—San Diego’s Amylin Pharmaceuticals says Bydureon, its new once-a-week drug for treating Type 2 diabetes can hit the market as early as next month, after the FDA cleared Bydureon. The FDA rejected the Amylin’s drug twice before. An estimated 26 million people in the United States, or roughly 8 percent of the population, have type 2 diabetes.

—San Diego’s life sciences sector has expanded since 2009, with employment increasing by more than 5,550 jobs, or 15 percent, over the past two years, according to a new economic report from Biocom, the local industry group. The comprehensive study counted more than 1,700 life sciences companies with a total of 41,937 employees throughout San Diego County in 2011, and says those numbers are expected to grow over the next two years.

—The FDA gave its approval to Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which has substantial operations in San Diego, for a new drug called Ivacaftor (Kalydeco), developed to treat a rare form of cystic fibrosis. The twice-a-day pill targets about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis.

—Johnson & Johnson’s reorganized R&D operation in San Diego, now known as Janssen Healthcare Innovation, is trying an experiment in innovation by creating an incentive prize challenge. Janssen is offering a total of $250,000 for technology that helps improve care for patients who have just been discharged from a hospital.

—The folks who produce the quarterly MoneyTree report on venture capital funding just released a deeper dive into the details of life sciences investments. The survey shows that VC funding for life sciences increased 21 percent nationwide in 2011, with a total of $7.5 billion going into 785 deals. San Diego ranked third among metropolitan regions in terms of capital invested in the fourth quarter. The top five are Bay Area ($498 million), Boston ($384 million), San Diego Metro ($193 million), NY Metro ($98 million), and Orange County ($97 million

—Optimer Pharmaceuticals (NASDAQ: OPTR) CEO Pedro Lichtinger outlined his plans for expanding the market for the company’s first product, the antibiotic fidaxomicin (Dificid), as a preventative therapy for hospital patients at risk for a nasty intestinal infection called C. difficile. San Diego-based Optimer is planning a clinical trial to prove the drug can help prevent severe diarrhea in patients undergoing bone-marrow transplants.

—A tweet from Bob More of Frazier Healthcare Ventures prompted Luke to delve into the importance of character among life sciences leaders in his BioBeat column. “Politics pretty similar to backing CEO’s,” More said. “Newt may be smart and a good debate guy. But Newt=Smug. Never back smug,”

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After the stock market closed last night, New York-based Bristol-Myers Squibb (NYSE: BMY) announced that a cocktail containing two of its experimental drugs to treat hepatitis C obliterated the virus in some patients in a Phase 2 study. The results were so compelling the company used the “C” word in a press release, declaring, “This study was the first study to demonstrate the possibility that hepatitis C can be cured,” without interferon, which has to be injected and can cause side effects.

But the good news was quickly overshadowed by bad news from the FDA on another Bristol drug, dapagliflozin, which the company and its development partner, AstraZeneca (NYSE: AZN), had submitted for approval in Type 2 diabetes. At about 2 a.m., the companies announced that the FDA had issued a dreaded “complete response letter,” requesting additional data to help better assess the risk/benefit profile of the drug.

The FDA’s response was no surprise. In July, an advisory panel to the FDA voted nine-to-six against approving dapagliflozin. Although the agency doesn’t have to follow the recommendations of its advisory panels, it usually does. Dapagliflozin is part of a new class of drugs designed to inhibit SGLT2, a protein that promotes glucose absorption. The July assessment of Bristol’s drug was so harsh some Wall Street analysts declared the death of the entire SGLT2 class. In today’s statement, though, Bristol and AstraZeneca said they “remain committed to dapagliflozin and its development.”

Investors will be more likely to find something to cheer about in Bristol’s experimental hepatitis treatments, daclatasvir and asunaprevir. Both drugs target a subset of patients who have a particular genotype and who haven’t responded to the commonly used treatments interferon and ribavirin. With this recent study, the company reached its goal of proving that the combination would render the virus undetectable in some patients. A Phase 3 study of the dual treatment is now underway, meaning investors looking for some indication of how it works in a large patient population will have to wait a while.

Not surprisingly, Wall Street is focusing today on the bad news in diabetes. Shares of Bristol dipped about 1 percent to $33.42 in pre-market trading, and shares of AstraZeneca were down nearly 2 percent to $47.30.

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Merck (NYSE: MRK) outlined progress on several of the drugs in its pipeline today during its annual R&D and business briefing for Wall Street analysts and investors, which was held at the drug giant’s Whitehouse Station, NJ headquarters.

CEO Kenneth Frazier began the day by acknowledging that Wall Street has been impatient with the company’s progress in advancing novel drugs to market. Despite the fact that the company has won FDA approval for five new products this year—including boceprevir (Victrelis) to treat hepatits C—the company’s stock has been declining over the last six months, dropping from $36 in May to $33.80 yesterday. “We recognize we can’t ask you—our investors—to wait for us to achieve our long-term aspirations,” Frazier told the audience at R&D Day.  ”I want you to know we intend to perform in the short term.”

Merck’s R&D chief Peter Kim started by highlighting several drug candidates in Merck’s late-stage pipeline. Kim reviewed recent data on a range of drugs to treat such conditions as osteoporosis, atherosclerosis, and chronic insomnia. Kim vowed to submit eight new drugs to the FDA for approval in 2012 and 2013.

During R&D day, Merck outlined recent progress on six novel drug candidates, including two the company detailed for the first time. First is MK-3102, an oral drug to treat … Next Page »

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[Updated 9/13/11 2:30 p.m. See below.] Valeritas, a Bridgewater, NJ-based medical device company, announced yesterday that it has raised $150 million in a Series C funding round. The money will support the company’s lead product, a disposable device designed for patients with Type 2 diabetes who require insulin.

The product, called V-Go Disposable Insulin Delivery Device (pictured above), was approved by the FDA in December 2010. Patients can fill it with insulin and then wear it under their clothing. They can use it to get both a continuous dosing of insulin under the skin and on-demand doses at mealtime. The company plans to use the new funding to support the commercialization of the product, which was also approved in Europe.

Private equity firm Welsh, Carson, Anderson & Stowe led the financing and took a controlling interest in Valeritas, the company said. Also participating in the round were existing investors MPM Capital, Pitango Venture Capital, Abingworth, Advanced Technology Ventures, ONSET Ventures, HLM Venture Partners, Agate Medical Investments, CHL Medical Partners, and Kaiser Permanente Ventures. “We’re very excited that all these investors are expressing a lot of interest in the opportunity Valeritas has,” says CEO Kristine Peterson. “The Type 2 market is large and growing, and we think V-Go provides a real benefit to patients who need insulin.” [This paragraph has been updated with additional details and a quote from Kristine Peterson.]

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Kalamazoo, MI-based Metabolic Solutions Development, a developer of drugs to treat Type 2 diabetes, raised another $6.8 million in equity-based financing, according to a July 29 filing with the Securities and Exchange Commission. Twenty-three investors participated in the sale. Most of the financing is being used for expenses related to converting the company to an LLC structure, CEO Stephen Benoit said.

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The board of iPierian, the South San Francisco-based stem cell company with high-profile scientific founders from Harvard University and prominent financial backers that include GlaxoSmithKline, Kleiner Perkins Caufield & Byers, Google Ventures, and Biogen Idec, has terminated several members of the company’s senior executive team as part of a shift in strategy, Xconomy has learned.

Michael Venuti, who was named CEO of Ipierian in July 2010, was fired by the board in late April of this year, and the company’s top executives in charge of finance, business development, and legal/intellectual property were dismissed within days, according to John Walker, Venuti’s predecessor as CEO of iPierian, and two other sources with knowledge of the situation. The chief technical officer, Berta Strulovici, left in the weeks prior to the departures of the other executives, sources said. iPierian hasn’t publicly announced the departures, but it has updated its corporate website, which says the new CEO is Peter Van Vlasselaer, the former CEO of Palo Alto, CA-based Arresto Biosciences. Van Vlasselaer is the only person listed under “Leadership Team” on the company’s website.

Two members of the iPierian board, Corey Goodman and Beth Seidenberg, declined to comment on the moves. Venuti didn’t respond to a request for comment, and neither did Van Vlasselaer or George Daley, a co-founder of the company at the Harvard Stem Cell Institute.

iPierian has been one of the nation’s highest profile stem cell startups of the past few years. The company in its current form was put together in July 2009, when Pierian, a company co-founded by three world-renowned stem cell researchers at the Harvard Stem Cell Institute, was merged with iZumi Bio, a San Francisco startup that focused on reprogramming adult cells to become “pluripotent,” so they could have the vast potential, like that of a stem cell, to morph into most any cell type in the body.

The new combined company, which I profiled in these pages last June, has a high-profile set of venture backers that have poured more than $50 million into the company. The crew of backers includes Kleiner Perkins Caufield & Byers, Highland Capital Partners, MPM Capital, Google Ventures, GlaxoSmithKline’s SR One, FinTech Global Capital, Mitsubishi UFJ Capital, Mission Bay Capital, Atel Ventures, and Biogen Idec New Ventures. iPierian’s last financing came as a Series B round worth $28 million, which Xconomy reported in September.

iPierian’s business strategy has long been to develop technology for using “induced pluripotent stem cells” as a tool for screening new drug candidates; it would then license the technology to Big Pharma companies. In my profile last June, then-CEO Walker said iPierian had created 200 different “lines” of induced pluripotent stem cells from patients with neurodegenerative diseases like Spinal Muscular Atrophy, Huntington’s, Parkinson’s, and Alzheimer’s, and from people with Type 2 diabetes. The company was comparing those cells with cells from healthy relatives to better home in on what might be going awry in the patients with the ailments, and which drugs might have the best chance to change the course of their disease in clinical trials.

iPierian hasn’t yet found a Big Pharma partner to provide cash and validation for this strategy, but Venuti was in position to execute on the plan at the point he was fired, Walker said … Next Page »

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Three companies involved in the development of a once-weekly injection of the Type 2 diabetes drug exenatide reported today that the treatment did not provide superior efficacy over an existing treatment in a head-to-head study.

Amylin Pharmaceuticals (NASDAQ:AMLN) of San Diego, Waltham, MA-based Alkermes (NASDAQ:ALKS), and Indianapolis drugmaker Eli Lilly (NYSE:LLY) said that the treatment, called Bydureon, failed to meet its primary endpoint in a 26-week “noninferiority” study comparing it to Novo Nordisk’s liraglutide (Victoza). Patients on the weekly exenatide formulation had only a 1.3 percent decrease in a blood marker called A1C compared with a 1.5 percent decrease among patients who took liraglutide in the study. Yet patients who received Bydureon generally suffered fewer side effects than those who took liraglutide.

The results follow the FDA’s complete response to an application for approval of Bydureon in October 2010, when the once-weekly treatment failed to gain approval. (A twice-a-day version of exenatide, marketed as Byetta, is Amlylin’s top seller. The agency asked for additional data on Bydureon’s impact on heart rhythms. The companies involved in developing the treatment plan to file a response to the FDA in the second half of 2011.

This latest study, dubbed DURATION-6, is the sixth trial comparing weekly exenatide to other treatments for Type 2 diabetes. (The study is not going to be part of the submission packages for U.S. or European approval of the treatment, according to Alkermes.) In the study, Amylin and its collaborators pitted their once-a-week treatment against a product that has gained market share from Amylin and Lilly’s twice-daily version of exenatide since Novo Nordisk won FDA approval of liraglutide, a once-a-day treatment, in January 2010.

Both exenatide and liraglutide are drugs known as GLP-1 receptor agonists, but Bydureon’s developers hope that once-a-week formulation will provide greater convenience for patients with Type 2 diabetes. (Read my colleague Luke Timmerman’s recent interview with Amylin CEO Dan Bradbury for more about his company’s hopes for the weekly version of exenatide.)

So what does the failure of the treatment to meet the study’s primary endpoint mean for its regulatory and commercial chances? “DURATION-6 was not a pivotal trial, and given that Bydureon showed robust A1C reduction with no new safety issues, we see little impact to Bydureon’s approval chances,” JP Morgan said in a note to investors this morning. “However, with Bydureon potentially reaching the US market two-plus years after Victoza and a numerically better A1C drop for Victoza from (the DURATION-6 trial), we foresee potentially significant adverse commercial implications from this study.”

Amylin’s share price had fallen by 22.5 percent to $11.64 per share as of 12:12 pm Eastern time. Amylin has been viewed as the company with the most at stake with Bydureon. Alkermes’ stock price was down 12 percent to $12.40 per share as of 12:11 pm Eastern time. Alkermes provides the polymer microsphere technology that enables the extended release of exenatide. Alkermes would get an 8 percent royalty on sales of the once-weekly treatment if it is approved. Lilly’s shares were listed at $34.48, up .3 percent as of 12:13 pm Eastern.

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Beverly, MA-based SmartCells has kept a relatively low profile since it was founded seven years ago, quietly working on a potential blockbuster drug for diabetes with technology from MIT. But yesterday the drug giant Merck (NASDAQ:MRK) made headlines with its plans to buy the biotech startup for upfront and potential milestone payments of more than $500 million.

Todd Zion, the co-founder and CEO of SmartCells, talked to Xconomy hours after the big deal was announced, and he reflected on what seems to be the less-traveled path that his startup has taken. It might have made all the difference. (Read on for what the CEO plans to do after his firm has transferred its technology to Merck.)

This deal represents an unusually big payday to the founding team of a biotech startup, because SmartCells never sold any shares in the startup to venture capital firms. It’s also somewhat of a surprise to those of us in the media, because Zion has never tried to generate hype in the press about the potential benefits of its lead drug, a formulation of insulin that could provide greater convenience and control over blood sugar for patients with diabetes.

Rather, SmartCells has raised just $9.8 million in equity investments from angel groups and individuals since the firm got going with a Series A funding round in 2004, Zion said. Its most recent round of financing was a $4.1 million Series D round in June from Boston Harbor Angels, Angel Healthcare Investors, Beacon Street Angels, Cherrystone Angels and members of Common Angels. In fact, the firm has received more money via grants from the National Institutes of Health than it has from private investors, the CEO said.

“We’ve always had a philosophy here that we let our operating plan dictate our financing plan and not the other way around,” Zion says. “It made more sense to us to raise the amount of dollars we needed from these individual investors.”

For one, the startup wanted to avoid raising more money than it needed to enable its team to retain a significant share of ownership in the firm, Zion says. Merck’s upfront payment in the acquisition deal … Next Page »

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New money and new product innovations seemed to be the intertwining themes of San Diego’s life sciences news over the past week. See if you agree.

—San Diego’s Ambit Biosciences intends to raise as much as $86.3 million in an IPO, according to a regulatory filing last week. Ambit, which has been developing a drug to treat acute myeloid leukemia, hopes to ride on the coattails of 18 initial public offerings in October, the most in years.

—Bill Davenhall, ESRI‘s global marketing manager for health and human services, talked with me about his 2009 TEDMED talk about the importance of creating a medical place history. One year later, ESRI developed a way to create your own medical place history—an app that is now available for free at the Apple iStore.

—San Diego’s Arena Pharmaceuticals (NASDAQ: ARNA) said initial results from an additional test of its experimental diet pill show that the drug meets federal requirements for prescription weight-loss treatments. The study essentially showed that overweight patients who also have Type 2 diabetes reached all three goals of a clinical trial. Arena will now take this information to its next meeting with the FDA, in hopes that it can persuade regulators to approve the drug for sale. The drug’s initial application was turned down last month.

—San Diego-based Optimer Pharmaceuticals (NASDAQ: OPTR) said it halted a study of an experimental antibiotic for traveler’s diarrhea, after a higher-than-expected rate of skin rashes. Optimer said the drug candidate is in a class of antibiotics known as fluoroquinolones, which are known to sometimes cause rashes.

—The non-profit West Wireless Health Institute said it has developed its first engineering prototype-a wireless fetal and maternal monitoring device called “Sense4Baby.”

—Shareholders of San Diego’s Ligand Pharmaceuticals (NASDAQ: LGND) didn’t show much reaction after the company said its board approved a 1-for-6 reverse stock split, which is expected to take effect by the end of this month.

—Federal grants to fund therapeutic discoveries under the Affordable Care Act began arriving at nearly 3,000 biotechs across the country over the past week. Keith Darce at The San Diego Union-Tribune published a complete list of 184 biotechs in San Diego County that are getting a total of almost $67.1 million. The biggest beneficiary is Ligand Pharmaceuticals, which is getting a $1.9 million grant.

—Thoratec (NASDAQ: THOR) of Pleasanton, CA, sold its International Technidyne Corp. subsidiary for $55 million to the private equity firm Warburg Pincus, which merged it with San Diego’s Nexus Dx. The San Diego startup is focused on point of care blood diagnostic testing.

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Arena Pharmaceuticals is getting ready to make another run for U.S. regulatory approval of its obesity drug, and now it has some clinical trial data that the FDA has said it wants to see.

The San Diego-based biotech company (NASDAQ: ARNA) is announcing today that its experimental weight loss treatment, lorcaserin (Lorqess), reached all three of its main goals in a clinical trial called Bloom-DM, which enrolled 604 overweight or obese patients who also have Type 2 diabetes. The study essentially showed that these patients, who are generally tougher to treat than other overweight and obese patients, had a similar experience to more than 7,000 patients who participated in the last two pivotal trials, Bloom and Blossom. Some details are being released today to investors, while more details are expected to come out later at a medical meeting and peer-reviewed scientific journal.

Today’s data release represents Arena’s hope for redemption after what has been a brutal couple of months. The company’s application to market its treatment was ripped by FDA staff in September over some concern about tumors in rats, and then the agency formally turned down Arena’s application to start selling lorcaserin, saying it offered only “marginal” ability to help people lose weight. The FDA, in its complete response letter to the company, recommended that the company turn in detailed reports on this other study, Bloom-DM, to provide more evidence that the drug helps people who face the doubly whammy of obesity and diabetes. An estimated two-thirds of people in the U.S. are considered overweight or obese, which puts them at risk for a slew of other chronic, and costly, ailments like cardiovascular disease, arthritis, and depression.

So while the potential benefit—and market—for an effective weight loss would be huge, the FDA has also made clear through its actions this fall against both Arena and one of its competitors, Mountain View, CA-based Vivus (NASDAQ: VVUS), that any new drug developer must clear an extremely high bar for safety and effectiveness if it wants to start selling a new product to millions of people in need. San Diego-based Orexigen Therapeutics (NASDAQ: OREX), the next obesity drug developer in line at the FDA, will either learn from these lessons and advance onto the market, or step into yet another buzz saw when it appears before an FDA advisory panel on December 7.

Arena CEO Jack Lief wasn’t making any predictions about whether the Bloom-DM study will put his company over the top, but he expressed his usual confidence, and how this latest study will help buttress his argument that lorcaserin deserves a spot in the U.S. market.

Jack Lief

“Patients with type 2 diabetes have much more difficulty losing weight than other patients. And although we believed they would benefit, you have to demonstrate that. This study has demonstrated they benefit as well,” Lief says.

Arena plans to crunch the numbers on this latest study, and discuss the new evidence with the FDA before the end of the year, Lief says. Arena’s partner, Japan-based Eisai Pharmaceuticals, remains committed to pushing forward with the program, a spokesman said.

OK, for the stat nerds out there who want to want to dig into what we’ve learned here, now you can get your hands dirty.

Patients who entered this study had an average body mass index of 36, Lief says. People with a body mass index of 30 or greater—which translates to 5-foot-10 and 209 pounds—are considered obese, according to the National Heart, Lung, and Blood Institute. They also entered the study with an average score of 8.0 on their hemoglobin A1c counts—an important measurement of blood sugar control. People are generally considered normal at … Next Page »

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Punch the search term “Type 2 diabetes” into the main public website for clinical trials, and you’ll find more than 1,000 ongoing studies. That might be a wealth of information if you are an endocrinologist looking to get up to speed on the latest and greatest therapies. But to patients, it’s mostly a vast wilderness of jargon.

Ryan Luce looked at the landscape and saw an opportunity to do something useful, and build a company. This week he and co-founder Eliot Cohen are taking the wraps off their new startup, Seattle-based Corengi, which is attempting to make the online world of clinical trial information a lot less intimidating. If Corengi has played its cards right, it might even help drugmakers solve one of their more vexing problems—finding enough patients willing to enroll in study.

Corengi, which is short for clinical options research engine, is getting started by trying to bring some Web 2.0 interactive sensibility to a really deep pool of data in the clinicaltrials.gov site maintained by the National Institutes of Health. There’s plenty of opportunity here, given that an estimated 25 million people in the U.S. have diabetes and the domestic market for diabetes treatments is worth more than $10 billion a year. Those numbers are only expected to climb, as incidence is booming in connection with the national obesity epidemic.

Every major pharmaceutical company has drug development programs in the works, and all of them complain about how hard it is to recruit enough patients fast enough into clinical trials so they can find out how safe and effective their new treatments really are. If Corengi can create a central platform where patients share experiences and tips from clinical trials, and it gets some buzz, then Corengi figures it should have a targeted audience that pharma companies will pay to reach.

“If you can make it easier for people to understand trials, then you can enlarge the pool,” Luce says. “Pharma companies simply can’t get enough patients through the door to participate. There’s a real business problem there. If you help recruit patients, there’s a market there.”

Ryan Luce

Luce brings some relevant experience to this task. He’s a scientist by training, who spent most of the past decade working at Seattle-based NexCura, a Web resource for cancer information that was acquired by Thomson Reuters and eventually US Oncology. He left earlier this year to start Corengi.

The idea at Corengi is to help patients navigate the vast sea of clinical trials, and their arcane eligibility rules, through asking people to complete a 20-point questionnaire. If you are a newly diagnosed Type 2 diabetes patient, or know your score on a common measure of blood sugar control, this will help weed out all the potential trials that aren’t right for you. It also sifts through trials based on how close the center is to your home. Once patients have entered their questionnaire, they can get e-mail alerts when a relevant trial opens up in their area. (You can see a 59-second video clip on how this is supposed to work at the Corengi site).

That’s the back end work, but the potentially bigger deal is in creating a platform that patients can run with themselves, like Wikipedia. That means letting patients … Next Page »

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It’s a happy day for Metabolic Solutions Development. The Kalamazoo, MI-based firm said today it has reeled in $23.5 million to fund development of its experimental drug for Type 2 diabetes and its other treatments for metabolic diseases. It also announced the appointment of Stephen Benoit as its new chief executive.

Hopen Life Sciences, a venture group in Grand Rapids, MI, led the drug developer’s latest funding round. Southwest Michigan First Life Science Fund, a previous investor, also took part in the financing. Metabolic Solutions Development has now raised $50 million since its founding in 2006.

Last month the company began a Phase IIb trial of its lead drug for Type 2 diabetes, MSDC-0160. A previous clinical study of the drug showed that it could boost insulin sensitivity and lower blood sugar without causing some of the common side effects of so-called insulin sensitizer drugs. (The FDA put restrictions on London-based GlaxoSmithKline’s (NYSE:GSK) blockbuster insulin sensitizer, rosliglitazone (Avandia), because the drug increases the risk of cardiovascular problems such as heart attacks and stoke.)

Benoit, Metabolic Solutions Development’s new CEO, was previously the founding president of a food safety nonprofit, the Global Food Protection Institute. Before the nonprofit, he worked in the biotech industry as CEO of NanoMed Pharmaceuticals, a developer of drugs for cancer and other diseases.

Metabolic Solutions Development said it also plans to put some of its new cash into funding the development of a second diabetes candidate, MSDC-0602. The firm says that both of its two lead drugs aim to correct the root cause of Type 2 diabetes by hitting an undisclosed target in mitochondria, the power packs of cells. Jerry Colca, the firm’s president and scientific chief, was one of the scientists at Upjohn (now part of Pfizer (NYSE:PFE)) behind the discovery of the diabetes drug pioglatozone (Actos).

“The pharmaceutical and investor communities are increasingly interested in the ability of our candidates to provide greater benefits than current market-leading diabetes medicines without the complications inherent in current therapies,” Colca said in a press release.

There’s a huge U.S. market for diabetes drugs; more than 23 million Americans are believed to have the diseases. That figure is expected to rise as the obesity epidemic in the country leads to more instances of the metabolic disorder.

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The big news: San Diego’s Orexigen inked a marketing deal around its obesity drug compound whose value could soar into the billions of dollars. We’ve got that and the rest of San Diego’s life science news for you here.

—Zogenix, the four-year-old San Diego startup that develops compounds for treating pain and central nervous system disorders, has filed for a $90 million IPO. The venture-backed biotech began marketing a treatment for migraines with its proprietary “DosePro” needle-free injector earlier this year.

—San Diego’s Orexigen Therapeutics (NASDAQ: OREX) awarded Japan’s Takeda Pharmaceutical an exclusive license to marketing Orexigen’s obesity drug combination of bupropion/naltrexone (Contrave) in the U.S., Canada, and Mexico. In return, Takeda agreed to pay Orexigen $50 million in upfront cash, as much as $1 billion in regulatory and sales milestone payments, and sales royalty payments of between 20 and 35 percent if the drug is ever brought to market in North America.

—Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX) said combining its drug candidate for hepatitis C with a standard treatment was able to cure 65 percent of patients who had not responded to a prior round of standard drugs alone. Vertex, which has substantial operations in San Diego, said more than 660 patients enrolled in its “Realize” study.

—San Diego Biopharmaceutical Halozyme Therapeutics (NASDAQ: [[ticker: HALO]]) today priced its offering of 8.3 million shares of its common stock at $7.50 a share, which would generate a total of almost $62.3 million to help fund further research and development of its product candidates. Halozyme has been developing products based on enzymes known as hyaluronidases that are a major component of both normal tissues, such as skin and cartilage, and tumors.

—Santarus (NASDAQ: SNTS), the San Diego specialty biopharmaceutical company, said it plans to launch a new Type 2 diabetes drug in the U.S. market this November. Santarus said bromocriptine mesylate (Cycloset) is the first FDA-approved drug for patients with type 2 diabetes to target the activity of dopamine, a chemical messenger between neurons within the central nervous system.

—San Diego’s ImThera Medical, which is developing an implantable device for treating sleep apnea, raised $1.3 million last month in a Series B round planned to total $3.5 million, according to a regulatory filing. ImThera CEO Marcelo Lima said in an e-mail that all funding in the round should be completed by next month, and came from high net-worth individuals. The startup, which I profiled in March, plans to use the funding to complete its European clinical trial studies.

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Anchor Therapeutics has landed its largest corporate partnership yet. The Cambridge, MA-based biotech startup has secured a partnership that could be worth up to $480 million with Ortho-McNeil-Janssen Pharmaceuticals, part of the healthcare products giant Johnson & Johnson (NYSE: JNJ).

Ortho-McNeil-Janssen, based in Titusville, NJ, has agreed to pay Anchor an undisclosed upfront fee, provide research funding to the startup, and deliver potential milestone payments in the deal to license several drug targets in the fields of cancer and metabolic disease treatment. The deal provides further proof that big drug companies are interested in Anchor’s novel pepducin drugs, which hold the promise to hit cell-signaling targets for treating many types of diseases.

“[Ortho-McNeil-Janssen] has taken our value proposition to heart, and that is the proposition that we can go after targets that other people can’t,” says Anchor CEO Rick Jones.

Anchor’s biological drugs home in on cell-signaling proteins, which reside in the cell membrane, called G protein coupled receptors, or GPCRs. Its drugs are designed to anchor into the cell membrane, where they can manipulate specific GPCRs in order to treat certain diseases. (There’s a tidy animation of how this works on the homepage of Anchor’s website.) These are well-known receptors, and drugs that target them already account for some $40 billion in annual sales, but Anchor offers methods to hit certain members of this family of receptors in ways that standard small molecule drugs haven’t.

To hear Jones tell it, the catalyst for closing the deal with Ortho-McNeil-Janssen was the biotech’s lab experiments involving a signaling protein called gpr39. The receptor is believed to play a role in metabolic diseases such as … Next Page »

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San Diego-based Santarus (NASDAQ: SNTS) said it has acquired exclusive rights from S2 Therapeutics of Bristol, TN, and VeroScience of Tiverton, RI to make and sell bromocriptine mesylate (Cycloset) tablets in the U.S. The Food and Drug Administration has approved the prescription drug as an adjunct to diet and exercies to improve glycemic control in adults with type 2 diabetes. Santarus said it expects to launch the drug commercially in November 2010.

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[Updated and clarified. 8/12/10, 7:25 pm Eastern time. See below.] Cambridge, MA-based Sirtris Pharmaceuticals made international headlines over the past few years for developing drugs based on the anti-aging effects of the red wine chemical resveratrol. Now that the company has been part of London-based drug giant GlaxoSmithKline for more than two years, former Sirtris executives have begun selling their own resveratrol supplements online through their Boston nonprofit, the Healthy Lifespan Institute, Xconomy has learned.

Michelle Dipp, a Sirtris-turned-Glaxo executive, confirmed that the nonprofit that she and former Sirtris CEO Christoph Westphal co-founded last year has started online sales of resveratrol. Dipp leads the effort on the off hours when she isn’t doing her main job as senior vice president of Glaxo’s Center of Excellence for External Drug Discovery.

While the group is charging $540 for a one-year supply of resveratrol, Dipp says that the nonprofit is selling the supplements for cost and is not profiting from the sales. The revenues are covering the manufacturing, distribution, and other functions, all of which have been outsourced, she says.

The nonprofit’s supplements are made the same way as the formulation of resveratrol that Sirtris initially developed as a drug called SRT501 for Type 2 diabetes, cancer, and other diseases, Dipp says. While the chemical formula for the supplement is the same as the drug, the group’s resveratrol supplements are being offered as just that: dietary supplements, not drugs for specific diseases. That means the group can sell resveratrol just like any other dietary supplements without doing FDA-sanctioned clinical trials to get permission to begin sales. (Editor’s note: Though the nonprofit’s supplements are made in the same synthetic process as SRT501, the group says that the drug was tested in liquid form in capsules of 5 grams and the supplements are provided in powder form in 250-milligram capsules.)

Numerous outfits have been selling resveratrol supplements for years. Some were even caught illegally using the likenesses of Sirtris founders David Sinclair, a professor at Harvard Medical School, and Westphal, who now heads Glaxo’s venture firm, SR One. Dipp—who formed the Healthy Lifespan Institute with Westphal and others last year—says that their group is the only one she knows of that manufactures resveratrol in a completely synthetic process with the same high standards for sterilization and purity that govern pharmaceutical production.

To be clear, this resveratrol operation is a volunteer effort that Dipp and Westphal do on the side. Both are still employees of Glaxo, and they have also started a Boston venture firm called Longwood Founders Fund with fellow Sirtris co-founder Rich Aldrich.

“Our main business is … Next Page »

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Seattle-based Allozyne has been operating in stealth mode for more than a year, prompting some biotechies to wonder if it had quietly run out of cash and closed its doors.

Far from it.

Allozyne, one of the startups that graduated from the Accelerator biotech startup incubator, has been making huge strides behind the scenes, based on what I gathered from an exclusive interview this week with CEO Meenu Chhabra. The biggest news is that Allozyne has now gathered what Chhabra calls “very promising” results from its initial clinical trial of a longer-lasting multiple sclerosis drug. Full details aren’t yet available, although Allozyne is planning to issue a press release and to present the data in a scientific forum, Chhabra says.

That might have been enough to secure more capital, but the company didn’t stop there. It has also shown that its technology, originally licensed from the Caltech, could be used to make scalable and reproducible quantities of a two-pronged “bi-specific” antibody drug for a hot target against inflammatory diseases. The company has shown it can do more than just make small proteins and fragments of antibodies in fermenters with E. coli bacteria. Its techniques can also be extended to commonly used mammalian cell hosts that are better at producing full-length antibodies like the ones that sell for more than $30 billion a year to treat cancer, rheumatoid arthritis, and other diseases. And last, Allozyne has secured a research partner in the form of an undisclosed Big Pharma company that will extend its cash runway.

Allozyne has done all of that in the past couple of years with 25 employees, and without completely burning through the $30 million it raised in October 2007 from MPM Capital, OVP Venture Partners, Amgen Ventures, Arch Venture Partners, and Alexandria Real Estate Equities. Chhabra, a former Novartis dealmaker, said she’s done it with line-by-line budgeting in which she personally scrutinizes the tiniest expenses. She has saved more than $1 million in salaries by insisting that she and chief scientist Ken Grabstein handle all the key executive functions—operations, business development, finance, medical affairs—by themselves. She provides box lunches, not fancy dinners, for board updates. The CEO with the Novartis pedigree even flies coach herself, uses frequent flier points, and only lets her team attend a couple key conferences a year.

Meenu Chhabra

It might just sound like prudent business in a downturn, but OVP managing director Carl Weissman says the company’s recent achievements amount to “incredible progress.” Chhabra and the Allozyne team have adapted, he says, to “the new realities of venture-backed biotech.”

Chhabra, who says she likes to use visual analogies to explain things, put it this way:

“I had this beautiful bulb in front of me to plant when I joined Allozyne,” Chhabra says. “We’ve planted the bulb, and it has sprouted a lot of things.”

Before I dive into the nitty-gritty details of Allozyne’s progress from the past year, a little background is required. Allozyne was founded in 2005 with technology from William Goddard and David Tirrell at Caltech, and incubated at Accelerator in Seattle. The Caltech scientists, as I described in this October 2008 feature on Allozyne, 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 is sort of like plugging in a Lego block, which performs a certain function wherever researchers want on the backbone of the molecule.

This was thought to be important to provide the rock-solid consistency … Next Page »

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Neurocrine Biosciences, which looked like it was stuck perpetual retrenchment-mode, just pulled off its second big deal in two days. Yesterday, the San Diego biotech agreed to grant German drug maker Boehringer Ingelheim worldwide rights to experimental diabetes drugs. Neurocrine will get an upfront payment of $10 million and milestone payments of up to $225 million in return.

The deal was preceded Wednesday by an even larger pact with Abbott Laboratories. The US drug giant is paying Neurocrine up to $575 million for global rights to Neurocrine’s experimental drug for endometriosis.

Neurocrine (NASDAQ: NBIX) also stands to receive royalty payments from its partners if the drugs reach the marketplace.

Is this the beginning of a long-awaited turnaround at Neurocrine? Investors seem optimistic. The company’s shares are up 18.5 percent since Tuesday’s close. Jason Napodano, an analyst with Zach’s Investment Research, said in a note Wednesday that the Abbott deal was a “game changer” for Neurocrine.

Of course, it’s important to remember that Neurocrine has more or less been in this position before. Back in 2002, pharmaceutical giant Pfizer agreed to pay up to $400 million—including an upfront payment of $100 million—for rights to Neurocrine’s experimental sleeping pill indiplon. That made Neurocrine one of San Diego’s hottest companies—until four years later when Pfizer walked away from the deal after the FDA declined to approve the drug. Neurocrine’s shares once traded between $40 and $50, climbing above $70 before the FDA acted. Thursday’s close of $5.57 is a long parachute jump from the stock’s previous heights.

Neurocrine is no longer working on indiplon, and the company … Next Page »

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One of the big ideas in diabetes research today is that inflammation is one of the major culprits. Tamp down inflammation, and maybe you can reduce the assault on blood vessels that leads to all sorts of complications like heart attacks, blindness, and amputations. If this can be proven over time, Cambridge, MA-based Catabasis Pharmaceuticals might have just the drugs to stop the inflammation and all its nasty effects.

That’s the concept anyway, and it’s one that Catabasis is being richly financed to pursue. The Cambridge, MA-based company has secured a $39.6 million Series A financing from SV Life Sciences, Clarus Ventures, and MedImmune Ventures. We first broke the story last week saying that Catabasis pocketed the first $7.7 million tranche of this deal. CEO Jill Milne confirmed the figure today, adding that Catabasis will get the rest of the money if it can hit certain development goals.

The Catabasis story began in the summer of 2008 when Milne and her colleague Mike Jirousek decided to leave senior jobs at Sirtris Pharmaceuticals after it was acquired by GlaxoSmithKline. They started talking with Steven Shoelson, a leading researcher at Harvard Medical School and the Joslin Diabetes Center, about the emerging understanding of inflammation as an underlying culprit in diabetes. The diabetes market is one of the biggest in the pharmaceutical industry, with an estimated 24 million people in the U.S.—almost one out of every 12 people—suffering from adult-onset or Type 2 diabetes. Incidence has roughly tripled over the past three decades as more people eat unhealthy diets, and live sedentary lives.

The pharmaceutical market has responded to this epidemic by flooding doctors and patients with drugs like metformin, various forms of insulin, GLP-1 inhibitors, and DPP4 inhibitors that work in different ways to keep blood sugar under control. Yet despite all that intense effort at every Big Pharma company, no one has yet gotten a drug approved for Type 2 diabetes that works by controlling inflammation.

“This is a novel way of treating the disease,” Milne says. “It got me excited.”

Catabasis has a plan to tackle this problem with what amounts to a combination drug strategy. Milne and Jirousek, who are trained in biochemistry and chemistry, respectively, started piecing this plan together after they heard about some promising results from Shoelson’s research. His team had shown that a generic anti-inflammatory drug, a type of salicylate, was effective at helping reduce blood sugar in a clinical trial. But there was a catch. The patients had to get a whopping 4 grams a day, and take their pills three times daily. And, researchers saw a case of tinnitus, a serious condition in which people suffer from ringing in their ears, which isn’t an effect the FDA or patients would consider allowable for treating a chronic condition like diabetes.

“That was not acceptable,” Milne says.

While some scientists have pursuing the anti-inflammatory hypothesis, others have been studying Omega-3 fatty acids—those heralded substances in fish oil … Next Page »

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GI Dynamics has garnered European marketing approval for its temporary intestinal implant for treating Type 2 diabetes and obesity, according to the Lexington, MA-based firm. The company said it plans to begin selling the device, called the EndoBarrier, in Europe in the first half of 2010. The firm’s venture backers include Advanced Technology Ventures, Catalyst Health Ventures, Cutlass Capital, Domain Associates, Johnson & Johnson Development Corporation, and Polaris Venture Partners.

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