It was a pretty slow week for tech deals in the Northwest—chalk it up to the election and the Veteran’s Day holiday. Nevertheless, there was a trickle of activity in software, digital media, and energy.

—Seattle-based Voyager Capital has led an investment in Keystream, a Mountain View, CA-based online video advertising startup. The deal closed earlier this year, and the financial terms were not announced. Keystream’s software allows Web publishers to insert ads into blank spaces in their video content.

—Entrance Controls, a Tukwila, WA-based security company, acquired Portland, OR-based 1Pointe, a startup that delivers secure networking, storage, and wireless technologies to businesses. The terms of the deal were not disclosed.

—Puget Sound Energy, the Bellevue, WA-based utility company, purchased 22 wind turbine generators from Vestas, a leading turbine manufacturer with U.S. headquarters in Portland, OR. The turbines will be used to expand the Wild Horse Wind and Solar Facility in eastern Kittitas County, WA, and they make up most of the project’s $100 million budget.

—Apptio, a Bellevue, WA-based startup that helps companies manage and optimize their IT costs, signed up a new batch of customers, including Alaska Airlines, SkyTap, and SumTotal. A year ago, the company raised $7 million from Madrona Venture Group, Greylock Partners, Ignition Partners, and other investors.

—Not a deal, but a list of dealbreakers: Seattle angel investor Geoff Entress, formerly a venture partner at Madrona Venture Group, gave his Top 10 list of why startups fail. (The list goes to 11, like a Spinal Tap amp.)

—Also not a deal per se, but Luke reported on how Portland, OR-based Wellpartner, a mail-order pharmacy, is helping clinics that serve the poor gain access to drugs at half the average wholesale price that private insurers get charged. Wellpartner does it by cutting through the red tape of a federal program known as 340B.

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Last week brought another mixed bag of news from Seattle biotech.

—Tysabri. The most effective drug on the market for multiple sclerosis isn’t sold by a Seattle biotech company, but it has its origins in a lab here at the Fred Hutchinson Cancer Research Center.

—ZymoGenetics had yet another good news/bad news week. The Seattle biotech company said its pegylated interferon lambda drug for hepatitis C was able to kill the virus in a trial of 18 patients, without any of the flu-like symptoms associated with standard interferons. But the next day, it said it sold just $1.8 million worth of recombinant thrombin, its only marketed product, in the third quarter.

—We occasionally like to take a close-up look at clusters within the Seattle region, and this week I did a census of the local ultrasound industry. About 5,000 people are now employed at 15 companies in the area we counted. If you know of more, please drop us a line at editors@xconomy.com

—MediQuest Therapeutics passed along some bad news Friday afternoon when it said its drug for Raynaud’s disease was rejected by the FDA. The privately-held Bothell, WA-based company didn’t say what the FDA’s questions were about the Vascana application, but it plans to meet with the agency to determine its next steps.

—Did you know poor people can legally get prescription drugs in this country for half-price? I didn’t know about it until the folks at Portland, OR-based Wellpartner, a mail-order pharmacy, explained how they’ve found a way to help clinics that serve poor people to handle the bureaucratic red tape to get this deal. This is one reason why Wellpartner has tripled in size over the past year, and attracted investments from Seattle-based Integra Ventures and Buerk Dale Victor.

—Northstar Neuroscience announced to investors this week that it doesn’t plan to just curl up and die. The Seattle-based medical device maker, which was under pressure from an activist shareholder this summer to sell itself, says it expects to have $66 million in cash left at the end of the year, and that it will still have $53 million left in reserves at the end of 2009. The company is developing its electrical stimulation device for severe depression, after an earlier trial failed in stroke patients.

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There’s a way to buy prescription drugs for 50 percent off that’s perfectly legal, but requires so much red tape that few people know how to take advantage of it, or even know about it. Except for Wellpartner.

This company is a Portland, OR-based mail-order pharmacy that I learned about several weeks ago during a meeting with a couple of its investors, Joe Piper and Hans Lundin of Seattle-based Integra Ventures. I had never heard of the federal program known as 340B, in which clinics that care for poor people can buy top-selling medicines like Pfizer’s atorvastatin (Lipitor) at half of the average wholesale price that private insurers get charged. Wellpartner’s ability to help clinics get access to these cheap drugs was part of the reason it raised $16 million in August from Burrill & Co., Credit Suisse, Seattle-based Buerk Dale Victor, and Integra. I followed up with Wellpartner CEO Mike Wright and marketing head Robert Judge to learn more about how this works.

One of the key strategies at Wellpartner is to help clinics that serve the poor quit paying full price. With hardly any notice, it has become the nation’s leading provider of prescription medicines through the 340B program. This program started in the early 1990s, through an administrative rule passed by the Centers for Medicare and Medicaid Services, Judge says. It’s meant to provide a supply of meds to federally qualified health centers that now serve as a safety net for more than 17 million people in more than 6,000 facilities around the country. The problem is that many pharmacies that serve the clinics don’t participate in 340B, because red tape dictates that inventory and accounting of these supplies be kept completely separate, to prevent anybody with a solid income from pulling shenanigans to get their drugs for half-off, Wright says.

“Not everybody is scrupulous about these things,” Wright says.

Wellpartner has developed a way around this. Since 2005, it has managed the inventory for community pharmacies who want to place orders for qualified patients, and the pharmacy doesn’t have to keep its inventory separated, Wright says. What this means is that poor patients who need, say, an AIDS medicine like Gilead Sciences’ emtricitabine and tenofovir (Truvada) will have to make much lower co-payments on a cheaper drug, and therefore, they are more likely to follow doctors’ orders to take it consistently, Wright says.

“If you stop taking your meds, your next step can be the mortuary,” Wright says.

Oregon Health & Science University in Portland has a federally qualified health clinic that can buy these cheap drugs, and other clinics tend to be in highly urban or rural areas, or serve Indian tribes, Wright says. Wellpartner makes its money on the prescription orders through transaction fees, Judge says.

The pharmaceutical companies don’t exactly advertise this on TV or anywhere else I’ve seen. … Next Page »

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The third quarter saw a pretty significant decline in Northwest venture deals, as Greg reported on Saturday. But still some big ones were landed—starting with one of the biggest in the nation: Big Fish Games. The Seattle maker of casual and online games (a 2002 spinoff from RealNetworks) took in a whopping $83.3 million, more than the next four biggest deals in the region combined. But Big Fish wasn’t the only bright spot, as six other firms, four from Washington state and two from Oregon, reeled in $10 million or more in venture rounds during the period.

Here’s the list of the top 10 venture deals for the quarter—and the venture firms that made them. Just having that Big Fish at the top makes you wonder about all the deals that got away.

— Big Fish Games, Seattle, WA — $83.3 million
Investors: Balderton Capital*, General Catalyst Partners, Salmon River Capital of New York

— AltaRock Energy,** Seattle, WA — $26.25 million
Investors: Advanced Technology Ventures, Khosla Ventures*, Kleiner Perkins Caufield & Byers*, Vulcan Capital

— Dexterra, Bothell, WA — $21.5 million
Investors: Canaan Partners, Intel Capital, Mesirow Financial, Motorola Ventures, New Enterprise Associates*, Sigma Partners

— Wellpartner, Portland, OR — $16.1 million
Investors: 3i Group, Buerk Dale Victor, Burrill & Company*, Credit Suisse Group, Integra Ventures, Mediphase Venture Partners

— HaloSource, Bothell, WA — $11.5 million
Investors: Origo Sino-India PLC, Unilever Technology Ventures

— Tableau Software, Seattle, WA — $10 million
Investors: New Enterprise Associates*

— Brammo, Ashland, OR — $10 million
Investors: Chrysalix Energy Management

— RadioFrame Networks, Redmond, WA — $9.3 million
Investors: Ericsson Venture Partners*, Ignition Partners*, Innovacom, Samsung Electronics, VantagePoint Venture Partners*

— RF Surgical Systems, Bellevue, WA — $8.2 million
Investors: Menlo Ventures*, Stanford University

— Elemental Technologies, Portland, OR — $7.1 million
Investors: General Catalyst Partners*, Voyager Capital*

* lead investor

** Founded in Seattle and still has major operations in the city, but has now moved its HQ to Sausalito, CA

Source: Dow Jones VentureSource

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Wellpartner, a Portland, OR-based company that handles pharmacy services for health plans and Medicaid programs, said today it has raised $16.1 million in a fourth-round venture financing. Burrill & Co. led the investment, which included Credit Suisse, the manager of the Oregon Investment Fund, and previous backers, including Seattle-based Buerk Dale Victor and Integra Ventures, as reported in Private Equity Week. Caroline Kovac from Burrill & Co. will join the company’s board.

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