If Ikaria prices its IPO at $16, or the mid-point of its proposed range, then the company will have a beginning market capitalization of $711 million, and Arch’s stake will be worth about $56 million, according to my calculations based on regulatory disclosures.

Neither Arch nor any other venture investor in Ikaria will be able to cash out immediately because it is prohibited from selling any shares for at least 180 days, as part of a typical “lock-up” agreement.

This transaction is in the midst of an SEC-mandated quiet period, so Arch’s managing director in Seattle, Bob Nelsen, said he has no comment. Same goes for Ulrich Mueller, the vice president of technology transfer at the Hutch.

It’s much harder to pin down the exact stake the Hutchinson Center has in the Ikaria IPO, but it’s clearly smaller than Arch’s. The Hutch, and Ikaria’s scientific founder Mark Roth, aren’t listed in regulatory filings among Ikaria shareholders who have a 5 percent ownership stake or greater.

Mark Roth

Still, the Hutch has got to have high hopes for this deal. The Seattle-based cancer research center received 807,500 shares of common stock in Ikaria, plus 142,500 shares of preferred stock, when it was originally spun out of the center in 2005, according to an exhibit attached to the Ikaria investor prospectus. It’s unclear based on my reading of the SEC documents how many shares the Hutch still has, or what percentage that represents today. The company did complete a one-for-2.72 reverse stock split on October 25 as it made final preparations for the IPO, which means that pre-IPO holders will have about one-third as many shares as they did before the split.

Plenty of well-known individuals around Seattle have stakes in this deal. Roth, the scientific founder, was granted 2,187,790 shares in the original Hutch license agreement in 2005, according to a regulatory filing. Ben Shapiro, a former executive vice president at Merck, and a former member of the Ikaria board, had 5,000 shares of preferred stock after the Series A venture financing. Steve Gillis, a managing director at Arch and the co-founder of Immunex and Corixa, held … Next Page »

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Natick, MA-based Boston Scienfic is getting out of the neurovascular business. The medical devices giant (NYSE:BSX) said today it has agreed to sell the business to Kalamazoo, MI-based Stryker (NYSE:SYK) for $1.5 billion in cash. The deal is expected to close before the end of the year, according to the companies.

Boston Scientific said it plans to use about half of the $1.2 billion in after-tax proceeds of the sale for acquisitions and the remainder for retiring debt. Stryker has agreed to pay Boston Scientific $1.4 billion for the business at the closing of the deal and the remaining $100 million after the closing based on certain milestones, including the commercial launch of the business’s new Target detachable coils for treating hemorrhagic stroke.

Boston Scientific’s neurovascular business is based in Fremont, CA, and had 2009 revenue of $348 million. The unit employs 1,150 people. The company first acquired the business in 1997 through its purchase of Target Therapeutics. That deal was valued at $1.1 billion.

Stryker said it has tapped Mark Paul, the current president of Boston Scientific’s neurovascular business, to continue to lead the unit after the acquisition closes. The business is a leading provider of medical technologies such as detachable coils, stents, and guidewires used in the treatment of neurovascular diseases.

“The sale of our Neurovascular business is part of our overall strategic plan that will refocus our portfolio to, amongst other criteria, leverage existing sales forces with least invasive, cost and comparatively effective medical devices that reduce or eliminate refractory drug regimens,” said Ray Elliott, Boston Scientific’s president and CEO, in a press release.

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Now I say this for sure, I’m not going to drop dead from a heart attack anytime soon.

Sure, I’ve seen the doctor before and had all the usual heart disease tests done—cholesterol counts, measurements of fat in the blood (triglycerides), blood pressure, the old-fashioned family history. But now I got some unequivocal signs on a high-resolution screen, which I could see in real-time, about how my arteries looked during an ultrasound scan at Bothell, WA-based SonoSite (NASDAQ: SONO).

SonoSite is pitching doctors on using ultrasound as one more tool in the endless battle to help predict, and possibly prevent, life-threatening cardiovascular events. The company is urging primary care doctors to use its portable ultrasound imaging machines to look inside a couple of arteries, to see precisely just how much plaque is building up there.

The company is so pumped about what this test can do, it invited me over to its offices last week to experience it firsthand. Even though I’m not personally worried about having a heart attack or stroke, and I certainly wouldn’t spend my own time and hard-earned money on such a test, I figured I’d give it a try because so many people are curious. Pfizer’s cholesterol-lowering drug atorvastatin (Lipitor) became the world’s best-selling drug with more than $12 billion in annual sales based on the notion that it could help people lower their risk of cardiovascular disease beyond improving their diet and exercise. In a country where junk food and the sedentary lifestyle rule, there are plenty of doctors looking for ways to strike genuine fear into patients with a new, more visual way of illustrating serious health risks. An estimated one in three people die from cardiovascular disease.

“There’s a whole community in medicine now that is serious about wanting to help people avoid a heart attack,” says SonoSite CEO Kevin Goodwin.

Kevin Goodwin

The test, which has actually been around a few years, is what’s called the Carotid Intima-Media Thickness (CIMT) exam. This is a measurement of the two inner layers of the carotid artery—an artery on each side of the neck that supplies the brain with blood. Studies over the past 20 years have shown that a thickening of this arterial wall can be an early sign of heart disease risk, at least when people are compared with peers of the same age, race, and gender.

SonoSite’s idea is to make this test fast and easy enough so that a primary care physician can incorporate it into his or her ordinary workday. SonoSite sells the doctor a $4,000 software upgrade, loaded with algorithms to analyze data on arterial thickness, and installs it on one of the company’s portable ultrasound machines. The exam itself usually takes 10 minutes or less.

Sharon Hall, one of the company’s sonographers, showed me how this works inside an exam room at the company. She ran the ultrasound probe along the right side of my neck, and then … Next Page »

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Innovation stories don’t get more local than this. A local medical device company provides an innovative tool to a local doctor, who gets money from local taxpayers to test the idea. And, before you dismiss this as some irrelevant insider-y project, an independent expert from Boston has said publicly that this Seattle collaboration may transform the way doctors treat a common type of stroke.

This new technology for the treatment of hemorrhagic stroke is the product of a partnership between Bothell, WA-based Ekos, neurosurgeon David Newell of the Swedish Neuroscience Institute in Seattle, and a $170,000 grant from Washington state taxpayers via the Life Sciences Discovery Fund.

The idea is to treat burgeoning clots in the brain sort of like how clots are treated in other parts of the body. Ekos is known for having developed a miniature ultrasound probe that slithers inside blood vessels, and gently amplifies clot-dissolving drugs. The hope is to get rid of clots faster, which ought to help people live healthier lives after they get out of the hospital. The company markets this tool for people with clots in the legs, known as deep vein thrombosis, and it is trying to expand into a broader patient population of people with dangerous clots in the lungs, known as pulmonary embolisms.

But Newell, and Ekos, saw another group of gravely ill patients who might benefit—those who suffer from hemorrhagic strokes. This is what happens when a blood vessel ruptures in the brain (usually from uncontrolled high blood pressure), which creates dangerous swelling and clots. About 100,000 patients in the U.S.—one-fifth of all stroke patients—are diagnosed with this form of stroke every year. While doctors sometimes try to surgically remove the squishy new clot, the disease is fatal about half of all cases, Newell says.

David Newell

There is no effective treatment for hemorrhagic stroke, although some evidence has emerged lately to suggest that clot-dissolving drugs like Roche’s genetically engineered tissue plasminogen activator (t-PA) can be effective. That made Newell and his colleagues wonder: What if you added the gentle pulsating waves of the Ekos ultrasound probe to loosen up the clot, and help t-PA do a better job? Could that save lives, and precious time to help survivors avoid disabling brain damage?

No one had ever tried to combine ultrasound inside the brain with clot-busters before, but the results opened the eyes of a number of physicians last month at the American Heart Association’s International Stroke Conference in San Antonio, TX.

“We got a very enthusiastic response,” Newell says. The moderator of the session, Lee Schwamm, the vice chairman of neurology at Massachusetts General Hospital, said to the audience after Newell’s talk that the Ekos system is a potential “paradigm shift.”

It must be stated that this is all very preliminary. And before diving into the details that caught Schwamm’s eye, I should be clear about who stands to gain here and who doesn’t. About 80 percent of all strokes in the U.S. every year are what are known as ischemic strokes—which is totally different from the hemorrhagic variety. Ischemic strokes arise when … Next Page »

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I’ve heard about serial entrepreneurs who start a company, build it up to a certain point, sell it to someone bigger, and then repeat the whole cycle again. But I had never heard of a true biotech sequel until I met Randall Woods a couple weeks ago.

Woods is the CEO of San Diego-based Sequel Pharmaceuticals, and a well-known entrepreneur who’s also the chairman of Biocom, the local biotech trade association. The two-year-old startup is literally the sequel to his previous company, Novacardia, a company that Woods led until it was sold for $350 million to Merck on Sept. 6, 2007.

Sequel came less than 24 hours later. The same nine employees, in the same office, with the same management team, and the same board (except for one), set their sights on a new goal. The idea was to take a drug in the early stage of development, steer it to the later stage of trials until the concept is more proven, and then sell it for a bundle to big drugmaker. Novacardia took a drug into pivotal studies for congestive heart failure, then passed the baton to Merck for the final phase of development. Sequel aspires to do the same thing with a different drug for a different heart ailment—atrial fibrillation.

“We didn’t even have a 24-hour break,” Woods says. “We just changed the sign on the door.”

This group of people clearly has skill in cardiovascular disease, so it knows something about the new problem. Atrial fibrillation is an abnormal heart rhythm that can cause acute attacks, or a chronic condition whose symptoms include shortness of breath, chest pain, or stroke.

Randall Woods

About 2.2 million people in the U.S. are estimated to be affected, and it caused 470,000 people to be hospitalized in 2003, according to the American Heart Association. The incidence is thought to be increasing as the Baby Boomers get older. There haven’t been many new developments in treatment either, except Sanofi-Aventis’ dronederone (Multaq), which first won FDA approval in July. That drug showed it could reduce hospitalizations from cardiovascular disease and deaths from all causes by 24 percent when compared to a placebo. Other than that, patients sometimes take beta-blockers to slow down their heart, or warfarin to thin their blood, Woods says. Another treatment from Vancouver, BC-based Cardiome Pharma is seeking FDA approval.

Sequel’s drug, called K201, is designed … Next Page »

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Perhaps it’s a sign of the “coolness” of medical device technology in San Diego. Fresh on the heels of Philips Electronics’ purchase of San Diego-based InnerCool Therapies, which uses cooling therapies to treat patients, BeneChill says it has raised $13.5 million in a Series C round of venture funding. In its statement, BeneChill says a new investor, HealthCap of Stockholm, Sweden, led the financing and existing investors MedVenture Associates and NGN Capital also participated, along with the Solon Foundation.

BeneChill says proceeds will be used to fund early commercialization of the company’s RhinoChill, a portable medical device that uses a catheter to deliver a proprietary coolant to nasal passages. Induced hypothermia is currently used in hospitals to treat patients with cardiac arrest, stroke, or head injury. Because the RhinoChill device is portable and requires no external power source, the San Diego company says it is targeting emergency field settings for the product. European health regulators approved RhinoChill in 2007 for use in European Union countries.

BeneChill says it recently completed a randomized study of RhinoChill in cardiac arrest patients, which is intended to show whether the addition of intra-nasal cooling during field resuscitation improves the outcome for people suffering a heart attack in comparison to hospital-based cooling. BeneChill says results of the study will be announced at the American Heart Association’s Scientific Sessions in Orlando, FL, in November. If the results are positive, the company presumably will seek FDA approval.

Founded in 2004, BeneChill is developing its non-invasive patient cooling applications for field and ambulance care, emergency rooms, and general hospital operations.

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Walk into a hospital with the telltale symptoms of a stroke, and chances are you’ll get something called a transcranial Doppler ultrasound test. This tool uses ultrasound waves to look inside the brain, noninvasively, to see how fast blood is flowing.

What’s important about that? It’s a useful technique to see whether a clot or piece of scar tissue is gumming things up, potentially causing trouble. The same goes for examining people with head injuries from car accidents, or to check if you are recovering well, or not, from brain surgery.

Any standard ultrasound machine can do this procedure, but it takes a skilled ultrasound technician between 5 and 15 minutes to get a single snapshot of data. What if you could make an automated machine that continuously monitors trends of blood flow in the brain for hours at a time? Wouldn’t that cut down on labor costs, and probably give you a more accurate set of data points to analyze how a patient is doing? Would it be easy enough to take readouts before and after surgery, or before and after drugs are given, to see how well treatment really worked?

That’s the concept driving Bellevue, WA-based PhysioSonics. This company is developing the first tool that’s supposed to give that automated, continuous recording of brain blood flow in the hospital. The company made news a year ago when it received a $4 million investment led by Johnson & Johnson Development Corp., and this month it secured some more financing along with a second strategic partnership with a large, unnamed healthcare company, says CEO Brad Harlow. PhysioSonics isn’t saying much yet about how much proof it has amassed behind this concept, but the company is now making the machines, and is preparing to apply for FDA approval to sell them.

“This will make it so you don’t have … Next Page »

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PhysioSonics, the Bellevue, WA-based developer of ultrasound technology for monitoring blood flow in the brain for patients with stroke or traumatic brain injury, has raised $2 million in equity out of a $4 million offering, according to a regulatory filing. The company, a University of Washington spinout, is led by CEO Brad Harlow. It raised $4 million last June from Johnson & Johnson Development Corporation. It lists Harlow, Robert Frederickson, Lauren Pflugrath, and Scott Moonly as directors.

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Boston-based medtech startup Myomo has cut its staff by 66 percent and adopted a more virtual business model over the past year, due to slower-than-expected initial sales of its highly acclaimed robotic elbow brace for stroke victims, company co-founder and interim CEO Steve Kelly tells Xconomy.

Kelly says that the angel-funded startup “hit a wall” financially toward the middle of last year, prompting the company to trim its ranks from a dozen to four full-time employees last spring and summer. Also, past company CEO Thomas Glover—a former executive at medical products giant Johnson & Johnson (NYSE:JNJ)—resigned from his post at Myomo last summer, at which time Kelly took over as interim chief executive. Nearly two years since the FDA cleared Myomo’s robotic elbow brace for use in hospitals, only three medical centers have purchased the devices, Kelly says. He adds that the devices are in use at clinics in the Boston and New York markets, and the firm plans to add Hartford to that list in the near future.

“I’m a little disappointed—I thought we would be in more metropolitan areas right now and we’re not,” Kelly says. “That’s partly a function of the economy and the fact that [healthcare] is a conservative industry where things don’t get adopted quickly.”

Myomo‘s technology, initially developed at MIT, is indeed new to healthcare practitioners. The firm’s first and highly acclaimed product, called the “e100 NeuroRobotic System,” is an elbow brace equipped with electrodes that pick up electrical signals on the skin when a patient is trying to move a partially paralyzed limb. The system translates the signals into movements. And even though the technology has brought the startup awards from MIT and Popular Science magazine, rehab clinics that the company has initially targeted for sales have been slow to adopt the device. The $7,500 cost of the system has not yet garnered U.S. insurance reimbursement, and clinics that purchase the FDA-approved device don’t necessarily get reimbursed more for providing therapy with the product than they would without using it.

Still, Kelly says he is pleased that his company chose to reduce its expenses and adapt to a virtual model with outsourced manufacturing and engineering before the economic meltdown in late 2008, when many companies were forced to abruptly lower costs and adjust to operating with fewer employees. (He says that Myomo has raised less than $5 million from himself and other angel backers, but he declined to provide further financial details.)

Myomo has ambitious plans to … Next Page »

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It was a very quiet week for deals in the Northwest, with just a trickle of activity in software, security, and biotech.

—Seattle-based Haute Secure, a software firm focused on computer security against malware, raised about $1.6 million in Series A funding. Investors in the round included Silicon Valley firms Baseline Ventures and Sherpalo Ventures.

—LookStat, a Seattle-area startup that makes software for analytics and workflow automation for the microstock photography industry, has received an investment from Founder’s Co-op, a Seattle-based seed-stage fund. (The news was mentioned in passing by investor Andy Sack at a financing talk.) The amount of the investment and the closing date weren’t announced, but Founder’s Co-op tends to invest between $250,000 and $500,000 in early-stage tech companies.

—Luke reported that Seattle-based VPDiagnostics received a $2.9 million grant from the National Institutes of Health to run a clinical trial of its MRI technology for determining a patient’s risk of stroke. The technology is based on 15-plus years of research at the University of Washington.

—Seattle-based Second Avenue Partners renewed its investment in Fanzter, a Collinsville, CT-based new media company. The $2 million Series B financing round was led by Steamboat Ventures. Fantzer, which was also backed by Seattle investors Curious Office Partners and Rich Barton (from Zillow), runs a celebrity website called Coolspotters.com.

—Seattle startup TrafficGauge, a provider of road traffic information in real time, was acquired by Networks In Motion, a mobile navigation and search company based in Aliso Viejo, CA. Financial terms were not disclosed. TrafficGauge first rolled out a mobile traffic map in Seattle in 2003.

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It was another busy week in Seattle life sciences, with some good news from the nonprofit side, and some bad news from the public-traded biotechs.

—Xconomy had the exclusive story this week on how Merck’s Stephen Friend is forming a new nonprofit in Seattle called Sage that hopes to spark an open-source biology movement to make better drugs. Friend, with co-founder Eric Schadt of Merck, has raised the initial $5 million in seed donations, and formed initial collaborations with the Fred Hutchinson Cancer Research Center, the University of Washington, and Yale University.

–Seattle-based Arzeda, the maker of designer enzymes emerging from the lab of University of Washington biochemist David Baker, told Xconomy in another exclusive about how it has secured commitments from OVP Venture Partners and WRF Capital to anchor its $12 million Series A venture round. It plans initially to make enzymes to protect crops from herbicides, and then pursue higher-difficulty projects like biodegradable plastics and cellulosic biofuels.

—Cell Therapeutics (NASDAQ: CTIC), aiming preserve its remaining cash, said it is closing its animal testing facility in Italy and laying off 62 workers there. It still has about 122 employees in Seattle, a spokesman says.

—Seattle Biomedical Research Institute secured a $2.3 million grant from PATH’s Malaria Vaccine Initiative to narrow down a list of promising candidates for malaria vaccines. I got the inside scoop from the Malaria Vaccine Initiative’s Ashley Birkett on why PATH is so high on the work happening down on Westlake Avenue.

—Targeted Genetics (NASDAQ: TGEN) said this week it is conserving cash for a few more months, by transferring its manufacturing know-how of AAV viruses for delivering gene therapy drugs to contract manufacturers. It says it now has enough money to operate through the first half of 2009.

—Life sciences isn’t completely about new drugs and medical devices. This week, we put together a list of more than 80 cleantech players in Washington, which includes a few people using sophisticated biology to pump out industrial quantities of renewable fuels. The list actually reflects a lot of diverse technology ideas, from life sciences through IT.

—VPDiagnostics, a Seattle-based company that spun out of research at the University of Washington, said it secured a $2.9 million grant from the National Institutes of Health. The grant will be used to run a 300-patient clinical trial that will look at how well the company’s MRI-based technology does at predicting when patients are at high risk of having a stroke.

—I listened to an update from the Biotechnology Industry Organization’s lobbying team in the other Washington (DC), led by president Jim Greenwood. The news is pretty grim, as about one-third of all publicly traded companies have less than six months of cash on hand. The political environment doesn’t sound favorable to companies either, as perennial issues like universal healthcare coverage and the advent of cheaper generic biotech drugs appear to have a chance at becoming law.

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Seattle-based VPDiagnostics has secured a $2.9 million grant from the National Institutes of Health to run a clinical trial of its MRI-based technology for determining whether patients are at high risk of stroke. The trial is expected to enroll about 300 patients, and will track them for 18 months, says Mike Hartmann, vice president of business and product development. The technology is based on more than 15 years of research at the University of Washington.

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