Obesity is one of the biggest public health problems of the 21st century, and now a Boston biotech startup is looking to fight it in an unorthodox way. The bet at Ember Therapeutics is that it can coax the body to burn off some of that unwanted fat.

The company is emerging from stealth mode today with a $34 million Series A financing from Boston-based Third Rock Ventures. The idea is to make drugs that take advantage of some of the new understanding about “brown fat,” a type of tissue that helps mammals to burn off the more familiar “white fat” tissue that stores excess energy. The company has recruited some big name advisors from the brown fat field, including Bruce Spiegelman of the Dana-Farber Cancer Institute, Patrick Griffin of The Scripps Research Institute in Florida, and Ron Kahn of the Joslin Diabetes Center.

Ember (not to be confused with the Boston wireless sensor network firm with that name) is being born during a rough time for the obesity drug business, as public companies like Arena Pharmaceuticals (NASDAQ: ARNA), Orexigen Therapeutics (NASDAQ: OREX), and Vivus (NASDAQ: VVUS) have all failed to win FDA approval for new weight loss drugs. Regulators have often cited underwhelming effectiveness, along with various safety concerns for pills that have potential to be taken by millions of people with a condition that isn’t immediately life-threatening. But obesity does lead to a wide variety of expensive, chronic health problems like diabetes, heart disease, arthritis, and depression. The potential market for an effective new weight loss drug is huge, as an estimated one-third of U.S. adults are obese and another one-third are considered overweight.

Lou Tartaglia

Third Rock’s bet is that it can come up with a more effective alternative through this new biology that seeks to help people burn off excess calories, rather than more traditional approaches that seek to work on the central nervous system by suppressing appetite.

“We can’t wait to get going,” says Third Rock partner Lou Tartaglia, the interim CEO of Ember.

Scientists have long known that newborns have a lot of brown fat, which is loaded with mitochondria that expend energy, and release heat to keep them warm. Most of this tissue disappears as people grow up, and adults begin to accumulate more “white fat” which stores excess energy from food we eat. But recent discoveries using positron emission tomography (PET) scans have shown that adults do retain some small amounts of brown fat tissue (usually along the back) which sends signals to burn excess white fat, Tartaglia says.

What’s interesting from a pharmaceutical perspective is that scientists have now identified biologic pathways that suggest it could be possible to “recruit and augment” the brown fat tissue that’s already operating in the body, Tartaglia says. Ember, which takes its name from … Next Page »

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Fate Therapeutics has been quiet during a down time for the stem cell business, but now it’s making news by luring a big name into its inner management circle.

Bill Rastetter, the CEO of Idec Pharmaceuticals during its long journey to develop the blockbuster lymphoma drug rituximab (Rituxan), has agreed to become the chairman and interim CEO at San Diego-based Fate Therapeutics. Besides being CEO of Fate, Rastetter will remain busy wearing his other hats as a partner at Venrock Associates (an investor in Fate), and through his work as chairman of Illumina (NASDAQ: ILMN), Neurocrine Biosciences (NASDAQ: NBIX), and Receptos.

But the new job at Fate, Rastetter says, will be “my major time commitment.” Fate’s executive chairman, John Mendlein, will now become the vice chairman of the board, and will oversee “scientific excellence” at the company as the chairman of the scientific advisory board, Rastetter says. Mendlein is also executive chairman and CEO of San Diego-based aTyr Pharma. Mendlein replaced Fate’s previous CEO, Paul Grayson, who left the company in February.

“We snagged an industry legend to take Fate that much closer to patient reality,” Mendlein said via e-mail. “Bill has done what few have done before – start and create a biotech to deliver one of the most important medicines today.”

Stem cells have excited scientists for years because of their ability to morph into virtually any type of cell in the body, raising the potential for regenerative medicines against a wide variety of today’s untreatable diseases. Still, no pharmaceutical company has brought forward an FDA-approved medicine based on embryonic stem cells, and drug companies haven’t shelled out big bucks to form alliances with startups working on these types of therapies, or to use the technology to improve the drug discovery process. Last month, a bellwether of the field, Menlo Park, CA-based Geron (NASDAQ: GERN) said it was getting out of the stem cell business altogether so it could focus on cancer drug development.

None of that seemed to deter Rastetter.

“Fate reminds me a lot of Idec back in the early antibody days,” Rastetter says. “I’ve always been very intrigued by new technologies deployed at the right time. I think stem cells are here to stay, and now is the time to invest in them. I’m very excited about the scientific and commercial opportunity here. There’s a passion and cohesion here with the team. I feel energized when I sit down with these guys.”

Bill Rastetter

Fate was founded in 2007 to capitalize on leading-edge stem cell science at Harvard University, Stanford University, the University of Washington, and The Scripps Research Institute. It has raised more than $50 million in venture capital from a group of VCs that includes Arch Venture Partners, Polaris Venture Partners, OVP Venture Partners, and Venrock, as well as Takeda Ventures, Astellas Venture Management, Genzyme Ventures, and one more unnamed company.

Fate announced the addition of Rastetter a day after it released some preliminary clinical trial results from its lead drug candidate, Prohema, formerly known as FT-1050. Instead of injecting embryonic stem cells into the body and hoping they will morph properly into a desired cell type, this program is designed to be much less risky, by operating in a controlled lab environment. The company uses a small molecule to treat umbilical cord blood in a laboratory, in order to coax it to produce more blood-forming stem cells that can then be transplanted into leukemia and lymphoma patients. Many patients with those blood cancers get intense chemotherapy or radiation that wipes out both their cancer and their blood cells, so researchers are constantly looking for safe and effective ways to reconstitute a patient’s bone marrow and immune system.

The data is from a small study, although it suggests … Next Page »

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It was another big week for life sciences news in San Diego, with interesting developments in agricultural biotech, industrial biotech, and genomic sequencing. This is our wrap up of what you need to know.

—San Diego’s Synthetic Genomics spun out a new San Diego-based agricultural biotech, Agradis, with $20 million in Series A financing and proprietary technology that can be used to develop improved hybrid crops such as castor and sweet sorghum. Mexican investor and businessman Alfonso Romo is a co-founder of Agradis, along with J. Craig Venter, Synthetic Genomics’ chairman and CEO.

—TedMed is underway this week at the Hotel del Coronado. Peter Diamandis, the chairman and co-founder of the X Prize Foundation, took the stage yesterday to announce some changes in its $10 million competition in genomic sequencing. The foundation, based near Los Angeles, says the $10 million Archon Genomics X Prize presented by Medco will be awarded to the first team that accurately sequences the whole genome of 100 people within 30 days for $1,000 or less per genome, and at an error rate no greater than one per million base pairs. The prize is intended to open the way to new era of personalized medicine with unprecedented accuracy.

—San Diego’s Illumina, (NASDAQ: ILMN), the market-leading maker of DNA sequencing equipment, said it’s eliminating 200 jobs, or about 8 percent of its workforce. Illumina said a restructuring of its business is expected to add a $15 million to $17 million charge on the company’s income statement, mostly in the fourth quarter.

—In a separate announcement, GenoLogics of Victoria, BC, said it has raised $8 million through a strategic financing in the company by San Diego’s Illumina. GenoLogics said it plans to develop genomics software tailored for cheaper desktop sequencers, to build up its sales and marketing efforts, and develop new applications.

—The MoneyTree Report on third-quarter venture capital activity found … Next Page »

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The benefits of generating databases based on the personal genetics of thousands of people came into better focus today with an announcement from Mountain View, CA-based 23andMe, the startup that aspires to be the world’s trusted source for personal genetic information.

Using genetic data drawn from thousands of 23andMe customers, the company says it has identified a gene that appears to protect against a genetic mutation associated with Parkinson’s disease. Specifically, 23andMe says the gene serum/glucocorticoid regulated kinase 1 (SGK1) appears to be protective against a mutation known as leucine-rich repeat kinase 2 (LRRK2).

A specific mutation on the LRRK2 gene, known as G2019S, is recognized as a risk factor for developing Parkinson’s. About half the people with the mutation develop the disease. Yet 23andMe says it has genetic data from a large number of people who carry the mutation, but who surprisingly don’t have Parkinson’s. In scrutinizing this group, 23andMe says it made the first-time discovery of the potentially protective nature of SGK1.

23andMe chief business officer Ashley Dombkowski previewed the SGK1 findings at Xconomy’s “Computing in the Age of the $1,000 Genome” event in San Francisco yesterday. Dombkowski said the company has amassed the world’s largest Parkinson’s research cohort, which has more than 6,000 participants and includes one of the largest groups of individuals carrying the pathogenic mutations in the LRRK2 gene.

The Parkinson’s initiative undertaken by 23andMe “has proven the tremendous potential in leveraging DNA technology, the Internet, and patient participation to accelerate findings,” says Todd Sherer, CEO of The Michael J. Fox Foundation.

The foundation awarded a $500,000 grant to the San Diego-based Scripps Research Institute in 2010 to identify a new and potentially vital therapeutic target for Parkinson’s disease. The foundation directed the grant to Philip LoGrasso, a Scripps professor of molecular therapeutics, who has been studying LRRK2 and SGK1.

“The SGK1 discovery, while still early-stage, is a promising outcome of this unique research platform, and holds potential to inform a therapeutic approach for Parkinson’s,” Sherer says. “We are eager to see the results of the continued investigation of SGK1 by Scripps.”

23andMe says it has 125,000 genotyped customers, and nearly 90 percent have opted-in to participate in research approved by the company’s Institutional Review Board. “These individuals are extremely valuable for us to study as they provide insights into why some people do not develop disease despite having high-risk genetic factors,” says CEO Anne Wojciki in a statement released by the company. “This could lead to new drug targets or diagnostics.”

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Scientists have never been able to make an effective AIDS vaccine, largely because the HIV virus is crafty, always finding ways to mutate and escape the body’s immune defenses. But now a national team of scientists has found antibodies that zero in on newly identified weak spots in the virus, potentially opening up promising new pathways for the development of an AIDS vaccine.

Researchers are reporting today in the journal Nature that they have discovered 17 novel antibodies that are all capable of neutralizing a broad spectrum of HIV strains, by hitting precise regions on the virus that are genetic common ground, no matter how many wily mutations the virus may make. The findings are being published by a team of scientists from Theraclone Sciences, a private biotech company in Seattle; The Scripps Research Institute in San Diego; South San Francisco-based Monogram Biosciences, a unit of Lab Corp of America (NYSE: LH); and the New York-based International AIDS Vaccine Initiative (IAVI).

The latest findings build on work this same team published two years ago in Science, when they identified two genetically engineered antibodies to hit two weak spots on the HIV virus. By finding so many more structural vulnerabilities in the virus, researchers now hope to take the next step by crafting compounds that can spur the body to make these antibodies, hitting the viral equivalents of Achilles’ heel. If this idea can be proven in future clinical trials, it could pave the way for the first vaccine against a disease that still kills an estimated 1.8 million a year around the world, according to UNAIDS.

“The more you understand the virus and characterize it, the better you can do at designing immunogens [ingredients for vaccines],” said Kristine Swiderek, the vice president of research at Theraclone. “It’s very exciting.”

Dennis Burton, a professor of immunology at Scripps and a lead author of the study, added in a statement that, “because of HIV’s remarkable variability, an effective HIV vaccine will probably have to elicit broadly neutralizing antibodies. This is why we expect that these new antibodies will prove to be valuable assets to the field of AIDS vaccine research.”

Theraclone's Russ Hawkinson and Kristine Swiderek

The far-flung collaboration of scientists got its start in a pretty basic observation from sub-Saharan Africa, where AIDS causes the most damage. Scientists there have long noticed that a few rare people can get infected with HIV, yet somehow retain robust immune defenses so they never get sick. IAVI and its collaborators have worked on clinical protocol to identify these special people and collect blood samples from them, which served as the essential raw material of this research collaboration.

IAVI, a global nonprofit supported by the Bill & Melinda Gates Foundation, provided the financial support for the collaboration with Scripps, Theraclone, and Monogram. Each of those parties played a distinct role, Swiderek says. Theraclone used its proprietary technology to produce the novel antibodies that could bind specifically with regions on the virus known as epitopes. The team at Monogram ran the screening tests of those antibodies against various strains of HIV in the lab. And the scientists at Scripps and IAVI worked together on characterizing those precious regions of the virus that are now thought to have potential as vaccine targets.

In the early days of the collaboration, Swiderek says the team worked on samples from just one individual donor, which yielded the first two antibodies described two years ago in Science. Emboldened by that progress—which marked the first time in a decade that any broadly neutralizing antibodies had been discovered—the team continued … Next Page »

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Here in Boston, we like to tout our universities, our faculty, our students. The academic community is one of the crowning strengths of the New England economy, not to mention a major driver of its global impact. But what have universities done for the local startup and business innovation community lately?

I’m not going to give a full answer here—it’s one of the broader themes I’m exploring around town—but I’ll give you a piece of the puzzle.

Harvard University’s Office of Technology Development has what it calls an “Accelerator Fund” that has been chugging along for four years now, and it has achieved some notable results. As of last month, the $10 million fund has given out $5.2 million in grants, which have supported more than 30 projects over five annual cycles. It’s still early to add up the returns on this investment, but already it has led to more than $10 million in partnership money for the university, and several startups that have received outside venture funding. (The Harvard office declined to give specifics on licensing revenues to date.)

What’s more, the model apparently has proven successful enough that the team is about to begin raising a much bigger fund, in the $20 million to $30 million range. And unlike in the past, when Harvard developed a laggardly reputation when it came to commercializing its research, universities around the country are starting to look at the school as a possible role model for technology transfer and startup development practices.

The Accelerator Fund, which Xconomy wrote about in early 2008, was created to help Harvard scientists commercialize their inventions by forming industry partnerships, licensing technology, and starting new companies, primarily in life sciences and biomedical fields. As technology development head and senior associate provost Isaac Kohlberg puts it, “The pipelines of Harvard were empty.” The school “suffered from a branding issue with stakeholders about the role of technology development,” he says.

Kohlberg and his team, which includes Curtis Keith, chief scientific officer of the Accelerator Fund, were brought in to overhaul Harvard’s tech transfer and development offices. Kohlberg joined … Next Page »

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Cambridge, MA-based Proteostasis Therapeutics has found a big new benefactor to support its R&D against neurological diseases.

Proteostasis said today it has formed a strategic alliance with Ireland-based Elan to develop traditional small molecule drugs and diagnostics with Proteostasis against neurodegenerative diseases like Parkinson’s, Huntington’s, and multiple sclerosis. Elan, the developer of the hit multiple sclerosis drug natalizumab (Tysabri), has agreed to invest $20 million into the small company, and may pump in another $30 million over the next five years. In return, Elan is getting a 24 percent ownership stake in Proteostasis now, a seat on its board of directors and scientific advisory board, and the first chance to exclusively license new drug compounds from the collaboration, the companies said in a statement.

Proteostasis has been pretty quiet lately, but it made a splash in the Boston biotech scene in September 2008 when it raised a whopping $45 million in its initial venture financing from HealthCare Ventures, Fidelity Biosciences, New Enterprise Associates, Novartis Option Fund, and Genzyme Ventures. The founding science came from the San Diego labs of Jeff Kelly at The Scripps Research Institute and Andrew Dillin at the Salk Institute for Biological Studies, and Richard Morimoto at Northwestern University.

As I described in a feature story a year ago, Proteostasis is about delving into biology that seeks to alter protein pathways that deteriorate as people age, which can lead to neurodegenerative diseases like Alzheimer’s and Parkinson’s. When people are young and healthy, they might produce amyloid plaques, for example, but a network of proteins works to dispose of them. One theory is about Alzheimer’s is that as people age, this garbage disposal network weakens, amyloid plaques build up, and it leads to the cognitive impairment in the brain that’s associated with Alzheimer’s.

Today’s statement had a few details on what each party is supposed to bring to the table. It said that Proteostasis will contribute its discovery technology, novel biological targets, and drug candidates. Elan plans to contribute with its proprietary animal models, biology, medicinal chemistry, and clinical development.

Proteostasis’ president and chief scientist, Peter Reinhardt, said Elan is “a proven leader” who will help speed up the R&D progress at Proteostasis. Kelly Martin, Elan’s CEO, added: “This initiative with Proteostasis reinforces our commitment and strategic business objective of being an exceptionally high-caliber, science-driven company and provides a multitude of opportunities for Elan to advance its position as a world leader in the broad field of neuroscience.”

This isn’t the only Boston-Ireland connection we’ve seen in these pages lately. Elan recently agreed to sell one of its divisions to Waltham, MA-based Alkermes (NASDAQ: ALKS) for $960 million in cash and stock.

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Is sentiment coming together to push for FDA regulatory reform? Luke’s BioBeat column described industry efforts to shake up the FDA, and U.S. Rep. Darell Issa convened a hearing in San Diego last to collect life sciences testimony on needed reforms. We have details on all that and more.

—In a run-up to an FDA public advisory meeting today in Silver Springs, MD, Luke reported that an FDA staff analysis of data submitted for a new hepatitis C drug under development at Cambridge, MA-based Vertex shows a cure rate as high as 79 percent among patients getting their first-round of treatment. That’s better than the 75 percent cure rate reported by Vertex, which has substantial operations in San Diego. The question lingering today is whether two side effects cited by the FDA—rash and anemia—will affect the advisory panel’s recommendation concerning the Vertex drug, telaprevir.

—Dow Jones VentureSource provided more details about first-quarter venture capital activity in San Diego, including data about local life sciences deals. In contrast to the MoneyTree Report, which shows a sharp decline, Dow Jones says venture funding in San Diego was relatively flat, with $213.9 million invested in 26 deals. That includes $119.6 million invested in 13 healthcare companies in San Diego, which is almost even with the $121.6 million that was invested in 12 healthcare companies during the same quarter of 2010.

—San Diego’s Polaris Group, which seemed to spring out of nowhere, is moving to begin a late-stage clinical trial of ADI-PEG 20 for treating the most common type of liver cancer. The drug, also known as pegylated arginine deiminase, is intended to deprive tumor cells of arginine, an essential amino acid they need to survive and grow.

—San Diego’s Fate Therapeutics, which is developing stem cell therapies, has increased the size of its current equity round to $36 million and arranged for $1 million in debt financing, according to a couple of recent regulatory filings. Fate said in February that chairman John Mendlein was stepping in to run the company following the departure of CEO Paul Grayson, who is leaving to … Next Page »

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Proteostasis Therapeutics, the Cambridge, MA-based company seeking to keep proteins in balance to fight neurodegenerative diseases, said today it has obtained two exclusive technology licenses from Harvard University. The licenses pertain to the ubiquitin-proteosome pathway, and include biological targets and small-molecule drug candidates. Proteostasis, founded by Healthcare Ventures in Boston with technology from The Scripps Research Institute in San Diego, isn’t disclosing financial terms of the deal. The new batch of intellectual property comes from the Harvard labs of Daniel Finley, Randall King, and Alfred Goldberg, the company said.

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This week we covered a lot of news about cancer, and some of it came from a surprising new source.

—Gilead Sciences (NASDAQ: GILD), the Foster City, CA-based company that made its name with drugs that turn HIV into a chronic disease, has placed a big new bet for the future on cancer and inflammation. Gilead agreed to pay as much as $600 million to acquire Seattle-based Calistoga Pharmaceuticals to obtain its pipeline of oral pills that it hopes will turn certain cancers and inflammatory conditions into more manageable, chronic diseases like HIV. I got the skinny from Gilead’s chief scientist, Norbert Bischofberger, in this follow-up interview.

—The controversy about whether to use Genentech‘s hit antibody, bevacizumab (Avastin) for treating breast cancer is far from over. The South San Francisco-based unit of Roche said this week that the FDA has agreed to let the company make its case on June 28 & 29 for why the drug should continue to be cleared for sale as a treatment for breast cancer, after the FDA said in December it planned to revoke the breast cancer clearance. If the FDA decision to yank breast cancer off the approved prescribing label, Genentech stands to lose hundreds of millions in future sales, analysts say.

—Redwood City, CA-based Pearl Therapeutics, the developer of treatments for lung diseases, said this week it has hired a new CEO, Charles (Chuck) Bramlage, from healthcare giant Covidien. Pearl raised $69 million in venture capital last fall, and soon after, showed its drug beat a multi-billion dollar blockbuster for chronic obstructive pulmonary disease in a head-to-head study of 118 patients.

—Here’s one angle you don’t see every day: A life sciences-focused VC firm moving away from the Bay Area. Thomas, McNerney & Partners, which has $600 million under management, said it plans to move its West Coast office from San Francisco to San Diego.

—Speaking of moves to San Diego, we reported on another big one this week. UC Berkeley chemist Michael Marletta was formally introduced as the new president of The Scripps Research Institute in San Diego. Xconomy was the first to report, back on Jan. 31, that Marletta would soon be named the top guy at Scripps, a major center for biomedical research.

—We also has the scoop last week about San Francisco-based Jennerex Biotherapeutics, which has produced some intriguing (albeit quite preliminary) data which suggests its cancer-fighting virus treatment is prolonging lives of patients with severe forms of liver cancer. Jennerex plans to present more detailed results later this year, with more time for follow-up, at the American Association for the Study of Liver Diseases.

—BayBio CEO Gail Maderis offered up a guest editorial this week with her view of how the federal government, if it wants to spur more entrepreneurship, could do some specific things with the people on the ground making it happen in the Bay Area.

—Unfortunately, I wasn’t able to personally make it into town this week for a cool event at UCSF Mission Bay which celebrated the 10th anniversary of QB3. Former Gov. Gray Davis, and Lt. Gov. Gavin Newsom were there, along with QB3′s founding director Regis Kelly. You can check Ron Leuty’s recap on this for the San Francisco Business Times. I’m working on some related themes for another big Xconomy event, with help from the folks at QB3 and BayBio, which will explore the 20-year outlook for the life sciences industry in the Bay Area. I hope to see you there at UCSF Mission Bay on March 16.

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We had some big names and big news out of San Diego’s life sciences community over the past week. Our roundup is here.

—Avalon Ventures founder Kevin Kinsella unleashed a scathing critique of some shortsighted and mercenary business tactics he says he’s encountered in dealing with pharmaceutical companies, which have him questioning the longtime partnership between venture-backed biotechs and Big Pharma. “Their predatory business practices,” Kinsella said, “are pushing the sector almost to the point of extinction.”

—The board of trustees at The Scripps Research Institute named U.C. Berkeley’s Michael Marletta as president and successor to Richard Lerner, who has led the San Diego-based biomedical research institute for 25 years. The announcement came three weeks after my colleague Luke Timmerman reported that it was imminent. Richard Gephardt, the former House Majority Leader who heads the institute’s board, told The San Diego Union-Tribune the 60-year-old Marletta is a leader who’s interested in building the endowment at Scripps.

—The health care venture firm Thomas, McNerney and Partners plans to relocate its San Francisco to San Diego later this year. The firm’s arrival comes at a good time for San Diego, which has a robust life sciences community, but has been searching for ways to boost its hometown venture capital resources.

—Biocom’s Global Life Science Partnership Conference, which ends today at San Diego’s Estancia Hotel & Spa, adjusted its program this year to reflect the fact that an increasing source of capital for biotech startups is coming from pharma partnerships.

—Investors drove the price of Vertex Pharmaceuticals‘ shares 15 percent higher yesterday after the Cambridge, MA-based drug-maker (which has operations in San Diego) reported that a new drug candidate significantly improved lung function in a late-stage trial of patients with cystic fibrosis. The stock gained $5.75 to close at $43.97 a share, a level that Vertex hasn’t seen since 2006.

—San Diego’s CalciMedica channeled another $6 million in venture financing into its coffers after the company hit a milestone goal by delivering the first doses of a new experimental drug to people with moderate to severe psoriasis. The five-year-old startup has now raised a total of about $25 million to pursue drugs intended to work against calcium channels on the surface of cells.

—In-Q-Tel, the investment arm for U.S. intelligence agencies, made a “strategic investment” in Biomatrica, a San Diego startup founded in 2005 to develop technology for storing biological samples at room-temperature. As Luke explained in 2009, Biomatrica’s technology works by forming a thermo-stable barrier during the drying process, which protects samples from degradation during storage at room temperature. Earlier this month, Pleasanton, CA-based IntegenX acquired another local biosample storage firm, GenVault of Carlsbad, CA.

—CEO Paul Grayson left San Diego’s Fate Therapeutics to start a new company, which Fate did not identify in its announcement about the change. Grayson led Fate for three years.

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The Scripps Research Institute, one of San Diego’s leading nonprofit research institutions, has officially named UC Berkeley chemistry researcher Michael Marletta as its new incoming president.

Marletta, 60, will join the Scripps faculty on July 1, and formally take over from Richard Lerner as president on Jan. 1, 2012, Scripps said yesterday in a statement. News of the leadership switch to Marletta was first reported by Xconomy on Jan. 31.

“I am honored to be named to lead one of the premier research institutions in the world,” Marletta said in a statement.

Marletta’s research career has focused on the nexus of chemistry and biology, and he is acknowledged as a pioneer in discovering the role of nitric oxide, which plays a key role in communication between cells, Scripps said in a statement.

Scripps has grown significantly during Lerner’s 25 years at the helm. It now has more than 3,000 employees between its campuses in San Diego and Jupiter, FL, and more than 540 faculty and scientific and professional staff. Lerner told the San Diego Union-Tribune he’s stepping down because “25 years is long enough in that job, and I want to spend more time with my experiments.”

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A series of private announcements and public policy changes in recent days put a spotlight on entrepreneurs nationwide. As Wade wrote in a thoughtful analysis, we seem to have placed a much bigger bet as a nation on early stage startups—and the life sciences news out of San Diego this past week seemed to reflect all the opportunities, risks, and expectations that encompass such bets.

—In an unexpected blow, FDA regulators rejected the new drug application for Contrave, the weight-loss drug developed by San Diego-based Orexigen Therapeutics (NASDAQ: OREX). The FDA said the drugmaker must conduct an extensive new clinical trial of the drug, which is a combination of bupropion and naltrexone, that evaluates the risk of “major cardiovascular events.”

—Across town, San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) eliminated 66 jobs, or about 25 percent of its workforce. That’s estimated to save the company about $13.5 million a year as Arena works to resurrect the prospects for lorcaserin, another weight-loss drug that was rejected by the FDA last year.

—The Scripps Research Institute’s longtime president, Richard Lerner, is expected to step down soon. No formal announcement has been made, but Luke reported that Berkeley chemist and molecular biologist Michael Marletta may be the leading candidate as Lerner’s successor.

—At a time when California’s biomedical sector lost about 6,000 jobs, a report from the California Healthcare Institute found that San Diego added 678 jobs in 2009, as total employment in San Diego’s biomedical sector hit 24,157. Job gains in San Diego was a surprising theme that emerged in this year’s 2011 California Biomedical Industry Report.

—Kieran Gallahue resigned as … Next Page »

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Richard Lerner, the president of one of San Diego’s leading research institutions for the past two decades, will soon step down from the top job at The Scripps Research Institute—and he is likely to be replaced by a top chemist and molecular biologist from UC Berkeley, Xconomy has learned.

No formal announcement has been made, and a successor won’t be officially named until a vote is held by the Scripps board of trustees, says Scripps spokeswoman Mika Ono. But Michael Marletta, a chemist and molecular biologist at UC Berkeley has emerged as the likely successor, Xconomy has learned from multiple sources inside Scripps. Ono, the institute’s spokeswoman, confirmed that Marletta is a candidate on a “very short list,” but she said the deal isn’t yet “signed, sealed, and delivered.” News of a search for Lerner’s successor broke last July when the institute advertised for the job in Cell, and the story was picked up by GenomeWeb.

“The board has to vote,” Ono says. “It’s in the works, but it’s not done yet.”

The change in leadership represents a big move for Scripps, where Lerner has been the only president since the institution reorganized as a nonprofit in 1991. Lerner, 72, who first arrived at Scripps’ predecessor institution in 1965, is best known for his work in the discovery of catalyzing antibodies along with chemist Peter Schultz. Lerner is expected to remain on the faculty, according to last summer’s GenomeWeb report.

Marletta, the Aldo DeBenedictis Distinguished Professor of Chemistry and a professor of biochemistry and molecular biology at UC Berkeley, said in an e-mail that he can’t comment at this time. Lerner didn’t respond right away to a couple of e-mailed questions this afternoon, although when my colleague Bruce Bigelow asked him by e-mail over the weekend if he has retired, Lerner said, “not true.”

Michael Marletta

Lerner oversaw a period of significant growth at Scripps, as it has emerged as as one of the world’s largest independent nonprofit centers for biomedical research, and an anchor of the San Diego biotech community. The institute has 35 acres of land and 1 million square feet of office space near the Pacific Ocean, UC San Diego, and a number of the region’s top biotech companies. As of last month, the institute had more than 3,060 employees between its campuses in San Diego and Jupiter, FL, and more than 540 faculty and scientific and professional staff. The institute has a reputation for excellence, with three Nobel laureates and numerous members of the National Academy of Sciences on staff.

If I hear any further comments from Lerner or other sources close to the situation, I’ll be sure to update the story.

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1. FDA’s decision to remove the breast cancer indication from the label of bevacizumab (Avastin).

2. Approval of Dendreon’s sipuleucel-T (Provenge), representing a new class of drug.

3. Sanofi-Aventis’ pursuit of Genzyme. It illustrates an industry move towards adding orphan and rare therapeutic areas to pharma portfolios. Another example of the trend came when Pfizer created orphan disease research division in 2010 and acquired FoldRx Pharmaceuticals.

4. The amount of free drug supplied to patients in 2010 reached record highs according to PhRMA, which cited the economic downturn.

5. Increased collaboration between pharma and academic research centers, indicating a shift to go beyond biotech to fill pipelines. Examples include Pfizer’s collaborations with UC San Francisco, Washington University in St. Louis, and Sanofi’s collaborations with The Scripps Research Institute, Harvard University, and the Dana-Farber Cancer Institute.

Top 5 Things to Look for in 2011

1. An escalating legal battle over the constitutionality of President Obama’s healthcare reform legislation.

2. Implementation of the pharma tax, which is expected to raise $2.3 billion a year, and will target branded prescription drug sales of more than $5 million to Medicare and other government programs.

3. Rethinking biopharma and physician relationships in light of the implementation of the Sunshine Act in 2012.

4. Increased use of adaptive trial design and how/if the FDA will address this new approach to clinical development.

5. As the economy continues to recover, will the IPO window open up?

[Editor's Note: This is part of a series of posts from Xconomists and other technology and life sciences leaders from around the U.S. who are weighing in with the top surprises they've seen in their respective fields in the past year, or the major things to watch for in 2011.]

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It’s less than 10 days before Christmas, but San Diego’s life sciences community doesn’t seem to be ready for vacation. The business news wires have been crackling with reports of buyouts, rumored buyouts, deals, and major product launches. Fortunately, we’re here to sort it all out for you.

—As corporate courtships go, the unsolicited offer by New York’s Ramius group for San Diego’s Cypress Bioscience (NASDAQ: CYPB) was more tempestuous than romantic. But Ramius finally came up with a proposal that swept Cypress off its feet. At $6.50 a share, the hedge fund’s $255 million offer was 63 percent higher than the original proposal of $4 a share five months ago, and about 160 percent higher than Cypress’ share price of $2.50 on July 16, before the Ramius offer became public.

—Is Genoptix (NASDAQ: GXDX) negotiating with a secret suitor who wants to buy the Carlsbad, CA, medical diagnostic company? Bloomberg News reported that Genoptix has hired Barclays, the British investment bank, and buyout speculation has been driving the company’s stock higher. Genoptix runs a centralized laboratory that performs tests on blood samples of patients with blood disorders and cancers.

—Another Carlsbad company, Life Technologies, (NASDAQ: LIFE) has started selling what it calls the Ion Personal Genome Machine, a molecular diagnostic instrument for sequencing genomes. The first commercial sequencing machine uses semiconductor technology, rather than imaging, to sequence genes, and was developed by Ion Torrent Systems of Guilford, CT. The machine sells for a shade under $50,000, about one-tenth the price of today’s most high-powered gene sequencing instruments.

—San Diego’s Avalon Ventures has put about $1 million in funding to launch RQx Pharmaceuticals, which plans to develop a … Next Page »

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Anaphore has found a new corporate benefactor to help create a new generation of more effective biotech drugs.

The San Diego-based biotech company is announcing today it has formed a partnership with Osaka, Japan-based Mitsubishi Tanabe Pharma to develop new protein drugs for autoimmune disorders. Anaphore will get $5 million in upfront cash, plus research support, another $110 million in potential milestone payments, and royalties on sales if one of the Anaphore drug programs goes on to become marketed product. Similar terms could kick in for Anaphore if Tanabe picks two more of Anaphore programs. The money will provide access to Anaphore’s technology, which creates specific protein molecules which are supposed to bind more thoroughly with targets on cells than traditional antibodies.

This is the first publicly announced partnership for Anaphore, although the company does have one other undisclosed collaboration with a biotech company, CEO Kathy Bowdish says. The Tanabe deal is an important validating step for the startup, which was founded in December 2007 and has since raised a total of $38 million in venture capital from 5AM Ventures, Versant Ventures, Apposite Capital, GlaxoSmithKline’s SR One venture group, Merck Serono, and Aravis Venture Associates. The investors’ bet is that Anaphore can create genetically engineered protein drugs with greater capability to bind with targets than today’s antibodies, which are lean and mean enough to penetrate inside bulky tissues, and which are equally good at blocking a biological pathway, or activating it.

“This has been an exciting opportunity, in which I’m trying to take everything I had learned over 10 years with antibodies, and thinking about how to improve on that,” says Bowdish. “We truly view this partnership as very validating.”

Kathy Bowdish

Quite a few companies have been sprouting up and raising cash in the last couple years with similar notions of developing “bio-superiors” or “bio-betters.” Cambridge, MA-based Eleven Biotherapeutics, Seattle-based Allozyne, San Diego-based Ambrx, and South San Francisco-based Sutro Biopharma are all examples could be filed under that header.

Anaphore’s work is still at a very early stage, and it isn’t saying much publicly about its strategy. The company has tested its protein drug candidates in the lab dish, and has seen evidence of activity there against important targets that appear on cancer and inflammatory disease cells, Bowdish says. Mitsubishi Tanabe and Anaphore aren’t disclosing which target for autoimmune disease they are pursuing first, and Bowdish didn’t say when she hopes to move that program ahead into clinical trials. She did say that part of Anaphore’s work concentrates on making “bi-specific” protein drugs, which are specifically engineered to bind with not just one target of interest, but two distinct targets simultaneously.

Since we haven’t covered Anaphore in depth before, I asked Bowdish to explain a little bit of the background. She has a long history in San Diego biotech as the co-founder, CEO and chief scientist at Prolifaron, an antibody drug spinoff from The Scripps Research Institute that was acquired by New Haven, CT-based Alexion Pharmaceuticals (NASDAQ: ALXN). After selling the company … Next Page »

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Thanksgiving got in the way of last week’s biotech roundup, so this week I’m reaching a little further back in the archive for stories you may have missed.

—Redwood City, CA-based Pearl Therapeutics raised $69 million in venture capital last month, and now we can see why. The company showed, in a small clinical trial, that its inhalable combination therapy beat a $3 billion drug in a head-to-head study among patients with chronic obstructive pulmonary disease. Pearl is now moving ahead with bigger trials to see if it can confirm the result.

—Intarcia, the Hayward, CA-based developer of drug/device combination technology, has set out an ambitious game plan to shake up the field of diabetes therapy. New executive chairman Kurt Graves offered up his insights into what why he thinks the implantable device will have such a big impact, in this exclusive Xconomy interview.

—Palo Alto, CA-based Anacor Pharmaceuticals (NASDAQ: ANAC) pulled the trigger on its initial public offering, settling for about 38 percent less money than it was hoping to scrape together from public investors.

—Faheem Hasnain, the former CEO of Redwood City, CA-based Facet Biotech before it was sold to Abbott Labs for $722 million this year, resurfaced this week with a new job as CEO of San Diego-based Receptos. He’s stepping in to replace Bill Rastetter, the partner at Venrock Associates, who had been interim CEO at Receptos. Rastetter remains chairman of the  startup.

—Mountain View, CA-based Ardian had plenty to be thankful for during the holiday break, as it agreed to be acquired for $800 million by medical device giant Medtronic (NYSE: MDT). Medtronic pounced after Ardian showed off new clinical trial data suggesting it has created a potent new device against high blood pressure that can’t be controlled by existing meds.

—Xconomy correspondent Ryan McBride  weighed in with the latest installment in the running battle among Dana-Farber Cancer Institute,  Novartis, and Millbrae, CA-based Gatekeeper Pharmaceuticals, over who has the rights to a promising new drug candidate against lung cancer. I’m hearing that this story is being closely watched in university tech transfer shops, and in VC land, for any reverberations it might have on how technology licenses get structured.

—A few days before the Ardian windfall, another Bay Area medical device company cashed out. This story was about Los Gatos, CA-based Sadra Medical, which agreed to be acquired by Boston Scientific (NYSE: BSX) for as much as $386 million. Sadra is the developer of a technique to repair aortic heart valves without requiring open heart surgery.

—We also ran a couple of guest editorials from our other West Coast bureaus that I thought would be of interest to our Bay Area readers. One, from Stewart Lyman in Seattle, was about what he calls “The Myth of the Patent Cliff.” And the other was from Scott Forrest at The Scripps Research Institute in San Diego, who talked about how broad sponsored research agreements between Big Pharma and academic centers ought to work.

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This week we took an in-depth look at several New England area biotechs, and saw some interesting developments from bigger drugmakers.

—I checked in with Holden, MA-based Hygeia Therapeutics, a startup developing topically delivered synthetic hormone treatments, using technology licensed from Yale University. The biotech has gathered pre-clinical data on a synthetic estrogen product for the treatment of age-related skin thinning.

—Ryan profiled Selventa, a Cambridge, MA-based startup formerly named Genstruct that is developing software to help pair the right patients with the right experimental treatments—before expensive clinical research trials are done. The firm, which has kept pretty quiet about its technology since starting in 2002, is now making a push to publicize its research and technology.

—Cambridge-based Aileron Therapeutics inked a deal for exclusive rights to “click” chemistry technology from The Scripps Research Institute in La Jolla, CA.

—Antibody technology developer Adimab, of Lebanon, NH, brought in a $4 million Series E funding round. The startup, which was founded in 2007 and is working on yeast-based human antibody discovery technology, raised the financing at a pre-money valuation of $520 million, which is double the value of the company when it raised its last round in October 2009.

—Cambridge-based Aveo Pharmaceuticals (NASDAQ:AVEO) said it will bring in $25 million in two equal payments from OSI Pharmaceuticals, which has exercised its option to Aveo’s technology for research in cancer and patient biomarker selection. Aveo’s platform allows researchers to engineer animal models with genetic mutations that are present in human forms of cancer.

—GlaxoSmithKline axed a mid-stage clinical trial of SRT501, a drug it picked up as part of its 2008 acquisition of Cambridge-based Sirtris Pharmaceuticals that is a formulation of the “red wine” chemical resveratrol. Glaxo chose to … Next Page »

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Receptos, the San Diego-based startup with an eye toward capturing super high-res images of an important class of new drug targets, has found itself a new CEO from the Bay Area who happened to sell his last company to Abbott Laboratories for $722 million.

Faheem Hasnain, the former chief executive of Redwood City, CA-based Facet Biotech, has been named the new CEO of Receptos. He replaces interim chief executive Bill Rastetter, who will keep his other title as chairman of the board. Rastetter, of course, is a legendary guy in San Diego, having been the longtime CEO of Idec Pharmaceuticals, and now a partner with Venrock Associates.

We broke the news about Receptos in November 2009, when it raised its first $25 million from Venrock Associates, Arch Venture Partners, Flagship Ventures, and Lilly Ventures. The company, a spinoff from The Scripps Research Institute, is seeking to capture the first high-resolution crystal structure images of certain spaghetti-like targets on cells, known as G-protein coupled receptors. These are highly complex proteins that snake inside and outside of cells, and it is especially tricky to develop specific drugs to hone in on them. Even so, about 30 to 40 percent of all pharmaceuticals worldwide hit these targets, including best-sellers for depression, allergies, and high blood pressure.

Faheem Hasnain

Before Hasnain’s stint at Facet Biotech and PDL Biopharma, he spent four years at Biogen Idec, ultimately as an executive vice president in charge of the oncology/rheumatology strategic business unit. Receptos was founded with a lot of key people who have Biogen Idec on their resumes, so presumably Hasnain is at least familiar with the people involved.

Receptos says on its website that it intends to bring its first drug candidate into clinical trials in 2010, although today’s statement says it will be in 2011. “I have been very impressed with the team’s execution of an aggressive first year strategic plan, and greatly look forward to collaborating with them to move our first product into the clinic in 2011,” Hasnain said in a statement.

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