On the heels of Renaissance Venture Capital announcing earlier this month that it had its first close of $60 million on its second fund, the Michigan Venture Capital Association (MCVA) released its annual report on the state of Michigan’s venture ecosystem. Its findings? More venture capital—a 64 percent increase in the past five years—and more deals. This optimism seems to square with regional venture capital data released by MoneyTree in April, which reported five deals in Detroit during the first quarter of 2012, with a total investment of $15.1 million. According to the MoneyTree report, the last time five deals were closed in Detroit in a single quarter was back in the second quarter of 2000. By contrast, three deals worth a total investment of $1.5 million were closed in the first quarter of 2011.

Michigan’s VC scene bucked the national trend of an overall decrease in venture activity. According to the same MoneyTree report, which is prepared by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters, first-quarter venture capital investments fell 19 percent nationwide in terms of money and 15 percent in terms of deal numbers compared to the fourth quarter of 2011. In Michigan, venture capital investments in Q1 fell by 11 percent over the previous quarter, but the number of deals quadrupled.

The MVCA data shows that investments concentrated in Life Sciences (40 percent), clean tech (18 percent) and IT (18 percent). New to the report this year are figures on what state-backed venture funds are contributing to the economy: The MCVA estimates that companies supported by the $215 Venture Michigan Fund alone have put $50 million back into the economy in the form of salaries paid and services purchased.

Key findings in the MCVA’s report include that the number of venture firms and capital under management both increased. There are currently 54 venture capital firms in Michigan with 335 active portfolio companies. Of the $3 billion of venture capital under management, roughly $370 million is available for new investments both inside and outside of Michigan.

During 2011, Michigan startup companies received $191 million in capital investment. There were 38 total investments, which included 22 new companies that raised a first round of funding.

In 2011, four Michigan VC firms—Arboretum Ventures, Plymouth Venture Partners, and the local offices of MK Capital and Arsenal Ventures—successfully closed funds and raised a total of $348 million. The MCVA report says that Michigan now has six funds that are over $100 million. Small and mid-size funds continue to grow, as well, with eight funds between $50 million and $100 million and 13 funds with less than $50 million. There were three significant exits in 2011 out of a total of 13 exits: Accuri Cytometers (reported to be $205 million), Ecosynthetix ($100 million), and Micronics (undisclosed, but it’s electronics giant Sony that purchased the company).

Staying with the theme of optimism, the MCVA report predicts that by 2016, Michigan will be “a nationally known top venture capital location,” with both venture and angel capital communities playing a “meaningful” role in Michigan’s revitalization. While that remains to be seen, the numbers do seem to indicate strong forward motion.

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San Diego Xconomist Evan Snyder has been called a “stem cell revolutionary” and is regarded as a father in the field of stem cell research. When we talked in his office at San Diego’s Sanford-Burnham Medical Research Institute, he told me he isolated the first neural stem cell in the mid-1980s, as well as the first human neural stem cell in 1998. Snyder’s team demonstrated the concept of stem cell pathotropism (the ability of stem cells to home in on injured or diseased regions of the brain) and helped to establish the concept that stem cells can be used to regenerate and repair diseased and damaged tissue.

He arrived in San Diego in 2003 to serve as a professor and director of the Stem Cells and Regenerative Biology Program at the Sanford-Burnham. He also is a scientific leader and researcher at San Diego’s new $127 million Sanford Consortium for Regenerative Medicine. While Snyder is focused primarily on basic research, he talked with me about the prospects for commercial development of stem cell technology—and how the much-publicized regenerative properties of stem cells, while holding tremendous long-term promise, will likely not be the focus of the first market successes. Our conversation, which I’ve condensed and edited, follows here.

Xconomy: My general impression is that much of the early promise and enthusiasm over stem cells has been dissipating.

Evan Snyder: I don’t think I would agree with that. I think there’s an enormous amount of promise.

X: I mean in terms of using stem cells in commercial applications.

ES: What the companies and the public thought was that it wouldn’t take any work, that you’d have a cell and you would sprinkle it with pixie dust and everything would get better. That was certainly unrealistic. It might have been fomented by scientists in the early days who were just totally enamored of the fact that you had cells that could read environmental cues and go down different pathways, and they seemed to do this based on their own intrinsic programming.

But the fine-tuning in the use of stem cells still comes down to really understanding the biology of the cell. That also entails understanding the biology of development, because … Next Page »

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The recent Facebook IPO has brought to the front pages an issue that many ordinary investors have been asking themselves for a long time: “Is the system fair?” In Facebook’s case, legitimate questions have arisen about why Morgan Stanley, Goldman Sachs, and J.P. Morgan, Facebook’s lead underwriters, all reduced their internal revenue estimates for that company prior to its IPO while investors outside of these three banks were told nothing about it. As Henry Blodget explains here, these circumstances raise serious questions about the practice on Wall Street of selective disclosure and the fairness of the overall system. In other words, were these banks (and subsequently their clients) told something that other investors were not?

This question, and an experience that happened to me this week, bring to mind another long-held practice on Wall Street that I think is equally questionable and seriously outdated. It’s the practice of banks holding private calls with company management teams for a select group of investors. Here is what happened:

This week, a website called theflyonthewall published an alert that Dendreon CEO John Johnson would be participating in a conference call hosted by J.P. Morgan as part of their “CEO/CFO Conference Call Series.” While I follow the company very closely, this was the first I had heard of this. I wasn’t even sure at that point if it was just a rumor or not. Subsequently, I learned that J.P. Morgan also previously distributed a schedule of such calls, presumably to their private clients.

Now before I go any further, let me make a few important disclosures. 1) I have been extremely critical of Dendreon’s management team and their disclosure practices in the past, so much so that I publicly lobbied for the ouster of its prior CEO and Chairman. 2) In this case, I do not mean to pick on Dendreon or its new CEO specifically because this is a practice that is rampant in the industry. Dendreon is just one of many companies who participate in these calls. In fact, I think Mr. Johnson is very honorable, ethical, and a breath of fresh air at Dendreon. I believe the company has a bright future with him at the helm. I only bring up this case for illustrative purposes because it specifically happened to me this week, and in light of the recent Facebook news. 3) J.P. Morgan is a great bank and they have a world-class biotech team. This is an industry problem, not a J.P. Morgan one.

After seeing this investor alert, I emailed Dendreon’s investor relations team, asked them if it was indeed true that the CEO would be holding an investor call and, if so, may I please have the dial-in number. Like many investors, I was interested in hearing what kind of updates or advice Mr. Johnson had to report. Dendreon Investor Relations replied with the following message, “Hi Brad, this is true, however the call is for clients of JPM and I’m not at liberty to provide the call info.” It does not get any more straightforward than that. Dendreon’s CEO had an hour of his time to give to investors, but apparently only investors who are clients of a specific institution. J.P. Morgan, by the way, has been either the lead or joint underwriter of multiple debt and equity offerings for Dendreon in the recent past.

Now let’s set Dendreon aside, because again, this is a practice that many, if not most companies participate in. As an individual investor, I believe these types of selective and private calls need to be opened up to all comers because otherwise they are blatantly unfair. In truth, it is impossible to know in advance if material information will arise during a call. It is one thing to hold a private call with an outside expert who has a relationship with the bank, but it is something entirely different to hold one directly with a company’s management team.

In fact, I believe it is so unfair that in my opinion even the banks themselves recognize this. For example, if you are ever awarded the “privilege” of being invited to one of these calls, you will notice the sleight of hand the banks sometimes use to cover their legal tracks. In the case of this J.P. Morgan event, during an opening legal remark they ask you to voluntarily jump off the call if you are not an “analyst.” However, clearly the call is for clients too because 1) Dendreon directly acknowledged that in their email to me and 2) the first thing the J.P. Morgan operator asks you upon calling in is, “Who is your J.P. Morgan salesperson?” They also forward you directly into the call after you have told them you are an investor. Why not just block “non-analysts” right from the start if it is so important?

Additionally, I would like to point out that other companies who have in the past participated in this same “CEO/CFO Conference Call Series” did see the value in full-disclosure and were motivated to put out a press release alerting everybody about it. For example, here is a link to a press release by Regeneron Pharmaceuticals. They were motivated to make sure that all of their investors could equally participate in their call. Bravo, Regeneron…this is the right thing to do. Unfortunately though, they are the exception, not the rule. In my opinion, other companies would be very wise to follow suit. Private meetings throughout the 1990s tech bubble led to so many material disclosures behind closed doors that it prompted the SEC to enact Regulation Fair Disclosure (FD) in 2000. The regulation is supposed to ensure all investors get material information at the same time.

The bottom line is that in this day and age, the practice of publicly-traded management teams holding private investor calls for only a select few should stop. All investors, no matter who they bank with or how much money they have, deserve as much of an equal footing in the market as possible…especially when it comes to information straight from a CEO’s mouth. This is not overly burdensome for the companies or the banks, and might actually even increase their business. All you would be doing is distributing the phone number of a call that is already happening in the first place, as Regeneron and others have done. A small investor’s money is just as good as the big guys, so they deserve to hear what is on a CEO’s mind as well.

Calls such as these are just one of the many reasons why so many individual investors feel that the system is unfair. Make no doubt, this is an important issue because it is this perceived unfairness that is keeping many people out of the market. At the end of the day, this hurts both trading volumes (which are at multi-year lows) and the veracity of our overall system. Let’s level the playing field. What is good for one set of investors should be good for all.

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When the X Prize Foundation’s Peter Diamandis took the stage in San Diego this morning at the Wireless-Life Sciences Alliance (WLSA) annual convergence summit, he said it was the perfect audience for announcing the foundation’s newest competition—the “Nokia Sensing X Challenge.”

The challenge, organized through a partnership with the Finnish wireless device manufacturer, is offering a total pool of $2.25 million in incentive prizes over the next three years to stimulate the development of health sensors and wireless sensing technologies.

“We’re living in a day and age where really small teams of individuals—people like yourselves—are empowered to do the things that only large corporations and governments could do before,” Diamandis told the audience. “We’re looking to foment, to push forward, to celebrate, to announce a new generation of healthcare biometric sensors.”

The competition that Diamandis outlined will offer $750,000 a year, beginning in 2013, to teams that have developed “the most outstanding” sensors for drastically improving the quality, accuracy, and ease of monitoring a person’s health. There will be multiple winners each year, but how many and how much prize money will be awarded to each team has not yet been determined, Diamandis later told me.

“We aim to facilitate and inspire research in an area where we are also seriously exploring,” said Nokia chief technology officer Henry Tirri, who joined Diamandis on the stage. The type of “open innovation” promoted by the X Prize competition “has proven to be a very interesting and engaging method of opening a very broad amount of innovation in a very different way,” Tirri added.

“Our goal is to create an ecosystem of the innovators and companies out there, and to give them the platform to really show your stuff to the entire planet,” Diamandis said.

“Why are we doing this? Number one, we need better sensors,” Diamandis added. “My car, my airplane, and my computer have more biometric sensing capabilities that we do as humans. We should be creating gigabytes of data per day about our bodies’ health, monitoring every single moment, every single second of what we do. The fact that it doesn’t exist right now is terrible.”

The timing is ideal, Diamandis explained, because … Next Page »

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It’s been a busy week for startup funding, with Obalon Therapeutics, Aperio Technologies, Topera, and Ivera Medical closing on financing deals. We’ve also got drug development news from Ocera Therapeutics and MediciNova.

—Japan’s Takeda Pharmaceutical said it’s closing its center of excellence in South San Francisco, which has been focused on developing early stage antibody drugs, and consolidating its operations, now known as Takeda California, in San Diego. The company’s San Diego center of excellence, which is focused on structure-based drug discovery, has about 170 employees, according to a report by Gary Robbins of U-T San Diego. Keith Wilson, president and chief science officer of Takeda California, told the U-T that Takeda plans to add about 30 positions in San Diego by the end of the year.

—San Diego-based Qualcomm’s wireless health subsidiary, Qualcomm Life, named 25 members to an advisory council to help the business address key industry issues. The list includes Kleiner Perkins partner Brook Byers, X Prize founder Peter Diamandis, inventor Dean Kamen, Diego Miralles of Janssen Healthcare Innovation, Eric Topol of the Scripps Translational Science Institute, Psilos Ventures partner Lisa Suennen, and Larry Smarr, founding director of the California Institute for Telecommunications & Information Technology (Calit2).

—San Diego’s MediciNova (NASDAQ: MNOV) said its experimental asthma drug failed to meet the main goal of a second mid-stage trial. The drug developer said patients treated with its leading drug candidate, bedoradrine sulfate, showed significant improvement in other ways, but a sell off on Wall Street sent shares of MediciNova down by … Next Page »

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On June 1, cancer scientists and drugmakers will flock to Chicago for the annual meeting of the American Society of Clinical Oncology (ASCO). The gathering is so prominent that many pharmaceutical companies hold off on releasing data from their clinical trials until the conference. This explains why ASCO is as important to Wall Street folks as it is to the oncology community: Any company that makes a splash at ASCO is likely to see its stock boom.

Here are some of the publicly held NYC-area companies that will be presenting news on their cancer compounds at ASCO.

Bristol-Myers Squibb (NYSE: BMY)

Bristol-Myers is planning ten oral presentations on its cancer pipeline at ASCO, but investors will likely zero in on BMS-936558—a promising drug candidate in a class called anti-PD-1. The company is testing the drug in a range of cancers and will be presenting data from clinical trials in advanced non-small-cell lung cancer, metastatic melanoma, and renal cell cancer. The abstracts of the trials have already generated some buzz: In lung cancer, for example, the drug elicited a response rate of 19 to 28 percent, which is considerable better than the 8 to 11 percent rate typical of existing therapies.

Celgene (NASDAQ: CELG)

The drug to watch from Celgene is pomalidomide, which the company recently submitted to the FDA for approval in the treatment of multiple myeloma. The drug is similar to Celgene’s blockbuster lenalidomide (Revlimid) in that it prompts the patient’s immune system to attack cancer cells. It also blocks the growth of new blood vessels, which keeps vital nutrients from getting to myeloma cells. The company will present data from trials of the drug in combination with other treatments.

Johnson & Johnson (NYSE: JNJ)

J&J’s abiraterone acetate (Zytiga) is already approved to treat prostate cancer. Still, the company will be presenting several sets of data, including a trial on the survival benefit offered by the drug and an analysis of its cost effectiveness—a measure that’s increasingly important to managed care companies and other insurers who are looking to slash expenses.

Merck (NYSE: MRK)

Merck will be presenting early-stage data on two of its emerging oncology compounds. MK-3475 is being tested in patients with advanced solid tumors. MK-2206 is being tried in breast cancer, advanced solid tumors, and lung cancer.

Progenics (NASDAQ: PGNX)

This is one of the many companies working on a hot new class of compounds called antibody drug conjugates (ADCs). These drugs are akin to smart bombs, because they are designed to home in on cancer cells and deliver their payload of tumor-killing medicines directly to them, while sparing normal tissue. Progenics is testing its ADC  in prostate cancer, and it will be presenting data from an early human trial at ASCO.

Pfizer (NYSE: PFE)

This NYC-based drug giant is presenting a whopping 100 abstracts at ASCO. Two drugs to watch are dacomitinib in lung cancer and inotuzumab ozogamicin—another ADC–in acute lymphocytic leukemia.

Regeneron (NASDAQ: REGN)

Regeneron is planning several presentations on its cancer compound, aflibercept, which works by binding two proteins that are involved in abnormal blood-vessel growth. The drug, a version of which is already approved to treat the eye disease macular degeneration, is being tested in a range of cancers, including colon cancer and lung cancer.

Cyclacel (NASDAQ: CYCC)

This company has been struggling to advance its leukemia drug, sapacitabine. It will present early data from trials of the same drug in another type of blood cancer, myelodysplastic syndrome, as well as in solid tumors.

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A bunch of small-ish deals (and some not so small) to catch up on from the past week…

—Hopkinton, MA-based EMC (NYSE: EMC) has acquired Syncplicity for an undisclosed price. The cloud-based file management startup, based in Silicon Valley, will be integrated into EMC’s Information Intelligence Group. The move is viewed as helping EMC compete with Dropbox for big enterprise customers.

—Boston-based TurningArt has raised $1.5 million more from NextView Ventures and other investors. The Web startup lets you browse for independent artwork and click to order prints.

—Cambridge, MA-based Spindle (fka Biff Labs) has raised $775,000 from investors including Polaris Ventures, Atlas Venture, Greylock Partners, SV Angel, and Ray Ozzie. The company is trying to build a “discovery engine for the social Web.”

—Boston wireless-networking firm Ember is being acquired by Texas-based Silicon Laboratories (NASDAQ: SLAB) for $72 million plus earnouts. It’s been a long, fun ride for Ember, which started in 2001. CEO Bob LeFort, co-founder Rob Poor, and investor Bob Metcalfe shed some light on the deal and what it means.

—Boston startup Yottaa announced a $9 million Series B financing from General Catalyst Partners, Stata Venture Partners, Cambridge West Ventures, and other investors. Yottaa is building Web infrastructure technology with the goal of helping businesses make their websites run faster on browsers and mobile devices.

—Cambridge, MA-based Ra Pharmaceuticals closed an $8.6 million tranche of its $27 million Series A. The company’s tech platform is designed to generate protein-like molecules that can combat a range of diseases.

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At first glance, the $1.1 million financing announced by Halo Therapeutics on Tuesday looked like your average case of a biotech startup scraping together enough money to get its early-stage compound into pivotal human trials. But this funding was anything but average. That’s because the money came from 12 nonprofit foundations pursuing a common goal: They all want to find new treatments for Duchenne Muscular Dystrophy (DMD), a rare but debilitating muscle disease that leads to early death in young boys. And they all believe Halo might have a promising drug candidate—an experimental pill whose main ingredient was derived from an herb that’s been used in Chinese medicine since 4730 B.C.

Before we review this unusual story of drug development, let’s take a closer look at this week’s news. Halo’s new round of financing consists of traditional grants, plus notes that offer a fixed return to the nonprofits based on specific milestones that Halo achieves while developing the drug, called HT-100. The company expects to begin mid-stage human trials in the second half of this year. “If Halo adds value and we can repay that money, we want to offer [the groups] the opportunity to use it to develop other therapeutics,” says CEO Marc Blaustein. “We want to put the value back into the patient community.”

Halo itself originated from that patient community. It was founded by Minneapolis-based Nash Avery Foundation and Stockbridge, MA-based Charley’s Fund, two groups dedicated to accelerating research and drug development in DMD. Benjamin Seckler, a physician and president of Charley’s Fund, was scouring the medical literature a few years back looking for remedies that might help his son, Charley, age 11. He came across halofuginone, a drug being developed by an Israeli company called Collgard Biopharmaceuticals.

The drug’s active ingredient, made from the Chinese herb dichroa febrifuga, had been tested by the U.S. military as an anti-malaria compound in the 1940s and later was synthesized by the pharmaceutical industry. Blaustein, who is the company’s sole full-time employee, says that experiments in mouse models of DMD suggested that Collgard’s compound has three key attributes: It fights … Next Page »

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It was clear that San Diego’s MediciNova (NASDAQ: MNOV) had a lot riding on the outcome of a mid-stage trial of the company’s lead drug candidate, bedoradrine sulfate. As I reported recently, MediciNova has been developing the compound to treat acute asthma attacks that are not responsive to standard therapy.

So shareholders registered their disappointment in preliminary results that MediciNova released today after regular Nasdaq trading ended—sending shares of MediciNova down by roughly 50 percent in after hours trading. Less than two hours after the news hit the wires, MediciNova’s shares were trading around $1.40, after falling by $1.35, or 49 percent, from $2.75 a share.

Many investors probably didn’t read much beyond the first sentence, which says the Phase 2b trial “did not statistically meet the primary endpoint, improvement in forced expiratory volume (FEV1),” compared to a placebo. In other words, patients who got the drug did no better in exhaling for one second than patients who got a placebo. Yet bedoradrine showed a significant improvement in other ways over the placebo group as well as patients who only received the current standard of care. MediciNova says its drug also reduced hospital admissions in acute asthma cases, and no significant safety or tolerability issues were seen.

Shareholders were likely expecting to see “home-run data,” MediciNova CEO Yuichi Iwaki told me by telephone late this afternoon. “We put the fact that we did not meet primary end point at the beginning,” he said. “If you read through everything, we clearly indicate that the trial was positive, and we’re ready to move onto Phase 3.”

Iwaki says the failure to meet the primary goal of the mid-stage trial was probably due to protocols that called for giving patients a two-hour intravenous infusion, which he says were based on an outdated trial design. The company has maintained that its drug poses a key advantage over the current standard of care in U.S. emergency rooms, which typically use an inhaled drug like albuterol, because constricted airways limit how much aerosol can be absorbed. As an IV drug, doctors have a better understanding of how much bedoradrine a patient has absorbed.

In a statement from MediciNova, Iwaki says, “We believe certain variables, such as administration of off-protocol therapies, especially in the standard-of-care alone group (placebo arm) and somewhat higher-than-anticipated variability in measuring FEV1 values limited the [bedoradrine] outcomes. Our goal is to control for these variables going forward, enabling us to run a successful Phase 3 program. Accordingly, we have filed our End-of-Phase 2 meeting request with the Division of Pulmonary, Allergy, and Rheumatology Products at FDA.”

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Don’t you hate it when you read an article about a promising new company and then you never hear anything about it again? We do too, which is why we’ve checked in with Loveland Technologies, Axonia Medical, and 3D Biomatrix for updates on the state of their operations, new milestones, and future plans.

Loveland Technologies: Projects Covered in ‘Awesome Sauce’

Loveland Technologies, a Detroit IT company started by San Francisco transplant Jerry Paffendorf whose motto is “changing the urban landscape with community maps, fundraising, and a dash of awesome sauce,” has enjoyed some mainstream recognition since we last spoke. “Our stock does seem to be rising in more traditional ways,” Paffendorf says.

In April, Loveland got a $7,500 grant from the Knight Foundation for its Imagine Detroit Together project, which combines technology and grassroots organizing to encourage residents to participate in large-scale demonstrations of civic unity. Imagine Detroit Together was behind the crowdfunding effort to get a painting by local artist Miguel “BeloZro” Yeoman up on a billboard near I-94. The painting, titled “The Rebuild,” featured futuristic Ford, GM, and Chrysler workers surrounding a globe along with the phrase, “Imagine Detroit working together?” Though Imagine Detroit Together was able to raise the $3,500 needed to slap “The Rebuild” up on the billboard, the billboard owners, fearing a lawsuit, required that Yeoman cover the logos of the Big 3 before they would display the painting.

Despite that experience, Paffendorf says he looks forward to working with Yeoman’s partner/manager James Feagin again. “He has a lot of interesting ideas for how to bring diverse groups into Detroit,” Paffendorf says. One idea is Peak Population Day, where organizers would try to lure 1.3 million people to the city for a massive block party along Woodward Avenue from the Riverfront to 8 Mile. That will require building some digital tools for organizing big groups, which Loveland is working on now.

Perhaps the unlikeliest partnership Loveland has formed is with Nora Maroun, wife of the controversial billionaire Manuel “Matty” Maroun, who owns the busy Ambassador Bridge crossing to Canada. (Yes, that’s right—a privately owned border crossing. Only in Detroit.) Maroun has his share of critics, particularly in southwest Detroit, where a t-shirt depicting him as Mr. Burns from “The Simpsons” was popular a few years ago. In addition to the bridge, he owns Michigan Central Station, a.k.a. Detroit’s Most Famous Ruin, a crumbling former train station that was designed by the same architectural firms that designed New York City’s Grand Central Station.

Central Station has long been a conundrum because it’s considered too solidly built to demolish without a prohibitive price tag, and too ruined to be restored without a similarly prohibitive investment. (Though one would imagine if anyone had the money to do either of these things, it would be the 854th richest person in the world, perhaps with an assist from the man he’s tied for 854th richest person with, but that’s an op-ed for another day.) Instead, Maroun has put his wife Nora in charge of working with Loveland on Talk to the Station, a website gathering public suggestions for what to do with the blighted monolith. Residents are invited to share their ideas for preservation via text, voicemail, or online submission. The idea is to foster open, inclusive dialogue that Maroun has pledged to keep her eye on. Though there are no guarantees, to have this discussion in a public forum is actually a pretty big step. (Paffendorf, by the way, has nothing but good things to say about Mrs. Maroun.)

Loveland also continues its work with Why Don’t We Own This, which maps all of the vacant land in Detroit, and Paffendorf says the city is definitely paying attention (finally!), but that nothing official is in place yet. And that crowdfunded Robocop statue? It’s still being built rather painstakingly by hand; keep track of its progress here.

Axonia Medical Raises More Seed Financing

Harry Ledebur, president and CEO of Kalamazoo, MI-based Axonia Medical, says the company has just raised its second million in seed financing. Ann Arbor SPARK’s pre-seed fund and Western Michigan University’s Biosciences Research and Commercialization Center contributed to the round. Ledebur says that Axonia now has enough operating capital to take it through January 2014 as it continues to work toward clinical trials.

As I wrote in a January article about Axonia, the company’s technology, which is spun out of the University of Pennsylvania, hinges on the production of axons, the long thin parts of nerve cells that carry signals to distant target cells. Unlike other regenerative treatments in development, Axonia uses … Next Page »

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A team developing analytic software that scores patients for the risk they pose to being readmitted within 30 days after being discharged from a hospital is the winner of the inaugural Janssen Connected Care Challenge. The prize is sponsored by Janssen, a unit of New Brunswick, NJ-based Johnson & Johnson (NYSE: JNJ) .

Kim Park, a founding partner with Janssen Healthcare Innovation, declared the Discharge Decision Support System (D2S2) as the winner this morning at the 6th Annual Wireless-Life Sciences Alliance (WLSA) Convergence Summit in downtown San Diego. The D2S2 team also was awarded $100,000 to advance the technology, which is under development by RightCare Solutions, a Philadelphia-based startup founded last year by Eric Heil of Domain Associates and Kathryn Bowles, a professor of nursing at the University of Pennsylvania.

The company describes the D2S2 system as a decision-support tool that uses key data from a patient’s admission to analyze the risk that the patient could be readmitted within 30 days after discharge. The software algorithm also “learns” by tracking patient outcomes and adjusting the way it scores a patient’s risk for readmission.

Because the D2S2 risk assessment is done upon admission, RightCare says hospital officials can better plan the discharge and follow-up care for at-risk patients. The company says a second-generation system will be able to recommend whether a patient at-risk for 30-day readmission should be referred to a skilled nursing facility, home care, rehab, or nursing home.

The D2S2 system was … Next Page »

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Today Ra Pharmaceuticals CEO Doug Treco will make a presentation at a conference in Las Vegas that will cap off the Cambridge, MA-based company’s weeklong unveiling. On May 16, Ra announced it had closed an $8.6 million tranche of its $27 million Series A round. And today Treco will be describing the four-year-old company’s technology platform, which is designed to generate protein-like molecules that can attack a range of diseases.

Ra is developing a class of drugs called Cyclomimetics, which are protein fragments that have been modified to improve characteristics such as stability, safety, and affinity to disease-causing targets. The company licensed the technology from Anthony Forster, a professor at Uppsala University in Sweden. Ra is funded by New Enterprise Associates, Morgenthaler Ventures, Novartis Venture Funds, and Amgen Ventures.

Ra is generating Cyclomimetics via a drug-discovery platform it dubs Extreme Diversity. It works, Treco says, by tricking ribosomes—the protein-making machinery of the cell—into assembling protein fragments that contain non-natural components. “That typically allows you to make libraries with more than 10 trillion molecules,” which can then be screened against disease targets to generate new ideas for drugs, he says.

Treco says Ra has zeroed in on four therapeutic targets and made headway on its lead program: a drug to treat hereditary angioedema (HAE), a rare disease that causes painful swelling of the face, airways, and stomach. Ra’s drug is designed to prevent acute attacks of HAE by inhibiting an enzyme that mediates the swelling. The company plans to start animal trials soon.

HAE has proven to be a hot target for drug developers of late. There are already four drugs on the market, including the recently approved icatibant (Firazyr), marketed by Irish drug giant Shire (NASDAQ: SHPGY). But Treco points out that only one product—a drug made by Exton, PA-based ViroPharma—is approved to prevent attacks, and it’s one that patients has to be given by infusion. “Our idea is to provide a daily oral formulation,” Treco says.

Cyclomimetic molecules are quite large, which can be an advantage in that they can bind to disease targets at several different contact points, Treco says. But unlike typical biotech drugs, they can be made into pills—an attribute Ra is counting on to be able to offer a convenience advantage for patients. “We want to come in with easy-to-deliver treatments,” Treco says. “We’re building all of the things that are necessary to make orally available drugs into the backbone of this.”

Other companies are trying different methods for assembling new protein-based drugs. Cambridge, MA-based Ensemble Therapeutics has been building a library of synthetic, protein-like molecules based on a technology platform developed at Harvard, and it has signed on big-named partners Pfizer and Bristol-Myers Squibb. Another Boston area firm, Adnexus, developed a protein-design system for generating oncology drugs that was so attractive to Bristol-Myers it bought the company outright in 2007.

Treco says Ra’s technology platform is so productive the company is already getting ready to line up its next four drug targets. And the company has started talking to potential drug-development partners. “We’re really going to focus on targets that Big Pharma has had difficulty addressing,” he says.

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Sometimes when a drug hits the market, it can take on a life of its own. Researchers start using their imaginations—and their own grant money—to pursue applications the drugmaker itself might never have envisioned. And sometimes, those researchers make important new discoveries, which can provide the company with a running start on a potentially lucrative opportunity.

One of those stories is happening now at Seattle Genetics.

The Bothell, WA-based cancer drug developer (NASDAQ: SGEN) said this month that it is pushing ahead with the final stage of clinical trials to test its brentuximab vedotin (Adcetris) for patients with cutaneous T-cell lymphoma (CTCL). The company agreed to invest in the 124-patient study after seeing that researchers, operating independently at MD Anderson Cancer Center and Stanford University, both ran trials suggesting the Seattle Genetics drug could be an important new advance for CTCL. If the company and its partner, Cambridge, MA-based Millennium Pharmaceuticals, can confirm what the researchers saw in those smaller trials, then it could pave the way to an FDA approval of the drug for a third type of lymphoma. That could open the door to treating another 1,000 new patients a year in the U.S., expanding the number of people eligible to get the drug by about 35 percent.

Cutaneous T-cell lymphoma comes in a lot of different forms, and although it doesn’t usually kill people, it is painful and disfiguring. It’s a disease in which cancerous immune system cells migrate to the skin, causing nasty lesions. There are a few treatments out there, such as topical immune suppressors, radiation, or chemotherapy. There are also more targeted drugs like Eisai Pharmaceuticals’ bexarotene (Targretin), Merck’s vorinostat (Zolinza), or Celgene’s romidepsin (Istodax). But once patients progress past the early rounds of therapy, no treatments have shown tumor shrinkage rates beyond about 35 percent, much less an ability to spur long-term remissions. The Seattle Genetics drug, in the hands of the Stanford and MD Anderson researchers, boosted the response rate up to more than 65 percent, and in one study showed the remissions lasted at least six months and counting. That’s the kind of data that prompted Seattle Genetics to make CTCL one of its more promising new corporate R&D priorities.

Seattle Genetics CEO Clay Siegall

“We’ve talked to the doctors extensively, and we are thrilled with the activity they are seeing,” says Seattle Genetics CEO Clay Siegall. “This is the most active drug in CTCL they’ve ever seen.”

Seattle Genetics won FDA approval for brentuximab vedotin back in August, originally as a treatment for relapsed forms of Hodgkin’s lymphoma and anaplastic large cell lymphoma (ALCL). But for years, the company has seen those two conditions as just a starting point. The drug is designed to hit a marker known as CD30 on the surface of cells. Hodgkin’s and ALCL are known to carry the CD30 marker, so there was a good scientific rationale to try the drug first on those patients.

What was less clear to Seattle Genetics, or anybody else, was just how many other cancers have CD30 markers on them, or how prevalent the CD30 markers need to be for the new drug to make a difference. Basically, once Seattle Genetics proved that it had a hammer for CD30, scientists suddenly started looking more aggressively for that nail. Published literature says about half of CTCL patients have tumors expressing the CD30 marker, which made it appear worth exploring, but not necessarily a slam dunk for Adcetris to show anti-tumor activity. “We spent time looking, but the literature was kind of sketchy,” Siegall says. “Before Adcetris was approved, nobody cared that much about CD30.”

Now, the race is on to find CD30 on all kinds of tumor types, and cutaneous T-cell lymphoma is just now emerging as one of the promising new uses. There are so many … Next Page »

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Here’s a potpourri of San Diego tech news, large and small, fresh from the local fields of innovation.

—San Diego’s Qualcomm (NASDAQ: QCOM), the world’s biggest manufacturer of wireless chipsets, said it has renewed its global QPrize venture investment competition for the third time. The $1 million pool is almost double the total pool Qualcomm offered when it created the QPrize in 2009 to accelerate wireless technologies in key business sectors. Qualcomm plans to hold regional competitions in China, India, Israel, Korea, North America, Brazil, Western Europe, and Eastern Europe, and award $100,000 in convertible note financing to a finalist in each region. The company plans to award another $150,000 in financing to a grand prize-winner chosen from the eight finalists.

—Newbury Park-based Sauer Energy, a wind power technology developer, said it has acquired 100 percent of the assets of San Diego-based Helix Wind, a San Diego maker of small vertical axis wind turbine systems that ceased business operations at the end of 2010. Helix, which was trying to commercialize its iconic design for helical-shaped turbines, had an accumulated deficit of nearly $42 million. In a statement, Sauer Energy CEO Dieter Sauer says, “We purchased only the assets, therefore there are no liabilities, no obligations or debt whatsoever to Sauer Energy.”

—San Diego-based Pelfunc, founded by Sanjay Nichani and Ray Fix, launched their mobile app “Skqueak” for the iPhone in Apple’s iTunes App Store. Skqueak lets users record audio while simultaneously sketching or animating a design over a photo, map, or other image. The result is a kind of multimedia postcard that can be shared through social media and embedded in blogs.

—Qualcomm’s top European executive, Andrew Gilbert, met with reporters to talk about the wireless giant’s technology licensing strategy for wireless charging systems that can be used to charge electric vehicles (EVs) as well as smartphones and other devices. Gilbert also showed off an all-electric Le Mans prototype racer, and said Qualcomm remains on schedule with its plans to install its wireless charging technology for as many as 50 EV taxis in London.

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Qualcomm (NASDAQ: QCOM), the San Diego wireless technology giant, says today it is joining forces with EvoNexus, the free tech incubator operated by the nonprofit industry group CommNexus.

The move adds a new dimension of business and technical expertise to EvoNexus, which relies heavily on volunteer tech executives and others to help mentor entrepreneurs enrolled in the program. EvoNexus operates two incubators in San Diego, one is downtown and the other in the University City neighborhood, and provides fully furnished office space, utilities, and other services to startups at no charge.

“A big differentiator for EvoNexus—from an investor’s or entrepreneur’s point of view—is that we are the best deal in the country because we’re completely free, except you have to pay for your parking,” says Kevin Hell, the former DivX CEO who has been overseeing EvoNexus for the past year.

Now EvoNexus will collaborate with Qualcomm Labs to develop a track within EvoNexus called QualcommLabs@EvoNexus.

Qualcomm Labs is expected to serve a role at EvoNexus that is similar to its function within Qualcomm, where it helps to identify and assess new products and market opportunities developed internally through Qualcomm R&D. For example, Qualcomm housed its wireless health initiative in the Qualcomm Labs business unit (known at the time as Qualcomm Labs Services) before moving it into its new Qualcomm Life subsidiary.

Qualcomm Labs also wants to guide startups developing innovative technology in certain areas, such as machine-to-machine communications, into the EvoNexus program. Qualcomm and EvoNexus did not disclose the financial terms of Qualcomm’s participation in the program, if there are any. But startups admitted into the QualcommLabs program will get separate seed funding from Qualcomm Labs as well as free space in an EvoNexus incubator.

Qualcomm did not disclose how much seed funding it plans to … Next Page »

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On April 2, shares of New York-based Keryx Pharmaceuticals (NASDAQ: KERX) fell a stomach-churning 65 percent to $1.74 after the company announced that a late-stage trial of its colon cancer drug failed. But CEO Ron Bentsur was unfazed. In fact, he was so confident in the company’s other drug candidate—a treatment for kidney dialysis patients—that he turned around and bought 90,500 shares of Keryx on the open market. He now owns a total of 479,476 shares, according to SEC filings, making him the largest individual shareholder of the company. “I wanted to show I truly believe in the company,” Bentsur says of his stock purchase. “I wanted people to know there is still someone answering the door here.”

Investors would be forgiven for fearing that the doors might be shutting at Keryx. In March 2008, the company’s shares plummeted 81 percent in a day after it announced that what was then its lead product, a drug to treat diabetic neuropathy, failed in a late-stage trial. And now, with the failure of the colon cancer drug, called perifosine, the company has only one product candidate left in its pipeline, the dialysis treatment, ferric citrate (Zerenex). It’s no wonder that in the words of Bentsur, his company remains “deep in the penalty box.” Analysts expect Keryx to report a $34 million loss this year.

Keryx’s most recent troubles began in the pivotal trial of perifosine. In an earlier trial with 38 patients, the drug looked promising in combination with a Roche product called capecitabine (Xeloda): It extended median survival from seven to 17 months compared with capecitabine alone. But those results couldn’t be repeated in the larger trial, which enrolled 468 patients. Keryx abandoned the drug, returning the development rights back to the original owner, Quebec-based Aeterna Zentaris.

Some influential prognosticators were predicting perifosine’s demise long before the April announcement of the trial’s failure. Last September, TheStreet.com’s biotech scribe Adam Feuerstein teamed with University of Chicago oncologist and professor Mark Ratain to publish an article in the Journal of the National Cancer Institute demonstrating that 59 late-stage trials of cancer drugs performed in the last 10 years by microcap companies had all failed. If the pattern were to continue, Feuerstein suggested a month later, perifosine would also fail.

Feuerstein proposed that a primary reason for the failure of so many cancer drugs developed by small companies is, well, the smallness of the companies. In other words, he contended, if the drugs had shown any promise in earlier trials, big pharma companies would have bought them or their developers long before the pivotal trials were completed. Bentsur had expressed an interest in attracting a buyer, but perifosine remained unclaimed well into the late-stage trials. “What’s more likely to have happened already, says Ratain (and I agree with him) is that larger companies have already vetted the previous perifosine data and found it lacking,” Feuerstein wrote.

Bentsur declines to comment on TheStreet.com’s coverage, saying only, “People are entitled to their opinion.” As for the perifosine trials, he says, “Based on the information we had, we ran the best study we could.”

Keryx was founded in 1997 and went public three years later on two assets: the diabetes drug, which it licensed from Eli Lilly, and a technology it developed and hoped to apply to immune disorders. The company licensed perifosine from Aeterna Zentaris in 2003 and ferric citrate from Taiwan-based Panion & BF Biotech in 2005. Bentsur had been the company’s CFO, but left in 2006, after which time … Next Page »

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About 275 technologists and healthcare industry executives are gathering in downtown San Diego tomorrow as the Wireless-Life Sciences Alliance (WLSA) convenes its Seventh Annual Convergence Summit at the Grand Hyatt.

“The overarching theme of the summit this year is ‘How do we move from innovation to institutional and personal adoption of the tools and technologies for wireless health?’” says WLSA CEO Rob McCray. Tomorrow’s agenda consists of all closed-door sessions for WLSA members, while McCray says the agenda for Wednesday and Thursday, which has no restrictions but is nearly sold out, puts an emphasis on the imperative for adopting technology innovations that meet healthcare needs and help to reduce costs.

In Wednesday’s opening session, for example, McCray says Leslie Saxon of the USC Keck School of Medicine is highlighting some of the practical aspects in determining who pays as institutional customers adopt wireless healthcare innovations. David Sayen, regional administrator of the Centers for Medicare and Medicaid in Californa, Arizona, Nevada, Hawaii, and other Pacific islands, will talk about using innovation to wring more care from existing programs.

The 2012 summit also may go down as the year of incentive prizes in wireless health.

The parade of prizes begins Wednesday with the selection of a winner from three finalists named in early April as part of Johnson & Johnson’s Janssen Connected Care Challenge, a competition that was created to help bridge the gap in coordinating patient care among different healthcare practices. Each of the finalists received $50,000 to help advance their … Next Page »

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Sue Siegel, one of the leading venture investors in the field of personalized medicine, is leaving her gig as a general partner at Mohr Davidow Ventures to join GE as the CEO of its $6 billion healthymagination unit, which is seeking to foster innovations that lower healthcare costs.

Siegel, 52, was the president of Santa Clara, CA-based Affymetrix (NASDAQ: AFFX) before joining MDV to help lead its push in molecular diagnostics and digital health. At MDV, she participated in the firm’s investments in Menlo Park, CA-based Pacific Biosciences (NASDAQ: [[ticker:PACB]), Foster City, CA-based Navigenics, Lexington, MA-based RainDance Technologies and Waltham, MA-based On-Q-ity among others.

The healthymagination program is a sizable one, even by GE (NYSE: GE) standards. The industrial giant has said it plans to invest $3 billion in R&D to foster at least 100 innovations to lower health care costs by 2015. The rest of the money is set aside for financing and technology development to bring health IT to rural and underserved areas. Mohr Davidow, along with other VC firms like Kleiner Perkins Caufield & Byers, Venrock, and MPM Capital, has been involved with GE in figuring out ways to put that money to work, partly through a $100 million global open innovation challenge, which will award prizes to innovative startup teams.

Siegel replaces Mike Barber at healthymagination, as he will be moving on to a new role as vice president and general manager of molecular imaging at GE Healthcare.

“Sue Siegel’s great passion for advancing healthcare is matched by her keen understanding of innovation, her sharp business sense, and her proven leadership,” GE Chairman and CEO Jeff Immelt said in a statement. “As we continue to work with our partners to revolutionize health, we need a leader to connect GE with new healthcare businesses, thought leaders and governments.”

“We are very happy for Sue and believe her move to GE is a positive both for her and for us,” Pamela Mahoney, a spokeswoman for MDV, said in an email. “Her new role at GE will allow her to continue to pursue her deep passion for personalized medicine and the technologies that enable it on perhaps the world’s best platform for doing so.”

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iPierian used to be known as a stem cell company, when stem cells were all the rage. But now it’s taking on a new identity as an antibody drug developer that happens to use stem cells as a tool for discovery.

The South San Francisco-based company is announcing today that it has found a new direction under CEO Nancy Stagliano, who took over back in September. The company is now zeroing in on making antibody drugs for neurodegenerative diseases like Alzheimer’s, which are affected by the Tau protein and the Complement biological pathway.

iPierian is also announcing today it has hired Pamela Conley, the former vice president of research at South San Francisco-based Portola Pharmaceuticals, to oversee the iPierian stem-cell technology and the tangible drugs that are supposed to come out of it.

The shift shouldn’t be that surprising. Stagliano is a neuroscientist by training, her last startup (South San Francisco-based CytomX Therapeutics) is an antibody drug developer, and Big Pharma companies are desperately searching for anything half-decent at slowing down neurodegenerative diseases like Alzheimer’s. The work at iPierian is still very much in the early stages, as Stagliano says she hopes to enter clinical trials in 2014.

If the company can do that, it would be a step ahead for the use of so-called induced pluripotent stem cells (IPSCs) for drug development. And it would give iPierian’s prominent crew of backers—including Kleiner Perkins Caufield & Byers, Google Ventures, and GlaxoSmithKline’s SR One—a new shot at getting a return on more than $50 million in investment. The company has gone through a series of strategy shifts in its brief history, as it had five CEOs pass through in its first three years.

Nancy Stagliano

“My big vision is this is the tip of the iceberg for IPSC cells,” Stagliano says. “We’ve made a lot of progress with the platform in Alzheimer’s and the disease models we’ve created. Because of that success, we’ve narrowed down and prioritized these two areas. We’re going where the science is taking us.”

Scientists at iPierian over the last six months have spent time working to make stem cell technology useful for drug development. The basic idea is to take ordinary adult cells like those from skin or blood, and reprogram them into a stem-cell state so they can be coaxed to differentiate into any other cell in the body. By doing that, scientists have found they can make adult human neurons in the lab dish, which can be used as models to see what happens in disease, or how drugs might interact with actual neurons.

Using cells from many different individuals also gives scientists a better idea how the disease varies from person to person, and how different molecular subtypes of disease might respond differently to certain targeted therapies.

iPierian has used its stem cell technology in recent months which has given it new insights about targets to go after on the Tau protein and in the Complement pathway, Stagliano says. While most Big Pharma companies are focused on reducing the accumulation of amyloid beta plaques as a way of fighting Alzheimer’s or frontotemporal dementia, some scientists believe the accumulation of tangles of Tau proteins might be just as important to the disease. Drug companies are also targeting Tau, but most are focused on making conventional small molecule drugs against biological targets inside cells, Stagliano says.

Based on insights it has gotten from its IPSC technology, iPierian says it believes it has found a target on the surface of cells, which is an accessible area for antibody drugs. Stagliano isn’t naming … Next Page »

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[Updated: 9:20 pm PT] Only a few companies have ever been successful enough to call themselves Big Biotechs. If boards and shareholders lack vision and guts, we’ll look back in a few years and wonder why the Big Biotechs went extinct.

The group of Big Biotechs includes companies like Amgen, Gilead Sciences, Biogen Idec, and Celgene. They grew from scrappy venture-backed startups with a dream into big, independent, profitable, diversified enterprises. They have enduring ability to create new jobs and new medicines. They are like ballasts in a stormy industry.

There are several challenges in the market today that make it harder than ever to create companies like these. The biotech venture community can’t afford to build startups anymore that have Big Biotech aspirations; there’s only a lukewarm biotech IPO market; and Big Pharma companies have an endless appetite for acquisitions to replace their aging drugs with expiring patents. Wall Street values the short-term payday over long-term potential.

All of these factors are conspiring to put a lot of pressure on biotech companies to sell to Big Pharma companies. You’ve seen it with GlaxoSmithKline’s $2.6 billion hostile bid to acquire Rockville, MD-based Human Genome Sciences (NASDAQ: HGSI). San Diego-based Amylin Pharmaceuticals (NASDAQ: AMLN) is reportedly another object of Big Pharma desire. If these deals get done, they could end up tipping over a set of M&A dominos that would significantly change the biotech industry—and not necessarily for the better.

Richard Pops

“We’re at a unique moment in the history of the industry,” says Alkermes CEO Richard Pops. “When you look at the companies in the $2-plus billion market valuation tier, it is an incredibly important time and an incredibly vulnerable time. These companies are big enough to help to solve big problems in Big Pharma.

“If you are a Big Pharma company facing a patent cliff, you really have a huge revenue gap to fill, and small companies don’t really help you. They aren’t scaled to solve your problem. And this is precisely why companies in this valuation tier are so vulnerable. When you have a $2 billion valuation, it’s usually because something made your company an economic enterprise rather than a big science project.”

Pops runs one of the Big Biotechs. Rather than being acquired by a Big Pharma company that might want its technology that makes drugs last longer in the blood, Alkermes decided to do the acquiring. It bought Elan Drug Technologies, in a move that turned it into a trans-Atlantic 1,200-employee enterprise with revenue streams from multiple products—and a good shot at profitability for the long haul.

[Updated to add Ariad and Pharmacyclics.] A fair number of companies out there have some realistic chance to be members of the Big Biotech class. I count 23 companies in the NASDAQ Biotech Index with market valuations of more than $2 billion. Will they remain independent, like Alkermes, or go extinct? You can size up the list here yourself.

When I look at this list, a few things jump out. Amgen, Gilead, and others at the top have gotten so big and rich that someone would really have to move mountains to buy them. At the bottom of the list are a few little companies, like Vivus, that are surely built for quick and easy takeover. What concerns me more are the companies in the middle. They are the ones with compelling technologies, strong management teams, and at least … Next Page »

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