In a typical year, research at the University of Washington will spawn about a dozen promising young companies. In the next three years, the school’s new president wants to see that output double—and ground zero for a lot of those startups will likely be a new incubator space unveiled this week.

When renovations are complete, the UW’s New Ventures Facility will have space for about 25 startups, with some 23,000 square feet of space split roughly evenly between laboratories and offices.

The initial floor of office space is finished now, and the first startups are expected to begin stocking its cubicles and conference rooms in the coming weeks. Renovation of lab space will take a little longer—it’s expected to be finished in 2014.

UW officials aren’t waiting to start trumpeting what they say is another big step toward dramatically increasing the entrepreneurial output of the state’s largest higher education center. It coincides with efforts like the new W Fund, an early stage investment pool pegged at about $25 million that will concentrate on companies emerging from public universities in the state.

Young

Michael Young, the UW’s president, said the incubator on UW’s campus should help keep young companies and entrepreneurs in Washington by making sure they don’t have to hit the streets too early, where they might find a need to relocate to Silicon Valley.

“When businesses spin too quickly out of their university geography, the reasons for staying in the state begin to reduce, and all of the sudden sunny climates and higher degrees of venture capital and so forth begin to appeal,” Young said Wednesday. “And that is despite the fact that the real value-add is staying connected with the university for some period of time until it really has proved its worth, and has shown what that market niche is, and has developed that technology that truly is significant and truly is transformative.”

Rhoads

Young speaks from experience, having helped the University of Utah become a national leader in spinning out university research. Linden Rhoads, head of the UW’s Center for Commercialization, said Young’s “assignment” of doubling the school’s startup output will also focus on quality—”not just companies, but successful, thriving companies that will be a benefit to the community and a credit to the university. So really, we look at the applicants with that assigment in mind.”

Startups have to apply for the incubator, and once they’re in, will pay to rent spaces—a typical office setup would be about $220 per month, with a one-year contract. The incubator already has seven startups ready to move in, and is expecting a handful more to join the parade soon.

One of those companies is Envitrum, a startup founded by mechanical engineering students Grant L.S. Marchelli and Renuka Prabhakar. Envitrum turns waste glass that is too dirty to be recycled into bricks that can be used in finish construction, namely building facades. The bricks that Envitrum produces are 95 percent glass, but consume a third less energy to produce than typical construction bricks, while also showing that they’re stronger in tests, Prahakar said.

Envitrum is about two years old, and presently operating on grant funding. ”It’s this great green technology. But the question is, how do we actually make the other type of green?” said Ryan Buckmaster, who’s working with Envitrum through the Center for Commercialization.

As the New Ventures building fills up, that’s the kind of question that people should be asking a lot more often in the next few years.

Comments | Reprints | Share:          

When the University of Washington hired Michael Young to be its new president last year, one qualification that stood out was an impressive record of spinning out companies from his previous employer, the University of Utah.

Today, the UW is taking a step toward fulfilling some of that promise by opening its New Ventures Facility, an incubator offering lab and office space for startups based on the school’s research. The incubator will be run by the university’s Center for Commercialization, which recently topped off a $25 million fund for spinning out public university research.

Tech startup incubators have been erupting across the American business landscape in the past few years, as faster, cheaper, more powerful software and hardware makes it very inexpensive to start a new company and investors look for ways to place broader bets on a crop of entrepreneurs. Seattle has a branch of the prominent TechStars program, which is also partnering with Microsoft to organize a separate accelerator program for startups working on the Kinect motion and sound sensor.

The UW plans to talk in detail about the New Ventures incubator at a launch event later today, and I’ll update with more color from the scene. It promises to be a bright spot for the university amid an era of steep cutbacks in money from the state, which is still struggling with lax tax collections following the Great Recession. Tuition has already increased to compensate for less state money, and the UW is likely to soon start charging different prices for in-demand majors for the first time.

UW’s commercialization efforts already have seen several spinouts in life sciences and information technology, including notable names like Fate Therapeutics and Farecast, now part of Bing’s travel search. The Center for Commercialization also has a strong collection of entrepreneurs-in-residence, with folks like Ken Myer and Luni Libes on the roster.

Comments | Reprints | Share:          

Bonnie Ramsey said three years ago that a cystic fibrosis drug from Vertex Pharmaceuticals was a huge medical advance in the making, and would end up being an achievement on par with putting a man on the moon, at least for her patients.

Yesterday, she says, was the day it truly felt like she was part of a team that reached the moon-shot goal. The good news came when the FDA approved Vertex’s ivacaftor (Kalydeco) as the first drug of its kind to work by treating an underlying genetic defect for cystic fibrosis.

“It’s a really big day,” says Ramsey, a leading CF physician/scientist at Seattle Children’s Hospital and the University of Washington. “Even though it’s for a small subpopulation, the treatment paradigm has completely changed. It’s no longer about just treating the symptoms, it’s about treating the genetic defect. That’s a real game-changer.”

The drug from Cambridge, MA-based Vertex (NASDAQ: VRTX) is now FDA approved for patients age six and older who have what’s known as a Class 3 gene mutation called G551D. This mutation is found in about 4 percent of the 30,000 patients in the U.S. with cystic fibrosis. The disease, the result of various mutations to a gene called CFTR, causes the poor transfer of water and salt across cell membranes, which leads to the buildup of thick, sticky mucus in the lungs, and poor absorption of nutrients. It means patients have to endure hours a day of treatment their entire lives, and the median life expectancy is about 39 years. Doctors currently treat the symptoms of the disease, through things like inhalable antibiotics, but Vertex’s drug is the first FDA-approved therapy that works by altering an underlying disease-related protein.

Bonnie Ramsey of Seattle Children's Hospital

Ramsey has had an instrumental role in developing this drug since its infancy. As the executive director of the Cystic Fibrosis Foundation’s Therapeutic Development Network, back in 2000 she began collaborating with the drug’s original developer, San Diego-based Aurora Biosciences (later acquired by Vertex.)

Ramsey was the lead investigator of a pivotal study of 161 patients, known as Strive, which yielded results in February that laid the foundation for yesterday’s FDA approval. The study showed that patients age 12 and older on the twice-daily pill from Vertex had about a 10.6 percent absolute improvement in their ability to force out air from their lungs in one second—compared with a placebo. The effect held up over the full 48-week course of the study. Researchers also saw significant improvements in being able to gain weight, while also reducing cough, sputum production, and the incidence of pulmonary exacerbations. Side effects included headache, and upper respiratory tract infections, researchers said, although more patients dropped out of the placebo group than the drug group. A second study verified the effect in younger patients, age six and above.

What excites scientists is that the drug has a compelling foundation in biology. It is designed to … Next Page »

Comments (1) | Reprints | Share:          

One of the co-founders of HealthTech Capital, Don Ross, offered Brian Glaister a blunt assessment last summer when the young entrepreneur came pitching a new device to help disabled people walk.

Ross responded that his wife, Donna Jang, is a stroke survivor who struggles to walk more than a couple minutes at a time. She would be the first one to judge whether Glaister’s product was as good as advertised. Glaister didn’t blink: Within a couple weeks, he was on a plane to Silicon Valley, where Ross and his fellow investors are based.

“When Brian came to us, I told him flat out, ‘You have to get a prototype sized up so Donna can try it. If she doesn’t like it, you’re toast. If she does, maybe you’ll have a shot,’” Ross recalled. “And Donna really liked it.”

Now HealthTech Capital is leading a syndicate of medical device angel investors who are putting $750,000 in equity and convertible debt, out of a round that could be worth $1 million, into Glaister’s startup, Seattle-based Cadence Biomedical. HealthTech is being joined in the financing by Alliance of Angels, Frontier Angels, Keiretsu Forum, Sand Hill Angels, and Wings. The new financing means Cadence has raised a little more than $1.5 million in investment and government grants since its founding in August 2007. It now plans to use the cash to bring the first commercial versions of its walk-assist device to the orthotics market this spring.

The Cadence technology, licensed from the Cleveland Clinic, looks like a fancy leg brace. It is essentially is one, although it has a spring that stretches from hip to ankle that is designed to store and release energy that can help propel people as they walk forward. Cadence’s hope is that can help about 2.3 million people in the U.S. who have extreme weakness in their lower legs that impairs their ability to walk—such as stroke survivors, people with partial spinal cord injuries, brain injuries, or patients with multiple sclerosis or amyotrophic lateral sclerosis.

There are existing alternatives, of course, like canes, walkers and wheelchairs, which have their limits. There are also newer high-tech robotic options in various iterations from companies like Berkeley, CA-based Ekso Bionics, Sunnyvale, CA-based Tibion, Israel-based Argo Medical Technologies, and New Zealand-based Rex Bionics. Cadence says its technology … Next Page »

Comments | Reprints | Share:          

Yesterday, we ran the first half of the Seattle life sciences year in review, which focused on biopharmaceutical companies and global health organizations. Today’s rundown will cover the medical device, diagnostic, and health IT side of the local life sciences cluster.

Medical devices may not fare so well in a glamour contest, but this year the Seattle device community had more success stories, more acquisitions, upheaval, and even a couple of controversies. SonoSite was the biggest acquisition of the year, and although terms weren’t disclosed, it was almost surely followed by Pacific Bioscience Laboratories (the maker of the Clarisonic skin brush you see prominently displayed at Nordstrom). Calistoga Pharmaceuticals, you had a great year, but your deal is probably the third-biggest of the year in Seattle biotech. Sorry.

For the highlights from Seattle med-tech, diagnostics, and various Bio-IT operations, read on:

Sonosite (NASDAQ: SONO): The maker of portable ultrasound machines has been relatively stable, and modestly profitable as an independent company for some time, so I was surprised to see it get acquired for $995 million earlier this month by Japan-based Fujifilm. Shareholders can’t complain, given the price represents a 50 percent premium over SonoSite’s prior closing stock price. This is the biggest deal of the year in local life science, by a long shot.

NanoString Technologies. This was a big year for NanoString. The company, a spinoff from the Institute for Systems Biology, developed a second-generation version of its digital nCounter instrument, which measures the extent to which multiple genes are turned on or off in a biological sample. This was part of a bold plan to turn this scientific instrument into a diagnostic tool. By the end of the year, NanoString had raised another $20 million from GE, former Genzyme CEO Henri Termeer, and others, and it presented some important data that suggests it could compete with Redwood City, CA-based Genomic Health (NASDAQ: GHDX) in the breast cancer diagnostic market.

Clarisonic. Terms weren’t disclosed, but this could be the second-biggest acquisition of the year in Seattle’s life sciences community (although this company is hard to really categorize). Pacific Bioscience Labs, the maker of the Clarisonic skin brush, was acquired by cosmetics giant L’Oreal last month. The Clarisonic surpassed the $100 million sales mark in 2010, was highly profitable, and growing by leaps and bounds. My best guess is that Clarisonic sold for about $500 million. It’s the second home run for the same entrepreneurial team who developed the Sonicare toothbrush.

Geospiza. The Seattle-based developer of software … Next Page »

Comments (1) | Reprints | Share:          

Google’s new site director in Seattle is Doug Orr, a senior engineer at the tech giant who was working most recently on cloud computing projects, two sources tell Xconomy.

Orr takes over for Brian Bershad, a former University of Washington professor who is now working for Google in Russia, one of our sources confirms. Word of Bershad’s new job was first reported in October by John Cook at GeekWire. Our source reports that Bershad’s job will be focused on determining Google’s strategy for gaining market share in Russia, one of the globe’s critical emerging economies.

Scott Silver remains the director at the company’s Kirkland, WA office, one of our sources says. Both sources spoke on condition of anonymity for this story.

Google’s presence in the Seattle area dates to 2004. More recently, it has seen other Silicon Valley companies come to the Puget Sound region in search of prime engineering talent, from the University of Washington and companies like Microsoft and Amazon. The trend has accelerated this year, with well-financed startups joining the parade as the Bay Area talent crunch gets worse.

Orr has been at Google for about five years, according to his LinkedIn page. Before joining Google he worked at Arbor Networks, a network security company. In a recent presentation at the University of Michigan—his alma mater—Orr described his work at Google this way:

“I’ve got two jobs. I’m actually in charge of the systems software for our network infrastructure, which means the load distribution and the management and monitoring of our production network. And I’m responsible for what we’re calling the cloud platform, which is the thing that we’re doing, sort of incrementally, to allow people to use our infrastructure for their cloud computing.”

As of this summer, Google said it had about 850 people between its Seattle and Kirkland offices, including engineers and product managers along with some sales staff. As GeekWire also first reported, Google recently staked out a new office in Bothell that could have enough room to nearly double that headcount.

At the beginning of this year, Google said 2011 would be the biggest hiring year in its history, surpassing the roughly 6,000 people hired in 2007. At a meeting of computer science educators this summer, Bershad put Google’s hunger for top-drawer talent this way: “We are not limited in the number of positions that we have. We are limited in the number of people we can find who are very good.”

Comments | Reprints | Share:          

This was a great year for Seattle biotech if you measure success through sheer number of acquisitions. But if you prefer to measure the health of an innovation community by the number of exciting new startups it hatches, then this was most certainly a down year.

That’s the mixed bag of returns that I saw when looking back at the news of 2011 from the Seattle life sciences scene. This was the year of the acquisition for Calistoga Pharmaceuticals, Pathway Medical Technologies, Calypso Medical Technologies, SonoSite (NASDAQ: SONO), Amnis, Geospiza, and Pacific Biosciences Labs (the maker of the Clarisonic skin brush.)

While those companies got harvested, not a whole lot of new seeds got planted. The list of notable Seattle biotech startups this year includes Cardeas Pharma, Oncofactor, Blaze Bioscience, Aquedect Neuroscience and Cardiac Insight.

Who else made headlines in Seattle biotech in 2011? Seattle Genetics emerged. Dendreon crashed. Marina Biotech, Omeros, and AVI Biopharma all had years they’d like to forget. Cell Therapeutics somehow managed to stay in business. New leaders emerged at the global health nonprofits, as Alan Aderem moved in to run the Seattle Biomedical Research Institute, Stewart Parker took over at the Infectious Disease Research Institute, and Chris Elias created a vacancy at the top of PATH by leaving for a new gig at the Bill & Melinda Gates Foundation. The foundation’s head of global health, Tachi Yamada, left for a new venture capital gig, and was replaced by a former Novartis executive, Trevor Mundel.

Here’s a company-by-company rundown of the major events at Seattle biopharmaceutical and global health organizations we keep tabs on here at Xconomy. Tomorrow, I’ll follow up with the rundown of rundown of medical device, diagnostic, and others in fields like Bio-IT or Health IT.

Seattle Genetics (NASDAQ: SGEN). This was a transformative year for Seattle Genetics. The company broke through in August by winning FDA approval of its first product, a souped-up antibody for rare lymphomas. The drug validated a new target on the surface of cancer cells, CD30, and provided hard proof that Seattle Genetics’ proprietary chemistry can successfully link toxins to antibodies—a feat that has eluded scientists for 30 years. Big Pharma companies have beaten a path to Bothell to get licenses to the antibody-drug linking technology, and Seattle Genetics has exceeded Wall Street expectations in the early days of its drug rollout.

Dendreon (NASDAQ: DNDN). Dendreon was the star of local biotech in 2010, and this year it fell flat on its face. The company failed to live up to its first full year sales forecast with its immune-boosting drug for prostate cancer, and burned its shareholder base in the process. The company lost more than $3.5 billion in market valuation, and had to cut 500 jobs, largely because it sparked controversy and confusion by pricing its cancer drug too high—at $93,000 per patient. It remains to be seen this year whether Dendreon can pick up the pieces, as the disastrous screw-up of 2011 has created a gaping opportunity for emerging competitors like Johnson & Johnson’s abiraterone (Zytiga) and Medivation’s MDV-3100.

Amgen (NASDAQ: AMGN). The Thousand Oaks, CA-based biotech company, which has significant R&D in Seattle, said at the end of the year that longtime CEO Kevin Sharer … Next Page »

Comments (3) | Reprints | Share:          

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

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

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

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

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

None of that seemed to deter Rastetter.

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

Bill Rastetter

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

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

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

Comments | Reprints | Share:          

The state of Washington is chipping in $5 million from a federal jobs program to put the finishing touch on a new $25 million investment fund that will look to spin more startups out of research labs at the University of Washington, Washington State University, and other local research institutions.

Gov. Chris Gregoire is announcing today the state’s contribution to what’s being called the W Fund. The program, administered by the Department of Commerce, is one piece of a broader five-year, $19.7 million plan the state has devised to make it easier for small businesses to get access to credit. The two other parts of the program will provide direct loans to businesses in underserved communities such as Indian country, and help facilitate bank loans for small businesses that aren’t quite in position to borrow today, says Commerce director Rogers Weed.

We first reported on the development of the W Fund in October 2010, back when it was tentatively being called the Husky Bridge Investment Fund. Linden Rhoads, the vice provost who runs the UW Center for Commercialization, said at the time the fund had secured $13 million toward a goal of creating a $20 million pool to invest in university startups. The vision is to help business students gain experience by vetting company ideas from university labs, and then potentially gaining real-world experience by helping entrepreneurial faculty to turn their ideas into real companies. The money for the W Fund is primarily coming from wealthy individuals and foundations seeking a return on their investment, and seeking a way to help startups gain further venture capital financing.

Rogers Weed

The state has found its way to participate by routing money it has obtained through the federal Small Business Jobs Act, passed in September 2010. The state won’t take any equity stakes along with the investors in the W Fund, but it will be in a position to get its money back from the W Fund investors, plus interest, if the investments turn out positive, Weed says.

Now that the state has gotten involved, the W Fund will expand its focus from the University of Washington to other research institutions around the state which have ideas for companies in the high tech, biotech, and cleantech industries.

“They’ve broadened what they’ll look at in terms of deal flow in return for us coming in as a partner,” Weed said in an interview Friday at his Seattle office.

Rhoads, who has led the effort to build the fund, said in an e-mail: “We believe that this will be a $25M fund that begins considering investments in February.”

Since this is part of a federal jobs act, I felt it was only reasonable to ask Weed how many jobs he expects will be created by these various programs. He offered what he called a conservative range, of 4,000 to 4,500 jobs statewide through direct, indirect, and what economists call “induced” employment because of the increased spending from the other jobs.

“This issue of access to credit and investment capital is a crying need I’ve been hearing about for two years now,” Weed says. “I don’t know how many jobs it will create, but the important thing is that small business will have more access to credit and capital at a critical time.”

Comments (3) | Reprints | Share:          

DNA data is piling up on servers and hard drives near you, and scientists are struggling to sort through it all as genome sequencing keeps getting faster and cheaper. Seattle-based Spiral Genetics is the latest startup in town with ambitions to help relieve some of the IT pain that biomedical scientists are feeling.

Spiral was founded in 2009 by a couple of students in a University of Washington-Bothell entrepreneurship class. Two years later, the company has introduced its first couple of commercial software programs, lined up critical support from Amazon’s cloud computing infrastructure, and signed up a handful of paying customers, including the BC Cancer Agency in Vancouver, BC.

It isn’t radically reinventing how researchers find the precious needles in the haystacks—disease-related genes. But the company is getting its start by bundling open-source programs that are currently available, and leveraging distributed computing power, in a way that can take genome analysis jobs down from several days to several hours. After toying with the idea of a consumer genetics-type of company like Mountain View, CA-based 23andMe, Spiral is now aspiring to compete with another big-idea Google Ventures-backed company in Mountain View—DNAnexus.

“It might sound cheesy, but I want to do something to heavily impact the world. We want to help reach that elusive goal of personalized medicine,” says co-founder and CEO Adina Mangubat.

The company is still very much in its infancy. Spiral Genetics got its start when Mangubat met with a classmate, Becky Drees, in a University of Washington-Bothell entrepreneurship class taught by Alan Leong. Drees, an experienced research scientist at the UW and the Institute for Systems Biology, had the idea of creating some kind of genetics analysis business. Mangubat was an undergraduate psychology major who realized she didn’t want to go to grad school in psychology, and needed to figure out what was next.

Spiral Genetics CEO Adina Mangubat

She was taken with the idea of a genetic analysis business, and helped flesh it out through their classwork. They had their eye on competing in a business plan competition. “I said, ‘If we’re going to do this, we better win,’” Mangubat says.

They won, but that didn’t mean they had a real company yet. But by the time Mangubat graduated in June 2009, the recession was going strong. If starting a company was risky, Mangubat says she figured entering the job market was probably just as risky.

The idea for Spiral Genetics evolved from the original consumer-genetics play into something that helps address the DNA data pile-up that is vexing so many researchers. The new plan was put in place by about March 2010, and Mangubat and Drees enlisted support in crafting their algorithms from Jeremy Bruestle.

You can say the market terrain in this field is tough. Plenty of companies have tried and failed to get much traction in bioinformatics—including big players like Microsoft. Much of DNA analysis is … Next Page »

Comments (3) | Reprints | Share:          

Yesterday, we ran the first installment of an interview with Eli Lilly CEO John Lechleiter, in which he says the pharmaceutical industry is breaking out of its current rut, and is beginning to get more productive at pumping out more innovative new drugs.

Today, we follow up with the second half of the interview, which includes some interesting thoughts on “open innovation” that were prompted by a question from Twitter.

Xconomy: Is it possible to get too big as an organization to innovate? Is this partly why you’ve resisted the urge to do a mega-merger like some people have said they want to see?

John Lechleiter: We’ve done lots of studies, several huge studies in the late 1990s that date back to the pre-Prozac patent expiration. We fail to see a connection between size and innovativeness. I’m not smart enough to say that it’s best to be this size or that size, but obviously if you’re a $50 billion-a-year company or a $70 billion-a-year company, growing 10 percent a year means you have be a lot more innovative in an absolute sense than a company of Lilly’s size at $23 billion in revenue. We study this question of how to create a company that’s really innovative. I don’t think there’s an easy answer, otherwise the industry would have locked and loaded on it.

I do think there are things that matter. I think co-location is important. Hiring talented people and keeping them. There are cycle times of 10-15 years in this industry. I’ve been at Lilly for 32 years, and I’ve only been around the horn two or three times.

We still think we hire people for careers. That may sound corny to some people, and fly in the face of what we hear. I think we heard today (from University of Washington president Michael Young) that people can expect to have three different careers. But we aim to give people a reason to want to stay and want to be productive at Lilly, and that they can stay and realize their career ambitions. Obviously there are lots of other things that go into the equation. Things like what kind of leadership and management is most conducive to innovation. I can tell you when I talk about commitment to innovation, this is what our scientists want to hear. They want to know they have a CEO who is committed to what they do. I think it matters a lot. I’m betting on them, and they know it. And I think it’s a good bet.

Eli Lilly CEO John Lechleiter

X: You made a reference earlier today about the pharma industry’s need to better communicate what it does to the broader public. But I have to challenge that, and bring up some of the major ethics problems this industry has had over the years, and which the public hears a lot about. Whether it’s hiding bad data, or bribing clinical researchers overseas to get good data, or pay-to-delay agreements with generic companies, tax evasion, off-label marketing, and on and on and on. My question to you is what are one or two things that the industry can do, that are legitimate things, that could restore some public confidence?

JL: First of all, transparency. We were the first company, in 2004, to post our clinical trial results online, whether they are positive or negative. Now everybody does that. It’s interesting to me that you don’t hear much anymore about concerns over clinical trial data not being shared. Or about negative results not being shared. It doesn’t mean, Shazam!, the problem goes away. But I think most people are reasonably assured now, through clinicaltrials.gov, and through other disclosure mechanisms, that the light in the room is on, and there is widespread knowledge of what trials have been started, which ones are running, and what the results are.

It’s interesting to me to think back 10-15 years ago, about all the reasons we didn’t want to share that information, and most of that revolved around concerns about proprietary information. We have shareholders to think of, and competitive issues to manage. It turns out that wasn’t such a problem. Transparency around clinical trials is something we have been able to manage, and we’ve been able to maintain necessary protection around the intellectual property that we need.

Secondly, we have to show we can be trusted. We need to recognize that some people’s view of pharma is going to be colored by past transgressions. People can point to a failure here or there, but in the long run we have shown we can be trusted partners, based on our behavior. We put in a state-of-the-art, robust, and effective program within Lilly to ensure it’s more than words. We have an assurance that all 35,000 people across the company who work for us understand how it is we do business, and how the way we do business reflects on who we are, and how we are seen by the public.

The other thing I was talking about before (during the WBBA conference) is about doing a better job over time, putting in understandable terms, what we do, how we do it, and why we do it. Our business is very complex. It doesn’t lend itself to sound bites. When you say to people it takes $1 billion to bring a medicine to the market, can I explain that in 15 seconds? It’s very difficult to do. It’s hard to talk about why intellectual property is important. Some will say it keeps medicines from being widely available in countries where people can’t afford to pay for them. There’s a great discussion around that. The answer is IP doesn’t preclude that automatically. But having those debates, and being out in public as I was here today, and being willing to engage on tough and sensitive topics is something all of our leaders and all our companies frankly need to be more engaged in.

X: You also spoke earlier about the need to modernize the FDA to help improve innovation. What do you have in mind specifically? … Next Page »

Comments (3) | Reprints | Share:          

This Friday the Washington Biotechnology & Biomedical Association (WBBA) will release findings from its 2010 Economic Impact Report at their Governor’s Life Sciences Summit and WBBA Annual Meeting. With the sometimes volatile ups and downs of our industry, these findings have the potential to propel WBBA forward in both current and new initiatives and strategies to build Washington state’s life sciences sector.

We know the life sciences industry has grown to be a significant part of Washington state’s economy. Even through tough economic times, we’ve seen employment numbers pass many of the traditional resource-based industries on which the state’s economy was founded. The life sciences industry is crucial not only because of its size, but also because of its potential for economic growth and improved health for individuals. As the trade association serving this industry in Washington, WBBA has been effective in supporting its members and companies as they work to translate innovation to realization. As I take over the reins as the next WBBA board chair, our goal will be to continue to advance the agenda that we have established thus far—to help all of our member organizations get access to additional financing to further their product development efforts.

Under Tom Clement and Chris Rivera’s leadership, the WBBA has done a good job of laying a solid foundation for establishing Washington state as a leader in the life sciences and in global health. We have one of the largest, most vibrant industry organizations in the country. However, in order for us to maintain our leadership role globally, we have to take a long-term approach by continuing to make investments in projects that have the potential to grow into bigger and more substantial development projects that benefit our healthcare ecosystem. This will require the help and support of all of our stakeholders—from WBBA members to our affiliate members, to local, state and federal elected officials, to patient advocacy groups, to healthcare providers and any other groups willing to join us. There is much to do in educating both the public and our elected officials so that they understand the long-term benefits of what our industry can provide in terms of hope and in terms of the life-saving healthcare solutions for patients and their families. Working together, we can develop sustainable policies that can be implemented now to support and grow our diverse life sciences sector.

Fundamentally we’ve come out of a pretty tough time. Right now, life science companies are facing substantial risks. The public markets haven’t … Next Page »

Comments (1) | Reprints | Share:          

Bellevue, WA-based PhysioSonics has picked up a $2.5 million grant from a military agency to see if its ultrasound technology can be adapted to the battlefield.

PhysioSonics said today it has gotten the grant from the Telemedicine and Advanced Technology Research Center, an organization at the U.S. Army Medical Research and Materiel Command, located at Fort Detrick, MD.

The aim of the research grant will be to see whether PhysioSonics’ technology can determine when a soldier is suffering from vasospasm, a potentially deadly condition in which blood vessels of the brain constrict, usually after a loud explosion. The condition can be hard to detect, but when it is, doctors can reduce the rate of death and disability, the company said.

The PhysioSonics ultrasound technology, which has origins at the University of Washington, has been backed by a local syndicate of investors including former SonoSite chairman Kirby Cramer, as well as the big device players Johnson & Johnson and Medtronic.

PhysioSonics said in today’s release that it plans to file an application for FDA approval of its technology, although it didn’t disclose timing. The initial plan is to pitch its technology to neurosurgeons, and heart surgeons, the company said. I described the basic idea of this continuous technology for monitoring brain blood flow, and how it’s supposed to be more automated than existing transcranial Doppler ultrasound, in a June 2009 feature story. The company said it recently completed a clinical trial that “showed parity” between its technology and the existing ultrasound methods.

Comments | Reprints | Share:          

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

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

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

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

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

Tom Clement, CEO of Cardiac Insight

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

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

Comments (1) | Reprints | Share:          

The past week in tech headlines was dominated by our leading alpha geek: Microsoft co-founder and chairman Bill Gates. Gates stopped by the University of Washington to give a short talk about the future of computing, and how he sees cheap, powerful storage and processing revolutionizing everything from robots to disease eradication (the part about malaria went on for kind of a long time).

But the most interesting part of the evening was surely the Q&A portion, in which Gates sat on stage with the UW’s Ed Lazowska to field questions on just about anything from students in the crowd. Gates seemed to rather enjoy the give-and-take, even when a young woman asked him how she could get rich.

As you’ve probably read by now, Gates marveled at how strange it was to be a billionaire, and said that once you get past a several million-dollar fortune, it’s really just more responsibility about how to give it away. “Once you get much beyond that—you know, I have to tell you, it’s the same hamburger,” Gates said to laughs. The UW now has the whole lecture up online.

Elsewhere around town:

—PopCap Games mobile chief Giordano Contestabile reminisced about the inglorious past of mobile gaming, when all games on cell phones were basically hokey ways to get people to send premium-priced text messages. As Contestabile said on Twitter, “When mobile games were crap.” Now it’s quite a different story, of course, and Contestabile is one of the people in the driver’s seat pushing the boundaries of how games will evolve.

He’s also joining us Dec. 6 for Mobile Madness Northwest, our half-day forum presented with the Washington Technology Industry Association at F5 Networks in Seattle. Early Bird pricing only lasts until Nov. 15, so get your tickets now.

—Online real-estate brokerage Redfin added $14.8 million in venture funding, with designs on expanding the business into new markets around the U.S.. The round was led by new investor Globespan Capital Partners.

—Speaking of venture deals, we looked at September’s fundraising for Washington-based companies in technology, biotech, and clean energy and found a total of $32 million had been raised, according to data from our partners at research firm CB Insights. Medical companies led the pack, with $12 million for RF Surgical Systems and $10.6 million for Theraclone Sciences.

—More turmoil at Clearwire (NASDAQ: CLWR), which saw board member Benjamin Wolff resign. Wolff is a close associate of Clearwire founder and former chairman Craig McCaw. The Kirkland-based wireless provider has been on a roller coaster ride lately—mostly down—as it and majority shareholder Sprint figure out how to navigate Clearwire’s expensive changeover to a new type of broadband technology.

—The state of Washington has been cutting millions from education budgets in the past several years as its treasury deals with low tax revenue. So there was one spot of good news for students shouldering larger tuition burdens: The rollout of open-source course materials for the most common community and technical college courses, called the Open Course Library. The project is jointly paid for by the state and the Bill & Melinda Gates Foundation.

Comments | Reprints | Share:          

How’s the life of a billionaire? “Quite strange,” says Bill Gates, who fielded questions from University of Washington students on Thursday evening as part of a lecture on the future of computing.

Gates’ talk, at a packed hall in the UW’s computer science building, focused on some areas where he thinks cheap, powerful computing will have a major impact on society, including education, disease, and robotics.

Gates recalled spending time on the UW campus as a young man, back in the days when computers were huge, powerful machines locked up in big research facilities.

“At strange hours you could essentially break in and use computer time,” Gates said. “I never did get a degree here, or anywhere else. But fortunately for me, my addiction to computers became easier to satisfy.”

Given the chance to ask Gates about anything, students treated the evening like a visit with the oracle, asking the Microsoft co-founder to expound on problems with the political system and the tax code, predict the future of computer interfaces, and more.

Gates didn’t disappoint, giving long answers that included some glimpses at his personal life, such as meeting his daughter’s boyfriend’s parents over Skype and being such a bookworm as a kid that “I had to have a quota about how much I was allowed to read.”

The webcast will be archived online by UW, but here are the highlights from where I sat:

BEING RICH
A student from Beijing said her dream as a child was to be one of the richest people on Earth, so she asked Gates “what is one word of advice that you would give to someone like me to become someone like you?”

“I didn’t start out with the dream of being super-rich. And even after we started Microsoft, and the guys who ran Intel—Gordon Moore and those guys—were billionaires, I was like, ‘Wow, that must be strange.’ And so—it is, it’s quite strange,” he said to laughs from the crowd.

“But I think most people who’ve done well have sort of found something that they just are kind of nuts about doing. And then they figure out a system to hire their friends to do it with them. And if it’s an area of great impact, then sometimes you get financial independence,” Gates said.

“But wealth above a certain level, really, it’s a responsibility that then you’re going have to either, a.) leave it to your children, which may or may not be good for them, or b.) try to be smart about giving it away.

“So I can understand wanting to have millions of dollars, because there’s meaningful freedom that comes with that. But once you get much beyond that—you know, I have to tell you, it’s the same hamburger. Dick’s has not raised their prices enough,” Gates said to laughs. “But, you know, being ambitious is good. You just have to pick what you enjoy doing.”

MONEY & POLITICS
Asked if he thought there was a societal problem of wealth being concentrated in the hands of too few powerful forces with an outsized ability to influence politics, Gates pointed out that worldwide poverty is getting far better over time. But he also acknowledged … Next Page »

Comments (16) | Reprints | Share:          

In her work at the University of Washington, Yoky Matsuoka spends time figuring out how to make the brain work directly with machines. In her startup work, she’s targeting something a lot less fancy-sounding: the home thermostat.

Matsuoka is vice president of technology at Nest, a Palo Alto, CA-based startup aiming to tackle energy efficiency by giving the ubiquitous wall-mounted thermostat a major overhaul. Nest’s device, detailed in these stories from The New York Times, Wired, and Forbes, adapts to its owners’ habits by tracking how they adjust their heat. It also uses motion sensors to detect whether anyone’s home, and gives owners data to track their energy use over time.

One passage from the Wired piece sheds some light on interesting adjustments that Matsuoka had to make to the device’s algorithms after testing with users.

It turned out that the Nest thermostat was actually being too aggressive in controlling the temperature for energy efficiency when nobody was home, making people feel like they were being forced into greener behavior rather than nudged.

“We’re actually trying to change the culture,” Matsuoka says. “If we just put a machine-learning device in people’s homes that changes the temperature without people understanding how it works, it’s never going to take off. We really had to understand how humans learn to live with a brand-new system.”

Nest’s co-founders led crucial work on the iPod and iPhone before starting Nest. Matsuoka, who was a 2007 MacArthur genius grant winner, also is a former head of innovation at Google. She’s on leave from the UW while working at Nest.

The startup is backed by top venture firms, including Kleiner Perkins Caufield & Byers, Google Ventures, and Lightspeed Ventures. Today’s reports say the company has raised in the neighborhood of $50 million.

Comments | Reprints | Share:          

Seattle-based Impel NeuroPharma has gotten a big vote of confidence for its technology that aims to deliver certain drugs more efficiently to the brain.

The company, a University of Washington spinout, said today it has secured funding from two of the world’s top 10 pharmaceutical companies, plus another $500,000 in a Series B angel financing. Impel, founded in 2008, has now raised more than $2.1 million combined from the U.S. Department of Defense, Washington’s Life Sciences Discovery Fund, and angel investors from the Wings medical device network, according to co-founder and CEO Mike Hite.

Impel isn’t disclosing terms of the pharma collaborations, but Hite said one will test its nose-to-brain drug delivery technology in animals, while another will study the drug/device combo in humans. Impel plans to run its first two human studies in 2012, Hite says.

“Other people have tried intranasal delivery, but largely devices deliver the drug to the lower two-thirds of the nasal cavity, not all the way from the nose to brain,” Hite says. “Pharma has tried everything else to get drugs in the brain and it hasn’t worked as well as they’d like, and they see this as the best device currently out there.”

Impel, as I described in an Xconomy feature in September 2008, is trying to take advantage of anatomy deep in the upper nasal passage. It has been developing a device to propel drugs way back there in the skull—the only place in the body where primary neurons are accessible via the outside environment. The Impel device, as scientific co-founder John Hoekman described it then, is made to deliver a pressurized, rotational flow of aerosol to reach those neurons.

Impel NeuroPharma's Nose-to-Brain drug delivery device

That way, patients who need the powerful pain drug Fentanyl, for instance, could take a nasal spray that delivers the drug directly to the brain and reduces pain within five minutes, without going through the bloodstream and causing side effects, namely severe constipation.

The device was originally tested for research at the University of Washington in Rodney Ho’s lab. Since the company’s founding in 2008, much of the development work has focused on taking a research prototype with many components and heavy electronics and turning it into something lighter, cheaper, and more convenient for patients to use.

One key question in human studies will be to see whether the miniaturized device can continue to deliver 60 to 80 percent of the dose where it needs to go, in contact with those primary neurons deep in the skull. Existing nasal sprays may be good at getting a drug into the bloodstream quickly, but they only deliver about 1 percent of their dosage all the way into the upper nasal cavity, Hite says.

“We’ve taken it now from the bench and miniaturized it,” Hite says. “We have made it into a manufacturable, scalable, disposable product.”

The device in its current form is designed to be small enough that a patient can carry it around easily in a personal bag, Hite says. The U.S. military has shown interest, he adds, in having a device that soldiers can clip on their belts, loaded with antidotes to chemical nerve agents they may be exposed to in the field.

Other companies have ideas about nose-to-brain drug delivery, including one local operation—Lynnwood, WA-based Kurve Technology. That company’s device recently received some attention for a study of 104 patients, in which insulin was delivered through the nose as a treatment for Alzheimer’s. UW researcher Suzanne Craft participated in that study, which was described last month in the Archives of Neurology.

Like any company just embarking on its first human studies, lots of questions still need to be answered before Impel can say it has the better mousetrap, or even a viable commercial product. But signing the collaborations and raising the cash means that Impel will at least get a chance to find out whether this technology has legs or not.

“These deals are of huge significance to the company,” Hite says.

Comments (2) | Reprints | Share:          

San Diego-based Illumina, the world’s leading maker of gene sequencing instruments, is getting more serious about software as its customers continue to drown in a sea of cheap DNA data.

Victoria, BC-based GenoLogics is announcing today it has raised $8 million in what it called a “strategic financing” led by Illumina (NASDAQ: ILMN), the world’s leading maker of DNA sequencing instruments. GenoLogics plans to use the money to develop genomics software tailored for cheaper desktop sequencers, to build up its sales and marketing efforts, and develop new applications that can go beyond the research bench and be used in the clinical setting. Illumina’s chief commercial officer Tristan Orpin will join GenoLogics board in connection with the deal.

“The strategic investment by Illumina illustrates our companies’ collective commitment to helping our customers overcome some of the most challenging barriers to next-generation sequencing adoption, namely data management,” GenoLogics CEO Michael Ball said in a statement. “Illumina provides important insights to these challenges and we look forward to working jointly with them.”

GenoLogics was founded in 2002, and has now raised at least $26.5 million since 2005 from a syndicate that includes Illumina, as well as Kirkland, WA-based OVP Venture Partners, GrowthWorks Capital, and Yaletown Venture Partners. The company’s big idea is to create a centralized system that keeps track of data from biological experiments across multiple instruments and applications.

Demand for genomics software has traditionally been thin, as researchers have opted in many cases for custom-made, open source programs. But genomics researchers have been struggling with information overload the past couple years, as companies like Illumina, Life Technologies, Complete Genomics and others have driven the cost of sequencing entire human genomes down to $4,000 or less—creating huge new demand to sequence large volumes of biological samples that need to be analyzed and interpreted.

While scientists may be crying for help with their data, there are limits to the amount they can spend on this type of software. Illumina missed its third-quarter sales forecast by about $40 million after reporting that scientists were skittish about purchasing its tools and chemical reagents as the U.S. National Institutes of Health is facing the threat of budget cuts.

Illumina CEO Jay Flatley downplayed the importance of software in an Xconomy interview in April 2010, but the company has changed its views more recently about the need to integrate its hardware with software. Illumina struck a co-selling partnership with GenoLogics earlier this year. Alex Dickinson, an Illumina senior vice president, will be able to talk some more about the company’s evolving strategy about DNA data analysis at the next Xconomy event in San Francisco on Monday Oct. 24, titled “Computing in the Age of the $1,000 Genome.”

GenoLogics has about 60 employees, according to a company fact sheet. Its customers include the University of Washington, the University of Southern California, Jackson Laboratory, Pfizer, and Sanofi.

Comments | Reprints | Share:          

The Seattle biotech community got an energetic new leader this week, but there was also some more grim news about budget cuts coming at one of the biggest local life sciences employers.

—Amgen (NASDAQ: AMGN), the Thousand Oaks, CA-based biotech giant, is looking to “improve focus” and “re-allocate resources” in its $2.9 billion R&D budget, according to a company spokeswoman. The company will have more to say in its quarterly earnings report on Oct. 24. Sounds like there will be some long days of grim speculation for the people at Amgen’s Seattle R&D operation.

—Seattle-based NanoString Technologies rolled out the next-generation version of its genetic analysis instrument at a big scientific conference in Montreal. The new tool is supposed to be able to churn out 50 percent more data, and it’s paired with a more flexible software program. The Broad Institute of Harvard and MIT, one of the world’s leading centers for genomics research, has signed on as the first customer for the Version 2.0 tool from NanoString.

—For the first time, I made an early morning call to Iceland for a story. This was to talk with Kari Stefansson, the prominent geneticist and CEO of deCODE Genetics. The company made the news this week by announcing by announcing a partnership with Pfizer to look for new lupus drug targets. The Seattle angle here is that Arch Venture Partners and its indefatigable managing director Bob Nelsen helped rescue deCODE from bankruptcy in 2010 in a wager that deCODE could thrive in the era of ultra-fast, ultra-cheap gene sequencing.

—Seattle-based Qliance Medical Management, the company that provides direct primary care services on a monthly subscription basis, said this week it has done some management shuffling. Co-founder Erika Bliss, a primary care physician, is stepping up to become president and CEO, while co-founder Norm Wu is stepping aside to serve as a “strategic advisor” working on partnerships. Qliance probably has the investment syndicate with the highest television Q-rating in town—Jeff Bezos, Drew Carey, Michael Dell, and Nick Hanauer are among its backers.

—This week in BioBeat, I offered up a list of five things that the pharmaceutical industry could (and should) do to help the FDA reform itself and restore public confidence in the agency. There are some good comments piling up at the bottom of this story, and you’re always welcome to add your own two cents there.

—Thong Le, the well-wired venture investor at WRF Capital, is going to take on a higher profile in the community next month when he becomes chairman of the Washington Biotechnology & Biomedical Association. Le is replacing Tom Clement, the founder of Pathway Medical Technologies, who is now working to get a couple new startups off the ground—Aqueduct Neurosciences and Cardiac Insight.

—Drew McUsic, a University of Washington graduate student in bioengineering, offered up his view of the opportunity for biotech startups in the world of stem cell R&D. This post was based on a WBBA event in which officials from Geron and Fate Therapeutics offered their view from the trenches.

—Lastly, we had a guest post for the biotech crowd inspired by the life of Steve Jobs, the Apple co-founder who died last week at 56. Christopher Bowe, a healthcare analyst with Informa, sees some lessons in Jobs’ life that might be healthy for a life sciences industry that’s starving for some really exciting new innovations.

Comments | Reprints | Share: