Fate Therapeutics, the San Diego-based company on a quest to develop techniques that make stem cell research practical for the pharmaceutical industry, has raised $30 million in a Series B round of venture financing.

Kirkland, WA-based OVP Venture Partners led the deal, which included the three venture firms that co-founded the company two years ago—Arch Venture Partners, Polaris Venture Partners, and Venrock Associates. This time, Fate also drew investment from three strategic corporate investors, two of whom are being named—Astellas Venture Management, and Genzyme Ventures. The company has now raised a total of about $50 million since inception, according to Scott Wolchko, Fate’s chief financial officer.

The round is the latest step forward for Fate, which was founded by a band of high-profile scientists from Harvard University, the University of Washington, Stanford University, and The Scripps Research Institute. Fate generated some scientific buzz last month when one of its co-founders, Sheng Ding of Scripps, found a way to use three conventional small-molecule compounds to coax adult human cells into an embryonic-like state. That’s important not only because it circumvents the ethical controversy around destroying embryos for research, but it also paves the way for “industrialized” stem cells. The Ding lab’s method is twice as fast and 200 times more efficient than previous techniques of creating induced pluripotent stem cells—with potential to turn into any type of cell. The Fate method also sidesteps the use of viruses and genetic modification of cells that has been one of the main disadvantages of the prior methods—and a big reason why pharma has steered clear.

Fate’s hope is to keep building enough momentum for its stem cell production technology that it will become a useful tool for creating models of disease in the lab, and for toxicology testing to see which drug candidates have the best odds of success. Further in the future, it hopes to create regenerative medicines to replace damaged tissues in the body.

While that capability is getting built up, and Fate is seeking pharmaceutical partners to help pay the bills, the company is also pushing ahead with its own proprietary drug candidate in clinical trials. The drug, FT-1050—a conventional small-molecule chemical compound that isn’t nearly as risky as an injectable cell therapy—is designed to help improve the effectiveness of adult stem cell transplants for blood cancers like leukemias and lymphomas.

“This is a company that has performed exactly as planned,” says Carl Weissman, managing director with OVP, who is taking a board seat in connection with the financing. “This management team is rounding out into a very sharp and effective group. It made sense for us to double down.”

OVP invested a small amount in Fate’s Series A round, and by betting bigger this time …Next Page »

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Who are the innovators who will help keep the San Diego region’s life sciences sector vibrant in the years to come? Which of the emerging ideas here will help transform the way we treat and prevent disease around the world? And how is the San Diego region poised to work with leaders from other hubs to stay on the leading edge of science and business?

These are some of the questions we plan to explore at the next Xconomy Forum we’re organizing in San Diego for the afternoon of December 14: “Tomorrow’s Biotech—Innovators and Innovations.” I’m thrilled to announce today that Xconomy has assembled a world-class group of life scientists and entrepreneurs to discuss where this is all headed.

The keynote speakers include David Baltimore, the Nobel Laureate and Caltech biology professor, and John Maraganore, the CEO of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY), a leader in the emerging field of RNA interference treatments. Both have strong ties to the San Diego biotech scene as members of the board of directors at Carlsbad, CA-based Regulus Therapeutics. We will also hear presentations from three venture-backed startups in San Diego with the potential to shake up their respective fields of medicine—Fate Therapeutics in stem cells, Regulus in the microRNA field, and Intellikine, which is pursuing one of the hottest targets in cancer biology.

The third and final component of the program will feature a panel discussion with some of the brightest young scientific entrepreneurs at San Diego’s research centers. They are Sheng Ding, a professor of chemistry at The Scripps Research Institute; Trey Ideker, the chief of genetics at the UCSD School of Medicine; and Peter Kuhn, an associate professor of cell biology at Scripps. All have their eyes on new ways of bringing their research to commercial reality. This panel will be moderated by a veteran biotech entrepreneur and venture capitalist, David Kabakoff, executive-in-residence at Sofinnova Ventures in San Diego.

The event will take place from 2 pm-6:30 pm on December 14 at Calit2’s Atkinson Hall, on the UC San Diego campus. You can find more information about how to register by clicking here. There will be time for networking before and after the event. I will personally be coming down from Seattle for the forum, and I look forward to seeing many of you there.

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This week we were jamming on our big event on the 20-year outlook for Seattle’s life sciences hub, but we still found a way to squeeze in a lot of news and features.

—Biotech pioneer Chris Henney offered an insightful and entertaining talk about how to invest in biotech at a recent speech before the CFA Society of Seattle. I included his six tips on how to spot a winning biotech in last week’s roundup, but that piece didn’t include the sequel on the five red flags investors should watch out for. The In Vivo Blog did a fun follow up on this story, too.

—If Seattle wants to grow as a biotech hub over the next 20 years, it could use a few more bars, and less university red tape. That’s according to Stephen Friend, the Rosetta Inpharmatics founder who’s now trying to ignite an open source movement for biology, in comments he made at the Xconomy event Monday evening on the 20-year outlook for Seattle life sciences. I summed up some of the other great insights I heard from his fellow panelists Ben Shapiro and Steve Gillis, and also posted a big photo gallery here that captured the energy in the room.

—Kirkland, WA-based Pathway Medical Technologies is one of the big success stories of the past year in the local medical device community, but even it has had to endure a few lessons from the school of hard knocks. CEO Paul Buckman offered a candid look at how the company is adjusting to the new reality of the medical device business.

—Amgen (NASDAQ: AMGN), the giant biotech company with 900 employees in Seattle, said its experimental drug for osteoporosis, denosumab (Prolia), was delayed by FDA requests for more information. That didn’t seem like much of a big deal at first glance because the FDA didn’t ask for any new clinical trials, and it has been missing a lot of deadlines lately. But then Amgen said yesterday in its earnings release that the FDA is asking for more clinical trials to demonstrate safety of denosumab for cancer patients. Ouch.

—Sonosite, the Bothell, WA-based maker of portable ultrasound machines, got a lift this week when it settled all of its patent litigation with General Electric over ultrasound devices that weigh less than 10 pounds. Sonosite (NASDAQ: SONO) will get $21 million upfront and an undisclosed royalty on sales of GE’s portable ultrasound machines until 2016.

—Seattle-based Calistoga Pharmaceuticals released some preliminary, but encouraging, results over the weekend from a small leukemia trial. The company’s experimental drug was able to shrink tumors for 29 percent of patients in the trial, but based on some secondary findings, the company thinks it might be able to do much better than that in combination with other treatments, or with longer follow-up.

—San Diego-based Fate Therapeutics, the company co-founded by a group of top stem cell scientists that includes Randall Moon of the University of Washington, announced over the weekend that it has taken a big step toward “industrialized” production of stem cells for drug discovery. The advance for inducing adult cells into a pluripotent, stem-cell like state, came from the lab of Fate co-founder Sheng Ding, a professor at The Scripps Research Institute in San Diego.

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One of the scientific co-founders of San Diego-based Fate Therapeutics, along with his team at The Scripps Research Institute, is reporting a major advance that will make it faster, cheaper, and potentially practical on an industrial scale to turn adult cells into stem cells that can morph into any type of cell in the human body.

Sheng Ding and his colleagues at Scripps have found a combination of three conventional small-molecule chemical compounds that can coax adult human cells into an embryonic-like state. The new technique is about twice as fast as existing methods, and produces 200 times more cells per batch. The research in how to efficiently make these so-called “induced pluripotent stem cells” was sponsored by Fate, and is being published online today in the journal Nature Methods.

The technology, which is exclusively licensed to Fate through its sponsored research agreement with Scripps, is a big feather in the cap for the startup company as it seeks to strike deals with pharmaceutical and biotech companies that are looking get into the stem cell game. Fate has been a leader in the field since its founding two years ago by a group of top stem cell scientists from Harvard University, the University of Washington, Stanford University, and Scripps. One of those co-founders was Ding, a young scientist who got his first faculty post in 2003 at Scripps.

“This is the first example in human cells of how reprogramming speed can be accelerated. I believe that the field will quickly adopt this method, accelerating [induced pluripotent stem cell] research significantly,” Ding said in a statement from Scripps.

The latest advance builds on the discoveries of Shinya Yamanaka of Kyoto University and James Thomson of the University of Wisconsin, who showed for the first time two years ago that scientists could transform adult human cells into a pluripotent state, like that of cells in an early embryo. That was important because it was a way to circumvent the political and ethical controversy over destroying embryos in order to harvest their stem cells for research.

Pioneering as that work was, it was nowhere near ready for prime-time use in the biotech and pharmaceutical industries. Yamanaka and Thomson used viruses to insert multiple copies of four genes into adult cells. Two of the genes are known to cause cancer. Given that risk, it’s almost impossible to imagine regulators ever allowing cells with that kind of genetic modification to be injected into people who want to, say, regenerate new pancreas cells to treat their diabetes. The other big problem with the original method was that it took four weeks from start to finish, and only worked in about one out of every 10,000 cells.

Today’s announcement is the second big stem cell paper this year from the Ding lab. In May, the Ding lab reported that it had essentially gotten around …Next Page »

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I am quite often asked, in some form or another, “What can [STATE][LOCAL] government do to spur on an innovation-based economy in [SEATTLE][WASHINGTON]?”

Well, as I said on a panel at the Technology Alliance meeting in Leavenworth yesterday, the single biggest correlate to the strength of an innovative biotechnology industry in any geography is the quality of the major research institutions. The two heavyweight biotech hubs are Boston and the San Francisco Bay Area. No surprise there:

—in Boston, there are Harvard, MIT, Tufts, Boston University, and various smaller but world-renowned research institutes such as the Whitehead and the Broad; and,

—in the Bay Area, there are Stanford, UC Berkeley, and UC San Francisco.

Seattle and San Diego probably represent the next tier, with UW, the Hutch, Institute for Systems Biology, and others in Seattle, and UC San Diego, The Scripps Research Institute, Salk Institute, and others in San Diego.

If the quality of the major research institutions is the critical correlate, then anything that can be done to bolster the quality of that research would represent at least one highly fruitful way in which to improve Seattle’s competitiveness as a biotechnology center. One way to bolster research is to create additional funds for researchers already in place, and the state of Washington has already done that with the creation of the Life Sciences Discovery Fund. However, I would argue that an even better use of these or any funds brought to bear in this effort should be utilized instead to attract and endow chairs for “rockstar” researchers who have made their names elsewhere. Doing this is a highly-focused, high-profile activity that will have the ripple effect of bringing with them:

—already established quivers filled with grant funding;

—high-profile reputations, raising the profile and reputation of our research institutions (with many additional ripple effects like future recruitment of faculty and top students); and,

—top-notch students and post-docs.

Done right, this focused approach will do far more, with its continued “ripple-on-a-ripple” effect in the long term to solidify and bolster the productivity and profile of our research institutions than almost anything I have seen that is currently being done here or elsewhere.

One fantastic, if not polarizing, example of this involves Lee Hood’s recruitment to the University of Washington. Without saying much about the who’s and where’s of the people and money behind recruiting a superstar of Lee’s stature from Caltech to start a new department of Molecular Biotechnology at the University of Washington in 1992, nobody can dispute the huge positive effect Lee’s presence has had on biotech in Seattle, reaching well beyond the entrepreneurs and scientists who trained under Lee at UW, the faculty that he played a part in recruiting, and the companies that he and those students and faculty have gone on to start.

If we the people of Washington want Seattle to be a sustainable and robust world center of biotechnology, then we need to let our state and local governments know that they should consider committing long-term funding (endowment) of prestigious chairs and professorships at our research institutions which those institutions can use to attract true impact-making superstars of basic life science research. A handful or two of such hires will go far further to cement and grow the innovation-based biotechnology industry here for decades to come.

[Editor's note: this editorial is also running on the OVP blog.]

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Scientists have been trying for years to solve the mystery of why a few rare individuals get infected with HIV, yet somehow retain immune defenses so they never get sick. Today, researchers at a small Seattle biotech company, Theraclone Sciences, and collaborators at San Diego’s Scripps Research Institute say they have found a new vulnerability in the virus that could lead the way to new treatments or possibly a vaccine.

By studying rare blood samples from HIV-resistant people in the lab, scientists have found two weak spots on the virus, and were able to genetically engineer two new antibodies that broadly neutralize many variations of the virus circulating around the world, according to research being published this week in Science. Besides Theraclone and Scripps researcher Dennis Burton, this effort included collaborators from South San Francisco-based Monogram Biosciences (NASDAQ: MGRM) and the International AIDS Vaccine Initiative (IAVI) in New York.

This effort is still in its early days, and nobody knows yet for sure if these new antibodies will even work in lab animals. But this is the first time in more than a decade that scientists have discovered antibodies with broad neutralizing capability that can stand up to multiple strains of the wily virus in the lab. Plus, they were found in blood samples from donors in developing countries, where most of the new infections occur.

While HIV is largely considered a chronic disease in wealthy countries like the U.S. where there are 32 FDA-approved antiviral drugs, the discovery of neutralizing antibodies is potentially groundbreaking. The antibodies could be critical ingredients used to develop the first HIV vaccine, which would be most useful in poor countries. More than 30 million people around the world are thought to be living with HIV, and the disease is still thought to kill 2 million people a year.

“These new antibodies, which are more potent than other antibodies described to date while maintaining great breadth, attach to a novel, and potentially more accessible site on HIV to facilitate vaccine design,” said Burton, a professor of immunology and microbial science and scientific director of the IAVI Neutralizing Antibody Center at The Scripps Research Institute in La Jolla, CA, in a statement. Burton is also a member of the newly-formed Ragon Institute, a collaboration of Massachusetts General Hospital, MIT, and Harvard.

We first wrote about this HIV work in April based on an interview with Theraclone CEO David Fanning. I caught up with Fanning again by phone to talk about the business implications of getting such big recognition in one of the world’s top two scientific journals.

Theraclone CEO David Fanning

This publication—and all the global media attention it is bound to attract—is definitely going to attract the interest of prospective partners in Big Pharma and biotech, and funding agencies like the National Institutes of Health, that Theraclone needs to help pay the bills for its research program. When Fanning called me, it was 4 a.m. in Japan, where he has been meeting with potential partners. “I’m not here for vacation, you can put it that way,” he says.

“This really validates our technology in the eyes of people that we want to see start using it,” Fanning says. “Instead of us being a small private biotech that may or may not be doing something interesting, we’ve now made a mark very rapidly in one of the biggest challenges of all infectious disease.”

Still, the work is clearly just beginning. Theraclone, through ongoing financial support …Next Page »

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Shareholders of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have their say today on whether or not they want billionaire investor Carl Icahn’s nominees to shake things up in the boardroom.

The votes will be tallied at the company’s annual meeting being held at 9 am Eastern time today at the American Academy of Arts & Sciences in Cambridge. This election puts four of Biogen’s 13 director slots up for grabs, between nominees from Icahn and the company. Winners will get a three-year term.

This year’s proxy contest has been a rematch of sorts, after Icahn failed in his bid to gain seats on the board at last year’s election. This time around, Icahn delivered a much more hard-hitting case about the need for change, accusing the company of “failed leadership” and suggesting it ought to consider splitting in two to gain greater focus. Icahn cited a number of flaws he sees in the company’s current operation, including: Biogen’s rising expenses; botched marketing of its top multiple sclerosis drugs; inability to develop any new drugs since 2004; and a stock performance that has lagged its peers. This argument helped sway the most influential firm that advises investors on proxy elections—RiskMetrics Group—to recommend two of Icahn’s four nominees, Alex Denner and Richard Mulligan.

That was the biggest victory of the contest for Icahn so far, but Biogen has scored its points as well. The company’s slate of nominees won recommendations from the two other main proxy advisory firms—Glass Lewis & Co. and Proxy Governance. Biogen shot back quickly at Icahn’s ideas in its presentations to investors, disclosed with the SEC last month. It said that physicians are regaining confidence in its fastest-growing MS drug, natalizumab (Tysabri) after some safety scares last year, that its pipeline is full of promising drugs, and that splitting the company in two would actually raise expenses and make it more difficult to develop drugs with broad potential for both cancer and autoimmune diseases. Icahn’s ideas, the company said, “would destroy shareholder value.”

Dissidents in elections like these always are fighting an uphill battle, because many companies like Biogen stagger their election terms in a way that makes it impossible for a majority of directors to be voted out in a single election. But not many investors have the kind of bully pulpit or famous name recognition of Icahn, which enable him to tackle highly-skilled corporate PR head-on.

But it’s difficult even for Icahn, so he’s supporting a second proposal to make the company reincorporate in North Dakota instead of Delaware—partly because he helped craft new laws in North Dakota that make it easier for activists like himself to mount successful proxy fights, as described in this interesting Bloomberg News feature.

One thing that certainly helps dissidents in any proxy fight is shareholder resentment over the fact that a stock has been dragging down their portfolio.

On that score, Biogen would have to be considered favored to win heading into today. The company’s stock price closed yesterday at $52.32, down 14 percent from the same day a year ago. That’s nothing to write home about, but …Next Page »

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Fate Therapeutics plans to announce this morning that it has begun its first clinical trial of a drug built on its knowledge of stem cell biology. Rather than injecting certain kinds of adult stem cells to regenerate tissues, this treatment involves a conventional small-molecule drug that’s designed to spur growth of blood-forming stem cells that patients need to recover from certain kinds of leukemia and lymphomas.

Xconomy reported in March that La Jolla, CA-based Fate—which was founded by top stem cell scientists at Harvard University, The Scripps Research Institute, the University of Washington, Stanford University, and the Whitehead Institute for Biomedical Research—was destined to test its first drug in humans. But the company is now disclosing that the study will be done at the Dana-Farber Cancer Institute in Boston, and provided more details on how its treatment could better the way hematopoietic stem cells from umbilical cord blood are transplanted into some cancer patients to restore their bone marrow function.

Fate’s drug, dubbed FT-1050, is a small molecule that the company plans to use to treat blood-forming stem cells from cord blood before the cells are transplanted into humans. By activating certain genes in the stem cells, the drug is intended to boost the ability of the cells to multiply and take up residence in bone marrow, Pratik Multani, vice president of clinical development at Fate, explains. The clinical trial is testing this use of the drug in patients with blood or immune system cancers whose bone marrow function—which is vital to blood production and the immune system—has been destroyed by chemotherapy and other cancer treatments.

Fate’s treatment was initially discovered in the lab of Leonard Zon, the director of stem cell research at Children’s Hospital Boston. Zon is one of several stem cell experts who was recruited by Polaris Venture Partners and …Next Page »

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Walk into any biology lab, and you’ll see freezers full of precious biological samples that researchers typically use to gain insights on cancer, heart disease or some other ailment. The freezers run around the clock for years, sucking up lots of electricity.

But what if scientists could store their samples at room temperature by just sticking them on a shelf, in a reasonably dry place? San Diego-based Biomatrica has been pushing this idea since it crafted its prototype technology in 2004. Now Biomatrica has started to gain some market acceptance. President Rolf Muller says sales have doubled in the last year, the company has grown from 13 to 25 employees, and the business became cash-flow positive.

Keeping biological samples cold in the lab, and as they are shipped between researchers around the world, is a big business worth an estimated $38 billion worldwide, Biomatrica says. The volume of samples stored in the freezer is on a steep growth curve as scientists dig deeper into analyzing the DNA, RNA, and proteins in those samples. The Rand Corp. recently estimated there are 307 million tissue specimens stored in the U.S., and 20 million more are added each year. Years of research can literally go down the drain if a freezer breaks down because of a power outage or a mechanical failure. So Biomatrica hopes to build demand for both practical and altruistic reasons among biologists who are looking for ways to both safeguard their specimens and work in a more environmentally-friendly manner.

“The concept is revolutionary,” Muller says. “It’s a new way of preserving biological materials and keeping them stable. It’s like inventing canning for the food industry.”

OK, but before we get too breathless, it’s worth pointing out that neither Biomatrica nor any other company has made the lab freezer obsolete. Muller says Biomatrica has signed up hundreds of customers who are giving the technology a shot, including GlaxoSmithKline, the FBI, and the U.S. Navy.

Muller, a former scientist at The Scripps Research Institute, co-founded the company with his wife, Judy Muller-Cohn in 2005. She’s the CEO, overseeing the finance and operations side of the business, while he manages the scientific side.

Here’s how the technology is supposed to work: Biomatrica’s technology is built on a complex, ancient natural phenomenon called anhydrobiosis, which means “life without water.” It’s a process some organisms use to survive …Next Page »

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Expectations were high at UC San Diego yesterday as the city’s academic, business, and political leaders gathered to announce the formation of SD-CAB, the San Diego Center for Algae Biotechnology.

Steve Kay, UCSD’s dean of biological sciences and SD-CAB’s founding director, told the audience the single point of the center was to position San Diego as “the leader in the new algae economy.” Such hyperbole aside, the underlying idea for the consortium of academic and industry researchers was basically how Kay described it in January, when I first learned about SD-CAB. Since then, organizers have added the Salk Institute and San Diego State University to the consortium, which intends to make San Diego a nationally recognized center for the kind of innovative solutions needed to make algae biofuels production commercially viable.

One difference that was evident yesterday, though, is that expectations have soared beyond making San Diego what UCSD Chancellor Marye Anne Fox calls “a big green cluster” for algae biotechnology research. Some speakers talked about making San Diego a “green Houston” of the biofuels industry. ”Maybe someday, if the history of algae is ever written, this will be remembered as the day when it all started,” Jim Waring, chairman of Cleantech San Diego, told me before the press conference began.

Joining in the exuberance, Stephen Mayfield, an expert in the genetics of algae at The Scripps Research Institute, told the audience that algae-based biofuels, which includes gasoline, jet fuel, and diesel, “will be under $2 a gallon” in the next five to 10 years. Who knows if Mayfield is right? But with his enthusiasm and scientific credentials, Mayfield had people listening raptly. In addition to serving as SD-CAB’s co-founder and associate director, Mayfield also is a scientific adviser and co-founder of Sapphire Energy, the algae biofuels startup funded in part by Bill Gates’ Cascade Investment fund.

And perhaps there is cause to celebrate. Biofuels Digest says venture capital firms invested $175.9 million in to develop algae-based biofuels throughout the United States last year, and $100-million of that went to Sapphire Energy. Panelists at the press conference also cited a San Diego regional economic study that found every $100 million of venture capital funding applied …Next Page »

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The San Diego region is undertaking a broad initiative to accelerate development of algae-to-biofuels technology by establishing a new organization, the San Diego Center for Algae-based Biofuels, or SD-CAB. The center is being organized by a consortium of academic and industry researchers and represents a regional effort to make sustainable algae-based biofuel production a reality in the next 5 to 10 years, says Steve Kay, dean of Biological Sciences at UC San Diego.

Kay says the center is currently virtual, with initial funding for SD-CAB coming from what he described as “a corporate affiliates program.” He didn’t elaborate, but such an effort might attract financial support, for example,from a big oil company. In any case, I recently counted at least nine companies in the San Diego area that are working to develop algae-based substitutes for conventional petroleum products. Most of them are early-stage startups, but the list includes SAIC (NYSE: SAI) and privately held General Atomics. Both are major government contractors accustomed to managing collaborative research programs, and both recently got grants from the Defense Advanced Research Project Agency to develop technologies that use algae to make jet fuel.

The collaborative effort behind the new center emerged from a non-profit membership organization called Cleantech San Diego, which was formed in late 2007 by the city of San Diego and local economic development groups.

Lisa Bicker, Cleantech San Diego’s CEO, told me last week she helped organize an initial meeting of scientists and industry officials last July—just to talk about who’s doing what …Next Page »

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It has been a year since the largest pharmaceutical company in the world acquired San Diego’s CovX, a venture-backed life sciences company developing new treatments for cancer and diabetes.

At the time, Pfizer already had invested more than $522 million to develop a San Diego campus, which has more than 1,000 employees and operates as a major hub for Pfizer Global Research and Development, or PGRD. So it would have been logical for Pfizer to consolidate CovX within its global R&D operations. But it didn’t.

Pfizer instead made CovX part of a new R&D division that includes other biotech units in Boston and the United Kingdom. Pfizer created the division just 14 months ago as an alternative approach to drug discovery, and calls it the Biotherapeutics and Bioinnovation Center, or BBC. I sat down recently with Rodney Lappe, the chief scientific officer at CovX, to discuss how Pfizer’s new model for innovation has been working.

“We remain more or less the way we were when Pfizer bought us,” Lappe says. “The goal is to retain that fast-paced entrepreneurial culture, with the resources of a big pharma company.”

In fact, he says, CovX has grown from 65 employees to 85 since joining the Pfizer fold, with R&D expanding from CovX’s original focus on developing new compounds for cancer and diabetes to new candidates for treating pain and inflammation. Yet Lappe says, “Most of the people here really can’t …Next Page »

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Jack Florio fits the casting profile of the kind of guy Hollywood might see as an angel investor. He has 30 years experience in the pharmaceutical business, much of it in management jobs at pharma giant Eli Lilly. He’s got the experience to offer advice to a younger entrepreneur, and the Rolodex to make key introductions with old pals in Big Pharma. He even looks the part of an energetic elder statesman, like a less-tanned version of actor George Hamilton.

I had an interesting talk with Florio, the vice president of marketing and communications for Tech Coast Angels, on my trip to San Diego a few weeks ago. This is a follow-up to the story Bruce wrote in October, based on an interview with the angel group’s president, Michael Elconin. One recent investment from the group in San Diego-based MicroPower Appliance caught our eye. It’s aiming to to develop a battery-powered Wi-Fi video camera.

At a Starbucks at the University Towne Centre mall on La Jolla Village Dr., I asked Florio what the angels get out of doing this sort of thing. The group has put more than $100 million to work in a variety of 150 different startups across a broad range of technology and life sciences ideas. The angels have a variety of motives. They want to put their experience to work, but not necessarily in the everyday pressure-cooker of running a company. They want to stay mentally engaged with a variety of interesting concepts. They want to meet some of the brightest, hungriest young entrepreneurs around. They want to keep their valuable contacts in industry fresh. They want to get in on the ground floor of promising investments too, but Florio made that sound kind of like gravy.

“We don’t want people to come to Tech Coast Angels if you just want money,” Florio says. “We have an interest in getting involved with companies.”

Each member of the Tech Coast Angels is asked …Next Page »

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Software tycoon and San Diego Padres owner John Moores has contributed $2.1 million to kick off a $50 million fund-raising initiative for The Scripps Research Institute. The San Diego facility says the campaign is intended to expand current research programs and recruit elite scientists to the institute’s laboratories in San Diego and Jupiter, FL. Moores, who co-founded Houston’s BMC Software, started San Diego software investment specialist JMI Equity in 1992 and bought the Padres baseball team in 1994. He has served as a member of the Scripps Research Board of Trustees since 1997 and as chairman since 2006.

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

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

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

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

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

“This can supplant interferon beta,” Chhabra says.

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

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

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

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

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

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If it seems as if San Diego sprang to sudden prominence as a global capital for innovation, at least part of the explanation can be found atop the oceanside bluff known as Torrey Pines Mesa.

This perch has one of the most prestigious zip codes in the world, 92037, used by the Burnham Institute for Medical Research, The Scripps Research Institute, and The Salk Institute for Biological Studies. Across the street from the Salk is the University of California, San Diego, with its own zip code, 92093. Just down the road are General Atomics and the San Diego headquarters of SAIC, Science Applications International Corp., both government contractors that operate as R&D conglomerates.

Torrey Pines Mesa also may be the most stunningly scenic vista in a city renowned for its Mediterranean-like views of coastal cliffs and beaches, sun-splashed bays, and urban skyline.

The mesa encompasses a 2,000-acre wildlands park, with trails that drop 300 feet through deep ravines to the Pacific Ocean. Coastal fog and rain occasionally sweep through the partly wooded bluff, which is usually bathed in sunshine. The zip code includes the Torrey Pines Golf Course, which hosted the U.S. Open earlier this year, and parts of fabled La Jolla, the affluent seaside resort. As it turns, 92037 also includes the latest office for Xconomy, on North Torrey Pines Road.

Leading researchers who relocate to San Diego often cite the combined allure of this scenic landscape and scientific firepower as a major reason for making the move.

It was part of the reason why K. Barry Sharpless, who shared the 2001 Nobel Prize in chemistry, moved to San Diego from MIT 17 years ago. Sharpless told me years ago he particularly enjoyed the ocean swim from La Jolla shores to La Jolla Cove, a roundtrip distance of roughly 2 miles.

Ron Evans, a professor in the gene expression lab at Salk (and a San Diego Xconomist), described the research institute where he works as “an architectural masterpiece” designed by Louis Kahn on a bluff selected personally by Jonas Salk, best known for his development of a killed-virus polio vaccine.

“It was meant to be symbolic of the movement of Americans from East to West,” Evans told me last week. “This is the last West Coast outpost overlooking the Pacific, constructed by Salk at the peak of his fame. Not only does it have magnificent views of the ocean and cliffs, but it is an uncluttered landscape. One never gets tired of that.”

Still, the emergence of Torrey Pines Mesa as a scientific powerhouse did not happen by chance, says Mary Walshok, a UCSD Associate Vice Chancellor and sociologist who has studied Silicon Valley and other technology clusters.

San Diego has a 100-year history of courting the U.S. Navy and relying on the military for its economic development, Walshok says. The Navy and Marine Corps continue to maintain major military bases in the region today.

Yet Walshok credits John J. Hopkins, president of General Dynamics Corp. …Next Page »

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The Scripps Research Institute, the La Jolla, CA-based nonprofit research center, said today it will establish, along with the International AIDS Vaccine Initiative, the world’s first research center devoted to studying neutralizing antibodies against HIV. The International AIDS Vaccine Initiative will invest $30 million over five years in the center at Scripps, to house teams of scientists from multiple disciplines who will study how to generate broadly neutralizing antibodies against the HIV virus.  Scripps president Richard Lerner called it “the toughest challenge facing AIDS vaccine researchers today,” in a statement.

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