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West Coast Bio Roundup: Big Waves, Big Cash & a Deep Pre-JPM16 Breath

Xconomy San Francisco — 

I’d say this week was the calm before the J.P. Morgan storm, except that we on the West Coast have had plenty of storms this week. Perhaps not tornadoes, but weather big enough to churn up 50 foot waves yesterday. (Not to be confused with 50 Foot Wave.)

Seeing those surf pictures from Mavericks, just south of San Francisco, is enough to make my heart drop into my stomach, although I guess it’s better than having 5,300-year-old bacteria in your stomach.

There was no calm this week in biotech news, either. The marketing world has realized that releasing news during J.P. Morgan is likely to get lost in the vortex caused by reporters circling Union Square in half-hour increments, trying to make their next meetings on time.

There was funding news from Vancouver to San Diego, clinical trial data from a few companies, and a hint of movement in the sometimes impenetrable gene editing patent dispute involving UC Berkeley’s Jennifer Doudna. Wait. Is that sunshine outside my window? Time to make hay. Let’s get to the roundup. We’ll start with the patent dispute, move into funding news, hit a little M&A, and finish up with trial data and other tidbits.

—As Xconomy reported Monday, the patent fight over ownership of the CRISPR-Cas9 gene editing system is poised to start a new, complicated phase. Two rival research groups, one headed by University of California, Berkeley’s Jennifer Doudna, the other by the Broad Institute’s Feng Zhang, have submitted applications for CRISPR-Cas9 patents. Only Zhang’s side has received patents from the U.S. Patent and Trademark Office, but the patent examiner has now asked that the dispute rise to a court-like setting, known as interference, that could begin this year.

—Guardant Health, a Redwood City, CA-based diagnostics firm, raised $100 million in a Series D round led by OrbiMed Advisors to ramp up marketing efforts for its cancer genome diagnostic product, Guardant360. The “liquid biopsy” test detects cells that growing tumors have sloughed off into a patient’s bloodstream, and it only requires a blood draw.

—Zymeworks of Vancouver, BC, said it has raised a $61.5 million (US) Series A mezzanine financing—typically the last step before an IPO effort—co-led by Canadian investors BDC Capital and Lumira Capital. The antibody developer plans to move its two lead products into clinical trials later this year. The firm also said it inked a development deal with Kairos Therapeutics that includes an option to merge companies in the future. Details weren’t disclosed. Kairos is a spinout of The Centre for Drug Research and Development, a Canadian national drug translational center also based in Vancouver. Zymeworks has also signed partnerships with Celgene, Merck, GlaxoSmithKline, and Eli Lilly.

—Down San Diego way, Otonomy (NASDAQ: OTIC) raised $100 million in a stock offering of 20 million shares. The company will use the money to enroll about 160 participants in a late-stage clinical trial for OTO-104, its treatment for an inner ear disorder known as Meniere’s disease. Last month, Otonomy said the FDA approved its antibiotic compound (Otiprio) for use in pediatric patients undergoing tympanostomy tube placement.

—South San Francisco, CA-based Cortexyme has tapped Pfizer (NYSE: PFE) as the lead investor in a $15 million Series A round to further its development of an Alzheimer’s treatment aimed at a bacterial pathogen that the company has not revealed. It is currently in preclinical studies. Cortexyme was seeded by Dolby Family Ventures, which is funding novel approaches to combat Alzheimer’s in honor of audio pioneer Ray Dolby, who died of the disease in 2013.

—More evidence that new approaches to neuroscience are being rewarded with investment: San Francisco biotech Alector, developing treatments for Alzheimer’s and other neurological diseases, raised a $29.5 million Series D funding just three months after closing a $32 million Series C round. As Xconomy detailed here, Alector aims to develop drugs that lean upon the growing evidence that the immune system plays a key role in neurodegeration. The new round was led by the Dementia Discovery Fund. New investors Amgen Ventures and AbbVie and existing investors also joined the round.

—San Diego’s Pathway Genomics said it raised more than $40 million in a series E round from investors that include IBM Watson. Pathway, which has raised more than $130 million since it was founded, has been developing a mobile app with IBM Watson to provide users with personalized health information based on their health history. The funding comes one week after Pathway agreed to pay $4 million to settle a U.S. Department of Justice lawsuit over allegations of kickbacks to physicians in exchange for patient referrals. Pathway denied all wrongdoing.

—San Diego’s GlySens said it has closed on a $20 million Series D financing led by prior investors. GlySens is developing an implantable wireless sensor to monitor blood sugar in people with diabetes. The company said proceeds from the round would be used for clinical trials needed to market the product in Europe and expand its operations.

—Ardelyx (NASDAQ: ARDX) of Fremont, CA, raised $75 million in a sale of 7.5 million shares to push ahead with Phase 3 trials of its two lead drug candidates, among other things.

—Back to San Diego for a spot of M&A: Medical device maker NuVasive (NASDAQ: NUVA) paid $380 million in cash upfront to buy Aliso Viejo, CA-based Ellipse Technologies, which could get an additional $30 million in milestone payments. Ellipse has developed implantable rods that can be lengthened magnetically to help correct spinal and complex skeletal deformities. The technology would help extend NuVasive’s own line of spinal surgical tools.

—South San Francisco-based Cytokinetics (NASDAQ: CYTK) has begun a 72-patient, Phase 2 trial in spinal muscular atrophy. Its development partner on the drug, CYK-2127017, is Astellas Pharma.

—Tobira Therapeutics (NASDAQ: TBRA) has clearance to move its drug cenicriviroc into human trials for the liver disease primary sclerosing cholangitis. Because cenicriviroc has been tested in patients for other indications, such as non-alcoholic steatohepatitis (NASH) and HIV, Tobira will move directly into Phase 2 for PSC.

—San Diego’s Effector Therapeutics, which raised $40 million before Christmas, began dosing in an early stage clinical study of its drug candidate eFT508 in solid tumors. Effector said eFT508 also will be tested in lymphoma.

—Final bits: Diagnostics firm Veracyte of South San Francisco is moving into new headquarters… Verge Genomics of San Francisco has recruited an all-star scientific advisory board, including geneticist George Church and neurologist Rudy Tanzi of Harvard University and Paul Aisen of the University of Southern California… Washington state’s biotech trade group Life Science Washington has a new interim CEO…. Annexon Biosciences of South San Francisco has brought on two new executives.