Three years have gone by since the region’s top biotech company was taken over by Eli Lilly, so it seemed like a good time to find out where all that talent migrated around the Northwest.

—Icos was once the great hope for Seattle biotech, but now three years have passed since the Bothell, WA-based company agreed to be sold to Eli Lilly for $2.3 billion. I wanted to find out where most of that scientific and business talent went in the wake of the mass layoffs that ensued, so I found a few Icosahedrons (as I’m told some of them like to be called) to help me put together a fascinating list of 270 alumni who have moved on to new opportunities.

—Seattle-based Trubion Pharmaceuticals (NASDAQ: TRBN) said this week that its co-founder and CEO, Peter Thompson, has resigned. He’ll be replaced on a temporary basis by Arch Venture Partners’ Steve Gillis while the company searches for a permanent replacement. I also recapped some of Trubion’s latest tribulations, to give a sense of what Thompson is leaving to his successor.

—Kirkland, WA-based OVP Venture Partners wanted a bigger piece of the original action in San Diego-based Fate Therapeutics, and now it grabbed some of that by leading a $30 million Series B venture round in the stem cell company. Carl Weissman, an OVP managing director and the CEO of Accelerator, will take a seat on Fate’s board as part of the deal.

—Seattle-based Oncothyreon (NASDAQ: ONTY) said it has decided to advance one of its experimental cancer drugs, PX-866, into mid-stage clinical trials next year. This is another sign of the company’s improving financial health, and its shift from cancer vaccines to cancer drugs, which I described in an in-depth feature earlier this year.

—Seattle-based NanoString Technologies earned a golden word of mouth endorsement this week from the Broad Institute of MIT and Harvard, which agreed to buy a couple of NanoString’s gene-expression tools to use them for a three-year research collaboration. Broad director Eric Lander, one of the big names in biology, said NanoString has “exciting” technology.

—People who work in Seattle’s global health cluster love to tell anecdotes about how certain projects can make a difference in people’s lives, but there hasn’t been as much effort to really catalog all the projects going on here and where they extend around the world. That was the goal of the Washington Global Health Alliance, a nonprofit led by Lisa Cohen, who wrote about it in this guest editorial. You can read more about the alliance in a profile I did of Cohen and her fledgling association in January.

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This was the week that a little biotech company in Bothell that few of the locals have ever heard of, burst onto the national stage.

—Bothell, WA-based Alder Biopharmaceuticals had its breakout moment this week when it pulled in $85 million in upfront cash, and stands to gain more than $1 billion over time from a partnership with Bristol-Myers Squibb to co-develop a new drug for rheumatoid arthritis. Clinical trial data on this drug hasn’t yet been released publicly, but CEO Randy Schatzman says it’s good enough to give market-leading drugs from Amgen and Abbott Labs a “run for their money.” Seattle Genetics CEO Clay Siegall, an Alder director, says it is now a “force” in regional biotech.

—Over in Seattle’s South Lake Union, another little-known private company called Kineta said it is splitting a little more than half of a federal contract with the University of Washington worth $13 million over the next five years. The goal will be to develop new chemical compounds, called adjuvants, that can boost the effectiveness of a wide variety of vaccines.

—The Institute for Systems Biology is continuing to net a lot of grant money, this week announcing that it has pulled in $8 million from the National Institutes of Health to contribute to The Cancer Genome Atlas. This is a genomic effort to identify potential new targets for cancer drugs.

—The battle between Seattle-based ZymoGenetics (NASDAQ: ZGEN) and Bristol, TN-based King Pharmaceuticals is heating up in federal court in Tennessee. If you’ve missed any of the back-and-forth, or how this ball really got rolling back in August, here’s a quick summary.

—Bellevue, WA-based Light Sciences Oncology, another private company that keeps a low profile, revealed in a regulatory filing that it has lined up another $35 million to support its drug-device combination therapy for cancer. The money is available in the form of a line of credit, and if investors choose to exercise warrants.

—Bothell, WA-based Verathon, the maker of a simple ultrasound tool for diagnosing bladder disorders, was acquired by Sarasota, FL-based Roper Industries (NYSE: ROP) as part of a pair of transactions valued at $356 million. The companies aren’t saying how much of that is going to the Verathon shareholders.

—Seattle-based Dendreon (NASDAQ: DNDN), the king of the moment in Seattle biotech, issued a pretty vanilla quarterly report with the Securities and Exchange Commission. One point worth noting was that it burned $28 million of its cash reserves in the three-month period ending September 30. It ended that quarter with $259.6 million in cash and investments left in the bank as it prepares to manufacture and market sipuleucel-T (Provenge) next year for men with terminal prostate cancer.

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Kineta, the Seattle-based developer of drugs for autoimmune diseases, has won about half of a $13 million federal contract awarded to the University of Washington to create new compounds which might be used to boost the effectiveness of vaccines against HIV or flu.

The five-year contract from the National Institutes of Health is worth about $6.8 million to Kineta, a company with 11 employees, with the rest going to teams led by UW scientists Michael Gale Jr. and Michael Katze. The company’s job will be to identify and analyze new chemical compounds that could become vaccine boosters, called adjuvants, and test them in animals, while Gale’s lab will study the way they work, and Katze will pitch in with computational biology support.

The federal contract is a coup for a small company like Kineta, especially in a period when seed capital for new biotech companies is scarce. Kineta is led by a pair of scientists who worked together at Seattle-based Illumigen before it was acquired by Lexington, MA-based Cubist Pharmaceuticals two years ago in a deal that could be worth as much as $340 million over time. Kineta CEO Charles Magness and chief scientist Shawn Iadonato have started their new company with a strategy of taking relatively raw molecules at the animal testing stage, steering them through the value-building steps of early human trials, and then striking partnerships with larger companies that will find them less risky and more valuable.

The decision to pursue vaccines shouldn’t come as any surprise, because Kineta’s expertise is in immunology, and Gale and Katze were both among the company’s original scientific advisers. It has been pursuing the contract for about a year, Magness says.

“This certainly helps with our financial future because it’s a long-term fixed contract,” Magness says. “We’ll look to hire some people in the short term, but what it really represents is another long-term product opportunity for the company with secure funding.”

The researchers will specifically look to activate …Next Page »

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PaxVax, a San Diego startup backed by Seattle’s Ignition Capital, has raised $2 million of a planned $6 million investment round, according to a document filed Friday with the Securities and Exchange Commission.

The biotech was founded in early 2007 to develop new oral vaccine technology based on a common cold virus called the adenovirus. The company says its vaccine, which is administered as oral tablets, avoids much of the requirements that conventional vaccines require—including cold storage for the vaccine itself and inoculation by qualified medical personnel. PaxVax says its oral tablets can be stored and distributed at room temperature, and are self-administered.

PaxVax says its vaccines also can be produced in large quantities and at record speed and low expense compared with traditional vaccines derived from egg culture. The company also says an oral vaccine may yield a more robust immune response than traditional vaccines.

The biotech was co-founded by Ken Kelley, who has worked in biotechnology for more than 25 years, including such companies as IntraBiotics Pharmaceuticals of Palo Alto, CA, and Integrated Genetics (acquired by Genzyme), and with such venture capital firms as K2 BioVentures and Latterell Venture Partners, according to the PaxVax website.

PaxVax’s board includes Ignition Capital operating partner Rennie Coit, who represents the Seattle VC firm at PaxVax. A pediatrician who got his medical degree at UC San Diego, Coit previously worked as a strategic planning consultant to clients that included academic medical centers, health insurance proviers, medical research organizations and global health providers. He also served as the chief operating officer of the University of Washington Medicine Neighborhood Clinics.

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Theraclone Sciences has formed a partnership with a Japanese drug company, worth as much as $18 million over time, to discover new antibodies that could broadly protect millions of people in a flu pandemic.

Seattle-based Theraclone has formed the alliance with Tokyo-based Zenyaku Kogyo, which markets a blockbuster antibody drug for cancer and rheumatoid arthritis, called rituximab (Rituxan), in Japan. The deal calls for Theraclone to give Zenyaku an option to exclusive rights to new flu antibodies in Asia and certain Pacific Ocean countries, which can be used for treatments and vaccines. In return, Theraclone gets an undisclosed portion of the $18 million in upfront cash, and royalties on future product sales in Zenyaku’s territories. Theraclone also keeps exclusive commercial rights to the flu antibodies it discovers in the rest of the world, says CEO David Fanning.

The deal comes one month after Theraclone and its collaborators made international news when a paper in Science described how they had discovered a pair of new antibodies with ability to broadly neutralize many variations of the HIV virus that circulate around the world. Theraclone has long said that its method can be applied to the discovery of antibodies for multiple pathogens, including flu. That’s because it looks for clues from blood samples of people who are naturally protected from infection, finds the natural antibodies that seem to be protective, and then genetically engineers copies of them that can made into injectable drugs for people who lack those specific antibodies.

The global headlines couldn’t have come at a better time for Theraclone. When I interviewed Fanning for that story last month, he was in Japan negotiating the deal with Zenyaku, making a case that the HIV discovery work could also be applied to flu. It certainly didn’t hurt his position.

Theraclone CEO David Fanning

“That’s right, those were the guys I was meeting with then,” Fanning says with a smile.

Flu has been a top priority of public health officials this year, particularly since June 11, when the director-general of the World Health Organization, Margaret Chan, declared a global flu pandemic with 30,000 confirmed cases in 74 countries. Major flu vaccine makers like Paris-based Sanofi-Aventis have been taking immediate action to see if they can use lower doses of existing vaccine this flu season—to stretch out capacity in order to protect millions more people—but the pandemic has also sparked renewed interest at the lab bench among companies with newer ideas like Theraclone.

Theraclone is testing for antibodies with broad neutralizing …Next Page »

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Todd Patrick, a longtime vaccine company executive, has been named the chairman of the board of trustees at Seattle Biomedical Research Institute. Patrick is the former president of ID Biomedical, the Vancouver, BC and Bothell, WA-based vaccine developer that was acquired by GlaxoSmithKline for $1.5 billion in 2005. Patrick has served on the SBRI board for two years, and takes the chairmanship as the nonprofit research institute prepares to advance a novel malaria vaccine candidate from the lab to its first clinical trial in early 2010.

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Dendreon watchers got all hyped up in anticipation of the company’s analyst day in New York, but there really wasn’t much in the way of news. So I dug up some other stuff for your reading enjoyment.

—The biggest piece of news out of Seattle-based Dendreon’s analyst day was that the company says it plans to file its application by mid-November to seek approval from the FDA to start selling Provenge in the U.S. Dendreon (NASDAQ: DNDN) had already said this was coming in the fourth quarter, so this added specificity is nice, but not exactly big breaking news. But the company is still hiring quite a bit, which you can read about how much here in case you missed it.

—Dendreon’s former CEO Christopher Henney has moved on to other endeavors, one of which involves being the chairman of AVI Biopharma (NASDAQ: AVII). So it shouldn’t have been a big surprise when this developer of RNA-based therapies recently moved headquarters from Portland, OR to Bothell, WA, under Henney’s watch. I checked out the company’s new digs in person with AVI Biopharma CEO Les Hudson, who’s enjoying his new surroundings, even while he’s trying to find out how to run the building’s HVAC system.

—ZymoGenetics (NASDAQ: ZGEN) released some bad news first thing Monday morning in an SEC filing, in which it said its partner, Merck KGaA, pulled the plug on a couple of trials for an experimental drug for multiple sclerosis called atacicept. This is just the latest in a string of setbacks for this drug, which was once the shining star in the Zymo pipeline.

—Charlotte Hubbert, a Kauffman Fellow at Seattle-based Accelerator, wrote a downright funny and insightful guest editorial for the Xconomist Forum on her journey from academic science to the supposed “dark side” of biotech and venture capital. I can only imagine what her parents think about the remark she made about hosiery.

—Fate Therapeutics, the La Jolla, CA-based company that counts Xconomist and University of Washington stem cell scientist Randall Moon as one of its big-name co-founders, has been on a growth spurt over the past year, as I discovered on an in-depth tour of the company’s labs.

—Redmond, WA-based Spiration, the maker of a minimally invasive device for treating chronic lung diseases, raised another $7 million in debt financing to keep supporting its work to commercialize the device in Europe and complete a pivotal trial in the U.S.

—Larry Corey, a scientist at the Fred Hutchinson Cancer Research Center and world leader in the quest to develop an HIV vaccine (he’s also an Xconomist), weighed in this week with an editorial about why he’s encouraged by findings of a clinical trial of a vaccine that protected about one out of every three people tested.

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The HIV vaccine field received exciting news Thursday from an HIV vaccine trial conducted in Thailand, where the vaccines tested appeared to reduce the acquisition of HIV by about 30 percent. This milestone is the first sign from a study in humans that it is possible to develop an effective HIV vaccine.

The trial, conducted by a consortium of partners, including the Thai Ministry of Health and the U.S. Military HIV Research Program, used two vaccines (ALVACr HIV and AIDSVAXr B/E) that were matched to the strain of HIV that is predominant in Thailand (Clade E). The study was the first community-based trial of an HIV vaccine and involved more than 16,000 people from two provinces in Thailand. The vaccines reduced the acquisition of HIV-1 by 31.2 percent. Although this level of effectiveness did not reach the degree of protection specified in the protocol for potential licensure as a vaccine, it was statistically significant.

Thus, while the vaccine’s effectiveness is not at the level needed to control the AIDS pandemic, it is an indication that scientists will reach the goal of developing an effective HIV vaccine. By examining and analyzing the blood samples from participants, they will develop a greater understanding of how these vaccines protected some people from infection. They will build on that knowledge to create future vaccine candidates that are able to produce a greater protective effect.

Historically in vaccine development, a study will first show a modest effect at preventing disease, and then changes are made so that subsequent vaccine candidates demonstrate a more robust effect. Some of the most effective vaccines can reduce infection by as much as 95 percent, while others, like the seasonal influenza vaccine, are in the range of 50-60 percent effective. It is far easier to double the effectiveness of a vaccine from 30 to 60 percent than it is to find the vaccine with that first effect.

Moving forward toward an effective HIV vaccine will require more clinical trials in humans. Some of them will be successful, and some of them not. Hopefully, a concerted scientific effort to define the correlate of this success will lead to rapid improvements on these initial results, and bring us to an effective HIV vaccine.

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Dendreon shocked the cancer research world back in April, proving for the first time in a major clinical trial that a drug which actively stimulates the immune system can be effective against tumors. Now the Seattle-based company has to wrestle with a whole new set of challenges to make sure it fully exploits the potential of its drug, sipuleucel-T (Provenge), which most analysts say has potential to easily top $1 billion in annual sales for patients with prostate cancer.

The company (NASDAQ: DNDN) has put off answering a few important questions about how it plans to accomplish that via manufacturing, partnering, pricing, and marketing strategy until its analyst day today in New York. I will not be attending this meeting, but I thought it would be useful, for Dendreon watchers, to provide a bit of a preview on the key issues the company will have to address at this forum. Investor expectations are running high, as the company touched a 52-week high of $30.42 a share on Tuesday.

Here are some key issues the company will be prepared to discuss:

—FDA Timelines. While Dendreon clearly reached its goal of helping men live a median of four months longer than a placebo in its trial of 512 men with prostate cancer, it still needs to put together an airtight application to win FDA approval to start selling Provenge in the U.S. Dendreon has said it plans to gather all the data for its amended application, and turn the whole thing in to the FDA in the fourth quarter of this year. Since Dendreon already filed an application based on earlier data in 2007, and it really only needs to add the database from the latest big trial, this process shouldn’t drag on into 2010.

Dendreon has said it expects a six-month review of its Provenge application, so investors will set their calendars for that future date the minute Dendreon files its application. If Dendreon turns in its application in October, it could get FDA approval as soon as March.

—Manufacturing. Putting together an airtight application to the FDA has to be a top priority, but manufacturing is right up there on the list. This is especially critical for Dendreon, because …Next Page »

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Gov. Chris Gregoire has been in the thick of the health care reform talks in the other Washington. To hear her tell the story, she has been talking with President Obama’s top health policy aide, Nancy Ann DeParle, U.S. Health Secretary Kathleen Sebelius, House Speaker Nancy Pelosi, and one of the leading Senators on health reform, Senator Max Baucus of Montana.

Gregoire has been so busy with the DC power elite, and dealing with a recent economic report that said the state’s economy has hit “rock bottom,” that I heard some scuttle she might try to phone it in at her own annual Governor’s Life Sciences Summit in Seattle this morning.

But there she was at McCaw Hall in Seattle at 8 am, letting a crowd of at least 100 people brought to together by the Washington Biotechnology & Biomedical Association know she’s still a believer in their work to build up the state’s cluster of companies that develop new drugs, medical devices, and diagnostics.

“We ought to remain committed to the Life Sciences Discovery Fund and what it can do for the public,” Gregoire said.

This spring, Gregoire and the legislature gave skeptics some reason to doubt the state’s commitment, when the fund was dealt a 41 percent cut over the current two-year budget cycle. The program, which pays for research projects in the state that have commercial potential, was originally projected to be a 10-year, $350 million program that uses money from the state’s tobacco settlement. But the Life Sciences Discovery Fund will now get $19.5 million per year over the next two years because of the state’s budget cuts, said executive director Lee Huntsman.

Interestingly, Gregoire’s justification for the program appears to have shifted. For years, this program was sold as an engine of job creation and prosperity for Washington state—which is finding it increasingly tough to pass the straight-face test when the unemployment rate has topped 9 percent, and even some of the strongest life sciences companies have been slashing payrolls. This morning, Gregoire shifted her message to talk more about the payoff for human health.

She told one anecdote about a police officer, Ray Blackwell. He suffered a brain hemorrhage that’s often fatal, but he survived after being treated by David Newell, the executive director of the Swedish Neuroscience Institute in Seattle. Newell was one of the early winners of state grant support—$169,532—to treat intracranial hemorrhages with an experimental procedures that uses a catheter loaded with enhanced ultrasound, combined with a common clot-busting drug, to gently dissolve the clot over a 24-hour period without causing complications.

The story has two local angles because not only is Newell a local doc getting state support …Next Page »

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[Corrected: 09/14/09, 12:40 pm. See below.] Autism has stumped drug developers for a long time. Scientists say they don’t really know what causes it. There’s a long list of symptoms, from social isolation, to obsessive behaviors like staring at ceiling fans, to difficulty with language. So it’s hard for drug developers to form a strategy to treat this disease, and not surprisingly, the condition doesn’t rank high on the research agendas of most drug companies.

That was true at Bothell, WA-based Nastech Pharmaceuticals (now called MDRNA), which long had a project on the back burner that held some promise for autism. When the company did some major downsizing a year ago to conserve cash, president Gordon Brandt was let go, and negotiated to take that neglected piece of intellectual property with him. That license has now formed into a business plan for a company Brandt is calling Anatrope Pharmaceuticals, which he told me about the other day at a Starbucks near Xconomy’s office.

“This always rattled around as number 4 on our priority list at Nastech, and never really got the attention it deserved,” Brandt says.

Autism has been riding a wave of increased public awareness, and is now said to affect about one out of every 150 kids in the U.S. Celebrities like Jenny McCarthy have pushed the idea that preservatives in childhood vaccines are causing the rising incidence, although scientists say there isn’t convincing data to support this. Yet despite all this popular attention (Bruce Springsteen and Jerry Seinfeld are scheduled to headline a fundraiser for Autism Speaks, a patient advocacy group, in New York on Nov. 17), there’s been surprisingly little progress, or competition, in the biotech and pharma industries to create effective new therapies. Right now, some children with irritability from autism get atypical antipsychotics like Johnson & Johnson’s risperidone (Risperdal), or depression meds, but behavioral therapy appears to be the best option for kids diagnosed with autism, Brandt says.

The idea at Anatrope is to build on research into oxytocin, the “hormone of bonding and trust,” as Brandt puts it. Levels of oxytocin spike for both mothers and their babies during breastfeeding; the hormone is supposed to play a role in the bonding process. [Editor's note: Previous sentence revised to clarify role of oxytocin in breastfeeding]. A 2005 paper in Nature lent more credence …Next Page »

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

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

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

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

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

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

Theraclone CEO David Fanning

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

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

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

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MabVax Therapeutics, a San Diego biotech developing novel vaccines and human antibodies for the treatment of cancer, plans to raise $4 million from investors, according to a recent filing with the Securities and Exchange Commission. The company, which has raised about $500,000 so far, was founded in 2006 to develop polyvalent versions of existing monovalent vaccines against small cell lung cancer, sarcoma, melanoma, and other cancers. MabVax says it plans to develop fully human monoclonal antibody products at the same time.

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The Seattle-based Infectious Disease Research Institute, a nonprofit global health research center, said today it has agreed to license technology from Israel-based NanoPass to use very short “microneedles” that cause less pain than traditional needles. The technology is supposed to stimulate the dense network of immune system cells just under the surface of the skin, which might make a number of new vaccines more protective, IDRI said in a statement. Financial terms of the agreement weren’t disclosed.

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Vaccines get the credit for some of the biggest public health gains of the past century, but they are notoriously tough to develop. The required clinical trials take years, cost many millions, and even the slightest safety warning will attract droves of litigators. That’s all for a product that can’t usually command monopoly prices, like, say, a cancer drug.

So why exactly did Cambridge, MA-based Genocea Biosciences raise $23 million in venture capital earlier this year, before it even has a single vaccine candidate showing value in clinical trials? Why would people largely responsible for the two best-selling vaccines ever—Merck’s human papillomavirus vaccine (Gardasil) and Wyeth’s pneumococcal vaccine (Prevnar)—get involved with this startup in its early days? That’s what I delved into with Genocea CEO Staph Bakali when we talked the other day.

There are financial reasons why venture capitalists have suddenly gotten more interested in vaccines like those promised by Genocea, and it isn’t all about impulsive reactions to the latest scary headline on swine flu. Vaccines, which once languished in the pharma industry backwaters, made up a $13 billion market in 2007, according to Lehman Brothers. Sales of vaccines are expected to grow at an 18 percent annual clip through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Both Gardasil and Prevnar have proven that vaccines don’t have to be commodities anymore—they can garner high prices and create new billion-dollar markets.

“It’s the fastest growing segment of the pharmaceutical industry,” Bakali says.

Looking through that lens, the work of microbiologist Darren Higgins at Harvard Medical School suddenly appeared to have more than academic interest when the company was started in 2006. Genocea has built its foundation on a technology that’s supposed to mimic the human immune system in a lab dish, which helps researchers identify the most important antigens for inclusion in vaccines, Bakali says. These antigens—substances that spark an immune reaction—are supposed to help the body do more than just stimulate the production of the usual antibodies, or B-cell response, that traditional vaccines are known to provoke.

Staph Bakali

Instead, Genocea, with the help of proprietary computer algorithms, is looking for antigens that can stimulate the second major element of the immune system—T-cells—that are widely predicted to be necessary players if researchers hope to develop effective vaccines for major sexually transmitted diseases, or infectious agents like tuberculosis and malaria, Bakali says.

To uncover ways to alert these T-cells, Genocea is drilling deep …Next Page »

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Just three months ago, San Diego-based Inovio Biomedical looked like one of the many biotechs with big ambitions that were headed for the dustbin of history. The company has been burning cash for 15 years and it was down to its last $5 million in working capital. Inovio tried to merge with another little biotech company from Pennsylvania for 11 months, before finally closing the deal on June 1.

Investors didn’t give it a New York minute of attention: Shares closed at 63 cents that day.

But Inovio wasn’t done. The company (AMEX: INO) pounced on a new opportunity to treat the latest public health scare. On July 29, Inovio said its “universal” DNA-based vaccine was able to protect pigs and mice who were directly exposed to current circulating strains of the H1N1 “swine” flu. That evidence added heft to an earlier finding, which said Inovio’s approach offered the same blanket immunity to mice that were exposed to the deadly strain of flu that killed 40 million people around the world in 1918.

This time, Inovio struck a nerve. The obscure little company’s stock more than quadrupled in value, rising that day from 74 cents a share to $3.18 a share on huge volume of 32 million shares. Inovio cashed in that exact same day—raising $28.5 million of new capital—enough to keep its doors open until the second half of 2011, according to its latest quarterly report.

While Wall Street reacted on the usual primal emotions—fear and greed—I wanted to dig a little deeper into the fundamentals when I spoke recently with Inovio’s new CEO, J. Joseph Kim.

J. Joseph Kim

Time will tell whether Inovio really deserves its lofty new market valuation (currently about $92 million), but it’s worth noting that the vaccine field as a whole is hot—and H1N1 vaccines are incandescent. The vaccine industry made up a $13 billion market in 2007, according to Lehman Brothers. What’s more, vaccine sales are expected to grow at an 18 percent annual rate through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Merck’s human papillomavirus vaccine, Gardasil, as well as Wyeth’s pneumococcal vaccine, Prevnar, have proven that new generations of vaccines can sell at high prices-and create new billion-dollar markets.

So there’s a business case for a lot of vaccine companies. But what about the science at Inovio, or the newly-combined Inovio to be more precise, That might give the San Diego company a new lease on life?

The rationale for the merger …Next Page »

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Somebody forgot to tell the Northwest biotech community this is the height of vacation season. Our pages this week were packed with stories on financings, clinical trials, exclusive interviews and more.

—Rick Klausner, the former leader of the National Cancer Institute and the global health wing of the Bill & Melinda Gates Foundation, provided some intriguing insights on cutting-edge biology that he’s been following in his new job as a venture capitalist. Deep into this story, Klausner explains why he thinks Seattle-based Dendreon (NASDAQ: DNDN) is just scratching the surface of what immune-stimulating therapies will be able to do in the future.

—Targeted Growth gets its share of publicity for its camelina seeds that are used to make jet fuel, but further in the future, Targeted Growth envisions making a bigger impact with genetically modified algae that can be made to compete on price with petroleum. We got the story from a conversation with Targeted Growth’s Margaret McCormick.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) raised about $40 million last month, and lo and behold, this week it found yet another lone institutional investor willing to wager another $30 million that this company has brighter days ahead. Cell Therapeutics has asked the FDA to approve its experimental pixantrone therapy for patients with non-Hodgkin’s lymphoma.

—PATH, the Seattle-based nonprofit that works to improve health in poor countries, won the closest thing the humanitarian field has to the Nobel—the Conrad N. Hilton Humanitarian Prize. PATH president Chris Elias envisions using the $1.5 million cash award as seed capital for a five-year, $25 million plan to support innovative new global health technologies, and to support geographic expansion in Africa.

—Amgen scientists in Seattle had something to celebrate a week ago, but just one week later the picture has gotten a little muddier. Earlier, we reported that the first big prospective clinical trial confirmed the company’s hypothesis that panitumumab (Vectibix) can slow the spread of tumors for colorectal cancer patients with normal forms of the KRAS gene (and that the drug doesn’t help those with mutated forms). This week a second clinical trial in a sicker patient population found the same pattern with respect to slowing the spread of tumors, although the treatment didn’t actually help normal KRAS patients live any longer.

—Seattle Genetics put the finishing touches on its big stock offering, which ended up generating a grand total of $136 million. The Bothell, WA-based developer of cancer drugs (NASDAQ: SGEN) said its underwriters exercised all their options to buy an extra 1.65 million shares. JP Morgan and Goldman Sachs were joint book-running managers of the offering. (Apparently Seattle Genetics saw fit to use at least a little money to spiff up its website, too.)

—Seattle-based biotech consultant Stewart Lyman submitted another intriguing editorial for the Xconomist Forum on why Big Pharma companies have many reasons to make biologic drugs. Some of this is about science, but there’s politics and business to consider, too.

—Mukilteo, WA-based CombiMatrix (NASDAQ: CBMX), the maker of genetic analysis tools, is looking to hire an investment bank to consider whether the time is right to sell the company. Back in June, after it got crushed by bigger competitors selling DNA microarray tools, I profiled the company’s attempt to reinvent itself around cancer diagnostics.

— Light Sciences Oncology isn’t just about oncology anymore. The Bellevue, WA-based company said it has started enrolling patients in a clinical trial to see if it can treat benign prostatic hyperplasia, otherwise known as an enlarged prostate. The company’s technology uses light-emitting diodes, threaded into localized tissue, to activate a drug within a certain wavelength.

—Seattle-based Sound Pharmaceuticals, the developer of treatments for hearing loss, said this week it nailed down a $2.1 million contract from the U.S. Navy to continue developing its lead therapy. It’s the third grant the company has gotten from the Navy since 2005, and will enable it to beef up its pipeline of experimental treatments, says CEO Jonathan Kil.

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Vaccines produced some of the biggest advances in medicine over the past two centuries, but for most of that time, scientists couldn’t say for sure how they worked to rev up the immune defenses. “You would close your eyes and hope,” says Rick Klausner.

That era is coming to a close, says Klausner, a former global health leader at the Bill & Melinda Gates Foundation and former director of the National Cancer Institute. Vaccines in coming years will be specifically designed to do what scientists want, Klausner says. They will stimulate certain cell types that you want to prevent an illness, fight off an existing infection, or possibly kill tough cancer cells.

The vaccine wave is one of several big ideas Klausner, 57, is pursuing in the latest chapter of his career as a venture capitalist. He’s now a managing partner with The Column Group, a San Francisco-based venture firm with about $260 million under management, and a team that includes three Nobel Laureates dreaming up the best ways to apply cutting-edge biology to vaccines and other areas. Klausner helped get the firm started from his home base in Seattle, but I spoke to him last week by phone from San Francisco. He moved to the Bay Area this month to be closer to his fellow partners, and most of his portfolio companies. But he insists he’ll be back on a plane once a month to the Northwest to keep tabs on his firm’s hot vaccine prospect, Seattle-based Immune Design.

“For the first time I’ve seen, we have a path forward to use vaccines against chronic diseases and as therapeutics,” Klausner says.

Immune Design, as we have written about in these pages, was born at an auspicious moment in both the science and business of vaccines. This business is pretty straightforward: these products, which once languished in the pharma industry backwaters, made up a $13 billion market in 2007, according to Lehman Brothers. What’s more, vaccine sales are expected to grow at an 18 percent annual rate through 2011, compared with 4.4 percent projected growth for the drug industry as a whole during that period, according to Lehman. Merck’s human papillomavirus vaccine, Gardasil, as well as Wyeth’s pneumococcal vaccine, Prevnar, have proven to the industry that newer vaccines can sell at high prices—and create new billion-dollar markets.

But when we spoke, Klausner mostly wanted to talk about why the science will lay an important foundation for this industry in the future.

Immune Design, albeit still in its early days, represents some of the exciting new advances in immunology that will make for better vaccines, Klausner says. The company was formed by combining two fundamental technologies. One was a delivery system, known as a vector, from the lab of Nobel Laureate David Baltimore at Caltech. That new tool makes it possible to precisely stimulate dendritic cells, which are known for sending sentinel warning signals about pathogens to other cells of the immune system, Klausner says.

The other component came from the lab of Steve Reed at the Infectious Disease Research Institute in Seattle, Klausner says. That’s where scientists have developed …Next Page »

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Why would a Big Pharma company want to remake itself as a biotech? In a recent Xconomy piece, I discussed the changes in Roche’s corporate culture brought on by their recent acquisition of Genentech, along with recommendations for creating an innovative biotech research culture. What I didn’t have the space to dive into was a discussion of why Roche is attempting to transform itself from Big Pharma to biotech (OK, Big Biotech). The answer can be summed up in one word. Biologics. Here’s how I see it all coming together:

Biologics are Hot, Hot, Hot

Plant-based drugs have been used by cultures around the world for thousands of years. Drugs based on chemical synthesis have been with us since the latter half of the 1800s. Now, the era of biologics—genetically engineered protein drugs made in living cells—is upon us. Biologics now account for 20 percent of the global drug market, according to market research firm IMS Health. In 2000, only one biologic made the top ten list of worldwide drug sales (Amgen’s recombinant erythropoietin in 4th place). By 2008, five of the top 10 drugs in sales were biologics, and by 2014 biologics are expected to occupy six of the top ten positions, according to EP Vantage.

The trend is clear: worldwide sales of biologics are on track to hit the $100 billion level by 2011. As recently as 35 years ago there were no recombinant protein drugs in the marketplace. Today the marketplace contains many types of recombinant proteins, including growth factors, monoclonal antibodies, soluble receptors, clotting factors, replacement enzymes, vaccine components, and immune system stimulators. Biologics comprise about 25 percent of new drugs, according to the Washington Post, and accounted for about 16 percent of total prescription drug spending in 2008, according to IMS Health.

Small molecules, however are not likely to go away anytime soon, because they retain …Next Page »

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PATH, the Seattle-based nonprofit that works to improve health in poor countries, said today it has won the closest thing the humanitarian field has to the Nobel Prize—the $1.5 million cash award known as the Conrad N. Hilton Humanitarian Prize.

The news was delivered at an exuberant press conference this morning with PATH president Christopher Elias, Bill Gates Sr. of the Bill & Melinda Gates Foundation, and officials of the Hilton Foundation. The prize, given annually since 1996, has gone to other big-name health nonprofits in the past like Partners in Health and Doctors Without Borders. The story first appeared on The Seattle Times.

PATH, as I explained in this profile back in February, has such a broad portfolio of projects that it sometimes struggles to explain what it does in a sound bite. But essentially it seeks out clever, affordable technologies, and partnerships with clever entrepreneurs and government agencies, to help improve the health of have-nots around the world. It has developed or played a role in co-developing 85 different technologies being used to improve global health, such as needles designed to curb the spread of infectious diseases, simple diagnostic tests for common diseases, and stickers on vaccine vials that can tell whether the immunization has gone bad. We’ve written a lot about PATH in the past year, including its work to improve the nutritional value of rice, fix broken bones, purify water, and develop new vaccines that can withstand hot and cold temperatures.

“We were absolutely thrilled when we heard,” Elias said during a brief conversation after the press conference. “We’ve been nominated in prior years, but haven’t won.”

The award may not sound like a lot of cash for an organization with 800 employees and a $240 million annual budget, but Elias made it sound like he plans to get major bang for the buck. PATH plans to use the money to expand its field operations in Africa, to scale up big production of existing global health technologies, and to provide seed funding for new technologies.

He gave an example of what he means when he talks about leveraging resources. Five years ago, PATH wanted to compete for grants to improve health in South Africa, but couldn’t be a serious …Next Page »

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