When I met Organovo CEO Keith Murphy last year, he was searching for commercially viable products the San Diego startup could use to support its business while advancing its long-term goal of using living cells to create kidneys and other vital organs.

More recently, a visibly excited Murphy told me he’s discovered an unmet need for Organovo’s technology among Big Pharmas, and the company’s new customer base is growing. In fact, Organovo has been generating enough revenue from a series of new partnerships that Murphy says he’s put off an expected Series A venture round.

“Back in the early part of last year we were thinking about raising capital, but have been able to avoid that because we’re getting sufficient revenue from partnership deals at this point to grow the company,” Murphy wrote in an e-mail yesterday. He told me earlier the deals had helped Organovo become nearly self-sustaining, and more are in the works. “I won’t say we’re in the black, but our burn rate has been quite low this year.”

As I explained last year, Organovo was founded four years ago on technology developed by Gabor Forgacs of the University of Missouri. Since then, Murphy says the company has raised just over $2 million from private investors to develop “bio-printing” technology that operates much like an inkjet printer. Instead of laying down ink, however, Organovo’s bio-printer lays down a pattern of cultured cells and a jello-like hydrogel that supports the cells in a 3-D structure. In this way, Organovo already has been able to grow bio-engineered blood vessels, and to lay more ambitious plans to create kidneys, livers, and other vital organs in the same way.

Such bio-engineering of organs is not a particularly new field; the basic took root decades ago. Anthony Atala of the Wake Forest Institute for Regenerative Medicine, for example, was the first to use similar technology to create new bladders. A key advantage of the technology is that it avoids host rejection complications by using a patient’s own cells to create new tissue. Still, the work is still highly experimental, so getting regulatory approval to graft a bio-engineered blood vessel in a living patient will take years.

In the meantime, Murphy found a burgeoning market among pharmaceutical companies by creating what he calls 3-dimensional “constructs” of diseased or dysfunctional human cells that can be used as models for testing new drugs. Creating a 3-D matrix of cells enables each cell to interact with adjoining cells, so they react to drug compounds much as they would in the body.

For example, Murphy says conventional drug testing on liver cells has been complicated because the cells flatten out in a petri dish—and as that happens … Next Page »

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It was another busy week with news of funding rounds for young startups, especially in the e-commerce and drug spaces.

—Woburn, MA-based Bio2 Technologies sold $1.1 million of an equity offering that could total $2 million. The company is developing tissue-engineering scaffolds for applications in orthopedics, and has licensed its technology from Geo2 Technologies, another Woburn company.

—Excelimmune, a Woburn-based drug developer, raised $4.5 million of a planned $9 million in an equity offering. The startup, which makes drugs using recombinant human antibodies, raised $1 million in Series B funding in February to put toward its experimental treatment for staph infections.

—Cambridge, MA-based thredUP, an e-commerce site for swapping used children’s clothing, raised $1.4 million in a Series A-1 round of funding, led by Menlo Park, CA-based Trinity Ventures. Participants in the deal also included Founder Collective, High Line Ventures, and NextView Ventures, the new micro VC firm started by Spark Capital veteran Rob Go, former Point Judith Capital principal Lee Hower, and David Beisel, current vice president of Venrock. ThredUP said it will put the cash toward new hires and product development.

—Mall Networks, a Lexington, MA-based online customer loyalty program provider, wrapped up a $6.6 million round of venture funding, an SEC filing showed. The filing listed representatives from Dace Ventures, Flybridge Capital Partners, Venture Capital Fund of New England, and LBO Enterprises as members of the Mall Networks board of directors. The startup, which runs a network of online malls featuring products from more than 700 merchants, nabbed a $7 million Series B round in 2008.

—Cambridge-based Infinity Pharmaceuticals struck a deal with Intellikine, a San Diego-based developer of drugs that target the so-called PI3 kinase pathway, which is involved in certain cancers and autoimmune diseases. Infinity (NASDAQ: INFI) will pay Intellikine $13.5 million upfront, up to $25 million in milestone payments for two drug candidates, and possibly another $450 million more if … Next Page »

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A biomedical startup in San Diego is giving new form to tissue engineering, with the help of proprietary technology licensed from the University of Missouri and a 3-D “bio-printer” capable of building human blood vessels and organs.

Organovo CEO Keith Murphy demonstrated the bio-printer for me several weeks ago, explaining that the technology was developed by Gabor Forgacs, a professor of biological physics at the University of Missouri. “The technology really sparked the germ of the company,” says Murphy, who previously spent 10 years at Thousand Oaks, CA-based Amgen.

Forgacs, a Hungarian who moved to the United States in the 1980s, founded Organovo in 2007 with more than $1 million in funding raised from angel investors in San Diego and elsewhere around the world, according to Murphy. The CEO says Forgacs gained a fundamental understanding of what it takes to artificially create human organs through painstaking studies of developing chicken embryos. As Murphy puts it, Forgacs literally wrote (or co-authored) the textbook, which is called “Biological Physics of the Developing Embryo.”

The field of tissue engineering has come a long way since the 1980s, when MIT’s Robert Langer developed methods of encouraging certain types of organ cells to grow on polymer scaffolding. In recent years, a number of researchers have begun experimenting with technology that uses modified inkjet printers to lay down precise patterns of cells that grow together to form tissue. Anthony Atala, director of the Wake Forest Institute for Regenerative Medicine, demonstrated how researchers at Wake Forest use similar technology to grow a human ear, bladder, and heart muscle during a Ted Med presentation in San Diego three months ago.

Early demonstration of organ bio-printing

Forgacs showed in 2005 that it was possible to “print” a tube of living tissue, using droplets—or spheres—of viscous biological material from hamster ovary cells. When the cell spheres were printed in a ring and stacked on top of one another with the help of a supportive hydrogel, they fused together within 24 hours to form a tubular structure. Forgacs refined the technology under a $5 million grant from the National Science Foundation that includes regenerative medicine scientists from Medical University of South Carolina, the New York Medical College, University of Utah, and other institutions. As Organovo’s Murphy puts it, the technology “really is about seeing this cellular self-assembly that occurs when these cells are put together. They already know how to behave and they just fuse together.”

Murphy says the startup moved to San Diego in late 2008 with a long-term goal of using the technology to create livers, kidneys, and other vital organs that are usually in short supply for patients in need of organ transplants. In the meantime, Organovo is expected to raise Series A venture funding sometime this summer. Murphy also says, “We’ve got to take the first steps to have commercially viable products in the short term.”

For the immediate future, Murphy says … Next Page »

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Pervasis Therapeutics, a Cambridge, MA-based cell therapy company, has hired a veteran businessman from Genzyme as its first CEO. Frederic Chereau, a former vice president and general manager of the cardiovascular business unit of Genzyme, takes over a company that aims to create a cell-based product that will help stop excessive inflammation and promote healing.

Pervasis is associated with some big name inventors, including MIT Institute professor Robert Langer, and has gotten backing from Polaris Venture Partners, Flagship Ventures, and Highland Capital Partners. Chereau, 42, said he decided to take on this challenge partly because he got a glimpse of Pervasis’ technology while it was being manufactured under contract at Genzyme, and he’s seen clinical trial data that suggest the product will improve the treatment of patients undergoing kidney dialysis. Chereau also spent a few months of soul-searching, and decided he wanted to push himself to try to do something big with a startup.

“My father once said he wished he had started a company and never did because of good reasons,” Chereau says. “You can always find good reasons not to take on this kind of risk. But if I waited five years, maybe I wouldn’t have the energy or the passion to do this.”

Chereau certainly sounded fired up in our conversation. His main goal is to further develop Pervasis’ product, which it calls Vascugel, which consists of a sponge-like material seeded with cells that line blood vessels. When the material is placed against an injured blood vessel, the cells produce certain proteins that seep through the blood vessel wall, where they can tamp down inflammation and scarring. The cells aren’t personalized to the patient, but rather are from a standard off-the-shelf line of cells.

The initial application that Pervasis is targeting with the technology is treating the blood vessels of kidney dialysis patients. These patients typically get hooked up to dialysis machines to have their blood filtered every other day, and it takes rather large needles to handle the stream of blood to and from the machine, Chereau says. To prepare an access point for those needles, surgeons create a sort of bubble below the skin in the upper arm by joining and artery and vein together directly (called a fistula) or with a plastic tube (called a graft). Eventually, though, inflammation and scarring slow the flow of blood through the site of the surgery, and a new bubble needs to get formed further up the arm. This can’t go on forever: As Chereau points out. “You only have two arms.”

Vascugel, applied to the blood vessel at the time the fistula or graft is created, could promote natural healing, preventing the excess inflammation and scarring, Chereau says. About 300,000 patients in the U.S. are on kidney dialysis, so there’s potentially a large initial market for this sort of therapy that might promote healing around those injection sites.

Data of the Vascugel technique from a mid-stage clinical trial is available internally at the company, although it isn’t being presented publicly until the American Society of Nephrology meeting in Philadelphia November 4 to 9. So far, about 65 patients have been entered into the safety database, and the product doesn’t appear to provoke patients’ immune systems to reject the cells as foreign invaders, Chereau says. The data are encouraging enough that his primary goal for the next year is to begin a pivotal study of Vascugel before the end of June, he says.

Pervasis has its sights on other applications of this cell-therapy approach as well. It wants to test the method against a disease of scarring and inflammation in leg arteries—peripheral artery disease—as well as carotid artery disease. That puts Chereau into a very competitive space with companies trying all sorts of techniques to reduce arterial inflammation. “Everybody is trying to solve vascular issues, but we have a very promising technology,” he says.

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With its aim of growing replacements for injured or ailing body parts, tissue engineering is a field that at first seemed spectacularly promising. (Anyone remember the mouse with a human ear growing on its back?) But it has ended up being a bit of a boondoggle. Although researchers have made important scientific advances in areas such as skin and bladder repair, overall too few projects panned out. What’s more, the business model for tissue engineering is awkward because, in most cases, donor cells must be harvested from each individual patient. These and other challenges have sent most investors scurrying away from the field.

Lincoln, RI-based InCytu is a brand new player in the tissue engineering arena with high hopes of reversing that trend, drawing on new technology from Harvard bioengineer David Mooney’s lab. InCytu is developing a suite of “smart” materials that help the body grow new tissues and repair itself—using its own stem cells right in the body—rather than requiring that cells be harvested, treated in a lab, and then returned to the patient. InCytu won’t try at first to rebuild very complex organs or structures, however. The company’s initial aim is to create simpler products such as dressings that can coax new blood vessels to grow into skin badly damaged by diabetes and injectable gels to help repair hernias and perhaps even shrapnel or bullet wounds.

Founded in April 2007, InCytu is now part way through a Series A funding round, which is expected to close this summer. CEO Alfred Vasconcellos says he’s not ready to reveal the initial backers or how much funding the company has, but he and Mooney were brought together by Venzyme Venture Catalyst, a matchmaker for new technologies and management teams. Venzyme’s managing director, Richard Berenson, is a co-founder of InCytu, along with Vasconcellos and Mooney.

The startup already has about 20 staff on board, and it plans to hire another 23 people by the end of 2008. And those new hires will be busy; InCytu hopes to have at least one product in human studies within 18 to 24 months, and something approved by 2011.

InCytu’s technology stems from Mooney’s work on the interaction between materials and living cells, particularly stem cells—undifferentiated cells able to develop into a variety of tissues. Hoping to boost the body’s own healing process into hyperdrive, Mooney developed materials embedded with biomolecules that “talk” to cells, coaxing them toward one particular fate or another.

InCytu uses these materials to build what it calls “Cellariums”—implants, dressings, gels, and other devices that function as solariums for cells, providing each type of cell with what it needs to grow, thrive, and replicate. As Vasconcellos explains, “they hold onto the cells, amplify their numbers, amplify their functionality, and then release them in an organized pre-programmed manner.” By customizing the mix of materials and biomolecules in each type of device, InCytu hopes to be able to grow or repair blood vessels, brain tissue, tendons, spinal cords, and more. The target market numbers in the business plan are whoppers, of course, with several offering blockbuster potential.

But what makes Vasconcellos think his team can succeed in a field where so many others have failed? For one thing, the technology, part of a whole new field referred to as “bioactive medical devices,” avoids the problem of how to get the engineered tissues or organs to reintegrate with the body properly. With Mooney’s approach, the new tissue is being engineered right at the point of damage or disease, rather than in a lab—there’s no need for any re-implantation procedure.

In addition, Vasconcellos says, InCytu won’t be caught up in a service model, where it has to grow cells or tissues for each new patient. The company will be mainly selling devices, including gels and dressings, that can be stored at room temperature and transported easily. The manufacturing process is also straightforward. “We can make large batches easily,” he says.

Finally, Vasconcellos thinks his experience with another former Rhode Island startup, Cytotherapeutics (now Stem Cells Inc.), will be invaluable. “I firmly believe cells will revolutionize medicine,” he says. (InCytu is Vasconcellos’s sixth startup overall.) Another alumnus of Cytotherapeutics, Dwaine Emerich, will be on InCytu’s scientific advisory board with Mooney.

Based on my recent conversation with Harvard Stem Cell Institute’s Brock Reeve, InCytu is just one of several new companies that isn’t looking to sell cells per se, but rather is developing products that encourage certain behaviors from the body’s own cells. Another player in this game is the high-profile Seattle startup Fate Therapeutics. Vasconcellos says InCytu is not in direct competition with Fate, though. Rather, he says, “we think we can help each other.”

And with any luck, the combination of new technology and simpler business models will help investors warm back up to tissue engineering.

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For almost as long as surgeons have been transplanting organs such as hearts, livers, and lungs, they’ve been frustrated by the scarcity of available organs, and have imagined a future where artificial organs might ease the shortage. One local transplant surgeon, Massachusetts General Hospital’s Joseph Vacanti, has spent more than twenty years working toward that vision, experimenting with various types of support structures that might allow specialized cells such as hepatocytes (liver cells) to grow and function outside an actual organ. And now the firm commercializing his technology, BioEngine, may be within striking distance of the goal.

Within two years, the Boston-based company expects to get clearance from the Food and Drug Administration for the first human pilot studies of an “artifical liver”—an implantable device that would boost liver function as a bridge to transplantation, according to CEO Gary Woolf. The two-year-old company had to throw out its first prototypes for the device and start over with a new design and a new manufacturing technology, but it’s currently building the first set of test devices based on the new design and gearing up to implant them in pigs. Woolf is in high spirits about the company’s progress and about the technology’s extended future. “If we can make this work, it will change everything,” he says.

I visited Woolf and BioEngine vice president of operations Brian Orrick yesterday at their Newbury Street offices, which are shared between BioEngine, sister company Alito Scientific (developer of a device to supplement lung function), and Shiboomi, Woolf’s business incubator. Woolf explained that from the time of Vacanti’s earliest tissue-engineering experiments with Harvard researchers Judah Folkman and Robert Langer (who is now at MIT, and is an Xconomist), the surgeon’s goal was to create three-dimensional structures that could provide a foothold for human cells—both specialized cells like hepatocytes and the surrounding support cells that keep them alive. But to survive and to do their jobs, cells need to constantly exchange nutrients, oxygen, wastes, and other molecules with the blood, and it turned out that that requires each cell to be very close—within a hundred micrometers—to a blood vessel. So the challenge became creating a structure with a dense, highly intricate vasculature.

In normal, living organs, incoming vessels branch into smaller vessels that continue to branch off, eventually forming networks of tiny capillaries only tens of micrometers wide. These capillaries then rejoin like streams flowing into rivers and eventually emerge from an organ as veins. Woolf and Orrick showed me examples of the company’s first-generation prototype for an artificial vasculature, a sheet of clear, flexible polymer bearing a grid-like mesh of progressively smaller channels. BioEngine worked extensively with Draper Laboratories in Cambridge, where Orrick was a member of the technical staff, to adapt a process called MEMS lithography to create the patterned silicon wafers that served as the molds for the polymer sheets.

Unfortunately, Orrick explains, blood tended to clot up as it flowed through the narrowing channels in these sheets. The problem appears to be one of geometry, Orrick says; cells in the natural bloodstream flow through tubes—i.e., structures with circular cross-sections—whereas the lithographic process could only be used to form molds for channels with flat walls and floors and a fixed depth. “You want your wide channels to be deep and your narrow channels to be shallow,” says Orrick.

So Vacanti’s team started over, partnering with Pittsburgh high-tech machining company ExOne to develop a different approach to making the molds for the polymer sheets. ExOne uses techniques such as electrolytic dissolution, laser ablation, and ultrasonic grinding to create tiny metal parts bearing 3-D patterns. In BioEngine’s case, the company used its tools to create molds for polymer disks bearing a lacework pattern of rounded-out grooves resembling the capillary networks of real liver tissue.

It’s that new design that BioEngine hopes to test soon in animals; in lab tests so far, blood doesn’t clot up in the redesigned channels, Woolf says. Before implantation, many of the patterned polymer disks will be stacked together, alternating with layers of hepatocytes. The stack will form a cylindrical device that can be implanted alongside a patient’s ailing liver (or in place of a portion of it).

BioEngine suffered a blow in April when Larry Rhoades, CEO of ExOne and an innovative scientific and engineering advisor to the Vacanti project, fell ill and died during a scuba trip in Hawaii. But Rhoade’s passing has only pushed the team to move faster, Woolf says. “He was a great man, a joy to be around, and we have an even greater motivation to keep pushing now, because he was such a light bulb for us,” says Woolf.

For Alito Sciences, BioEngine’s sister company, Vacanti’s team is developing an almost identical “lung assist” device, without the embedded cells. It turns out that the artificial blood vessels are very good at allowing oxygen to pass into the blood and carbon dioxide to escape. An implanted device fed via catheter with oxygen could help people with chronic obstructive pulmonary disease, cystic fibrosis, or other lung afflictions. That device, too, should be ready for testing on humans within two years, Woolf says.

Eventually, the privately-held, angel-funded company plans to address the transplant-shortage crisis even more directly by testing implantable liver-assist devices made of biodegradable polymers that will simply dissolve over time, leaving nothing but a permanent new organ. “Dr. Vacanti’s philosophy is that when mankind has a problem, it engineers a solution,” says Woolf. “When you need more housing for people, you don’t wait for old houses to open up. You build new ones.”

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