Author: Bruce V. Bigelow

Bruce V. Bigelow wrote:

Some 800,000 people in the U.S. are diagnosed each year with obstructive sleep apnea, in which the tongue relaxes during the onset of sleep to the point of physically blocking much of the upper airway. The condition often causes repeated interruptions of sleep, which can lead to increased blood pressure, coronary problems, and diabetes.

The established treatment is a respirator-like gadget that a patient is supposed to wear while sleeping. But nearly half of the people who are directed by their doctors to use these “continuous positive airway pressure,” or CPAP, devices simply can’t or won’t comply, according to Terry Davidson, a professor of head and neck surgery at the UC San Diego School of Medicine. Davidson says he also is pessimistic about surgeries that are intended to move the tongue forward and away from the throat.

A San Diego medical device startup where Davidson is Chief Medical Officer is now testing a new approach, which uses an implanted electronic device to transmit low-current neurostimulation to the tongue. The steady electric current causes the tongue muscle to tighten, so it pulls away from the upper airway. The company, ImThera Medical, announced in December that it had implanted its technology in two obstructive sleep apnea patients in Belgium.

Marcelo Lima, ImThera’s founding chairman and CEO, tells me he views the non-compliant CPAP patients as an ideal market for ImThera’s technology. The company is in clinical trials only in Europe, and intends to implant devices in 10 more patients as part of those studies. In the European trials, a surgeon implants ImThera’s pacemaker-like device in the upper chest, just under the skin, and extends a wire to a multi-contact electrode in the jaw. From there, the surgeon attaches the electrodes to the hypoglossal nerve, which controls multiple muscles of the tongue. The company has posted a YouTube video that explains it all here.

The implanted electronic device is programmed a couple of weeks following the surgery to send just enough electricity to the nerve to deliver what Lima calls “awake muscle tone to the sleeping tongue.” A handheld radio-frequency wand is used to turn …Next Page »

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Bruce V. Bigelow wrote:

Two San Diego biotechs, Adamis Pharmaceuticals and La Jolla Pharmaceutical, said today they have agreed to terminate their merger agreement, which was signed three months ago. The Nasdaq market also delisted La Jolla Pharmaceutical today, saying the company is operating only as a “public shell” with minimal assets and operations. La Jolla Pharmaceutical said that after receiving a total of only 13 percent of shareholder proxies, it would no longer seek shareholder approval of the proposed merger.

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Bruce V. Bigelow wrote:

There was a flurry of San Diego life sciences news over the past week, but we’ve got it all sorted for you here.

—Politicians sometimes complain about voter apathy, but consider the plight of San Diego’s La Jolla Pharmaceutical. The biotech, which failed to develop a drug for lupus, has been unable to muster enough shareholder votes to put itself out of business—or to approve a proposed merger with Adamis Pharmaceuticals (OTCBB: ADMP). In a statement this week, La Jolla Pharmaceutical says only 12 percent of its shareholders returned their proxy cards last week—falling far short of the quorum needed to constitute a valid vote.

—San Diego’s Adventrx Pharmaceuticals (NYSE Amex: ANX) says the FDA wants more data from stability testing of its new formulation of vinorelbine, a chemotherapy drug used to treat a variety of cancers, including non-small-cell lung cancer.

—Optimer Pharmaceuticals (NASDAQ: OPTR), a San Diego biotech developing an antibiotic for a dangerous hospital infection, raised $51.5 million in a secondary stock offering.

—San Diego’s Novalar was in the news twice in the past week. The San Diego-based biotech struck a deal that gives Sanofi-Aventis exclusive rights to market Novalar’s vasodilator drug phentolamine mesylate (OraVerse) in Germany.

—Novalar was also ordered by the FDA to stop using a misleading patient brochure in its marketing of the drug phentolamine mesylate. Novalar CEO Donna Janson says the …Next Page »

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Bruce V. Bigelow wrote:

A number of biotechs and medical device companies in the San Diego area have disclosed funding deals in recent weeks. As I noted last month, San Diego-based ProActa raised about $1.1 million to continue its anti-cancer drug development work. I found some more deals while reviewing filings submitted to the Securities and Exchange Commission:

—Auspex Pharmaceuticals of Vista, CA, continues to raise modest amounts of funding in its quest to develop deuterium-based analogs of clinically validated drugs in multiple therapeutic areas. The company says its technology replaces metabolically-sensitive hydrogen atoms with “heavy hydrogen,” a non-radioactive isotope, to create novel therapeutics with “very attractive product profiles.” After raising $3 million in August, a recent SEC filing shows that Auspex has returned to raise $2 million from promissory notes and warrants that can be converted into shares of preferred stock. Auspex, which was founded in 2001, raised almost $13.9 million in a Series B venture round from Thomas, McNerney & Partners, CMEA Ventures, and Costa Verde Capital. The concept is similar to an idea being pursued by Lexington, MA-based Concert Pharmaceuticals.

—Aethlon Medical (OTCBB: AEMD) has raised $600,000 from an unnamed investor, according to a recent SEC filing. The investor provided $300,000 in cash and a $300,000 loan to acquire 660,000 shares of Aethlon’s common stock. The San Diego-based company has been developing a blood purification device, the Hemopurifier, as a broad-spectrum therapy against infectious viral pathogens. In October, Aethlon formed a subsidiary, Exosome Sciences. The company says Exosome Sciences will run tests to see if the Hemopurifier also is effective in capturing exosomes that are secreted by solid tumors, lymphomas, and leukemias to suppress the patient’s immune response.

—Tocagen, a San Diego biotech developing gene therapy treatments for terminally ill cancer patients, has raised $3 million by issuing almost 1.6 million shares of preferred stock priced at $1.90 a share, according to a regulatory filing. Tocagen says on its website that its drug development efforts are focused on two deadly types of cancers, glioblastoma multiforme (a type of brain tumor), and malignant melanoma (a type of skin cancer).

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Bruce V. Bigelow wrote:

Investments by Southern California’s Tech Coast Angels dropped in 2009, as the network of individual investors helped raise a total of $61.7 million in direct investments by TCA members and affiliated investors. The angel investor group says it participated in seven new deals and 17 follow-on deals last year, according to a statement.

The organization, which includes more than 300 members in five regional chapters, says its members made $4.7 million in direct investments in startup companies last year, and helped to attract an additional $57 million from other sources.

The total invested in 2009 was about 18 percent lower than in 2008, and the number of deals declined by about 22 percent. In 2008, the Tech Coast Angels made a total of $75 million in direct and affiliated investments in 15 new deals and 16 follow-on rounds.

In a statement issued by the TCA, chairman Richard Sudek struck a tone of encouragement about the number of follow-on rounds, which increased from 16 in 2008 to 17 in 2009: “Clearly our members feel deeply committed to our invested companies and believe in their growth,” he said. “We not only continue to raise money for them, we also provide day-to-day operating assistance and mentoring that company executives tell us often make the biggest difference in their success.”

The angels group, which is technically a nonprofit mutual benefit corporation, identified several San Diego startups that its members funded last year:

—MicroPower Technologies has developed technology for ultra-low power wireless video cameras. By coincidence, the Telecom Council of Silicon Valley said yesterday that MicroPower Technologies was among seven new telecom companies to win the service providers’ “spiffy” awards.

—Hookit.com, formerly known as Loop’d Networks, is an online social network for lifestyle sports with features and services created for athletes and brands.

—Benchmark Revenue Management develops financial management software to help hospitals handle billing and collection issues.

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Bruce V. Bigelow wrote:

Adventrx Pharmaceuticals (NYSE Amex: ANX), the San Diego biotech that sprang back to life in January with a new drug application, says in a statement today that it has received a “refuse to file letter” from the FDA—which basically means it’s back to the drawing board.

Adventrx cut its workforce to just two employees almost a year ago, after its development of a co-factor drug for treating metastatic colorectal cancer failed. Brian Culley, who is now the company’s CEO, told me the biotech then made a “bet the company” decision to restart its development of ANX-530, a formulation of the chemotherapy drug vinorelbine (Navelbine). Much of the drug development work already had been done, and Culley told me Adventrx merely needed to show the FDA it could maintain tight manufacturing controls. When Adventrx announced in January it had filed a new drug application for ANX-530, investors rushed enthusiastically to buy shares in the penny stock.

Once a new drug application is filed, however, the FDA has 60 days to preliminarily review the submission and assess whether the NDA is sufficiently complete to permit a substantive review. The agency issues a refuse to file letter to the applicant if it determines that the application is not sufficiently complete.

Adventrx says in its statement that the FDA letter focuses on the company’s intended commercial manufacturing site. The FDA says the biotech’s application does not include enough information to show the plant can produce the drug in a way that meets drug expiration date requirements. In its statement, Adventrx says, the “FDA identified only the one chemistry, manufacturing and controls (CMC) reason for the refusal to file. ADVENTRX plans to meet with the FDA as soon as possible to discuss its response.”

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Bruce V. Bigelow wrote:

AFraxis, a mostly stealthy San Diego biotech, is getting ready to come out with a big announcement in the next week or so, but CEO Jay Lichter previewed some key parts of the story yesterday during a presentation before the San Diego Venture Group. He says the biotech has completed pre-clinical testing of a promising compound for treating a form of autism related to Fragile X syndrome.

Lichter, who does double duty as a managing partner of San Diego-based Avalon Ventures, founded aFraxis in 2007—shortly after researchers identified a possible drug target for Fragile X, a family of related mental disorders caused by a defect (or multiple defects) in a single gene on the X chromosome.

Of course, finding a compound that fits a single molecular target (the way a key fits into a lock) is no simple matter. The process can require screening millions of compounds, and then researchers must determine if candidate compounds are reasonably safe for initial use in humans and show the relevant pharmacological activity that justifies commercial development.

“The goal is to make a single exploratory compound and test it in a mouse, and we’ve done that,” Lichter says. The aFraxis CEO didn’t provide a lot of new details about the science. The target, which was identified at MIT in Nobel laureate Susumu Tonegawa’s laboratory, is PAK, a specific group of enzymes that catalyze neural reactions. Lichter says the same mechanism appears to be in play with schizophrenia. As Denise reported earlier this month, Fragile X Syndrome, which is the most common known cause of autism, is believed to be caused by defects in the gene that produces this group of enzymes.

Lichter’s presentation was instead focused mostly on the ultra-lean company-building approach aFraxis has taken to get this far. After three years, he says the biotech has only a handful of employees, and Avalon has invested a total of roughly $6 million to basically get to a stage where the company could submitt an application to begin clinical trials. “We started from scratch from a paper in PNAS (Proceedings of the National Academy of Sciences,” Lichter says.

The pre-clinical research was done in record time—and at a savings of roughly $4 million—by joining forces with …Next Page »

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Bruce V. Bigelow wrote:

Synthetic Genomics, the San Diego biofuels developer, today named a top executive from San Diego-based Illumina (NASDAQ: ILMN), the maker of genetic sequencing tools, as its chief operating officer. Joel McComb, a senior vice president and general manager of Illumina’s $650 million life sciences business unit, will start March 1 and report to J. Craig Venter, Synthetic Genomics founder and CEO.

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Bruce V. Bigelow wrote:

Call it an example of newfound pragmatism among the flat-rate wireless service providers, which are coming under growing pressure to consolidate.

San Diego’s Leap Wireless (NASDAQ: LEAP) announced today that it’s forming a “joint venture” with San Antonio, TX-based Pocket Communications that will provide pre-paid wireless services to customers of both companies in South Texas. As joint ventures go, however, this one clearly puts Leap in the driver’s seat.

Under the agreement, Leap, the operator of the Cricket wireless network, will own 76 percent of the joint venture and will manage wireless services in a region that extends from San Antonio to Laredo and includes the Rio Grande Valley. “As one step in the transaction,” the company says in a statement, “Leap will purchase some of Pocket Communications’ South Texas assets for approximately $38 million in cash.” Leap says it also will contribute its own assets in South Texas to the joint venture—along with the remainder of Pocket’s assets. (Pocket Communications, which also serves areas of Massachusetts and Connecticut, says its New England operations are not included in the deal.)

Other terms of the deal make the joint venture sound more like a de facto acquisition. Leap says that after the joint venture has operated for three and a half years, the two partners will gain certain rights to Pocket’s 24-percent stake. And if Leap gets acquired or merges with another company—which is a much-rumored possibility—Pocket will be obligated to sell its stake in the joint venture.

Speculation about a Leap M&A deal erupted in January, after the Wall Street Journal reported that Cricket’s parent company had hired investment bankers to advise it on its strategic options. I called Leap spokesman Greg Lund to ask if those bankers …Next Page »

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Bruce V. Bigelow wrote:

ProActa, which is developing an anti-cancer drug transplanted from New Zealand, has raised $1.1 million in debt and securities, according to a recent regulatory filing. The biotech, which has raised at least $43 million in venture funding since 2004, announced earlier this month that it was starting a second mid-stage clinical trial of a drug for Acute Myeloid Leukemia. ProActa’s investors include Alta Partners, Clarus Ventures, Delphi Ventures, Endeavour Capital of New Zealand, GBS Venture Partners of Australia, Genentech, No. 8 Ventures of New Zealand, and Roche.

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Bruce V. Bigelow wrote:

Cancer and certain types of mental illness are diseases that appear ripe for research breakthroughs, according to Francis Collins, who just marked his sixth month as director of the National Institutes of Health.

“I’m always loath to say what’s on the brink of some big breakthrough,” says Collins, who met with local reporters while attending the annual meeting of the American Association for the Advancement of Science—which is in San Diego for the first time since the AAAS was founded in 1848. Yet Collins, who previously led the Human Genome Project, says advances in genomics and the power of genetic sequencing technologies are opening the possibility of new therapies in cancer, as well as for schizophrenia, autism, and bipolar disorders—diseases with strong genetic components.

“I would hope in another five years that we would have the capability to have the genome of your tumor completely analyzed—and then go through the list of drugs that are available” to determine which anti-tumor drug would be most effective. Collins says using genomics to assess how genetic variations affect each patient’s individual response to different drugs is an example of the growing field of pharmacogenomics, and represents another aspect of the revolution that’s underway.

Collins says cancer is a disease of the genome, and federal funding for biomedical research is not only advancing on a cure but also helping to sustain the nation’s economic recovery. Of $10 billion in stimulus funding to be spent over two years on biomedical research, Collins says about $4.5 billion has been allocated throughout the country so far.

Some additional details, courtesy of the NIH director:

—Of the $4.5 billion in current economic recovery and stimulus funding, the NIH directed $126 million to researchers in San Diego County. Including the stimulus funding, the NIH provided about $920 million in funding for biomedical research in San Diego County during the current fiscal year. NIH grants are supporting 1,180 scientists at 92 organizations throughout the county. “San Diego is famous for being on the high end of innovation, both at the academic centers and at the research institutes,” Collins says.

—The NIH also has created a pilot that uses federal stimulus funding to …Next Page »

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Bruce V. Bigelow wrote:

Even though venture capital funding plunged dramatically in 2009, it was nevertheless encouraging when the VC surveys that came out in January showed an uptick in venture deals during the fourth quarter—like a ski jump into 2010.

Now the Cooley Godward Kronish Venture Financing Report for the fourth quarter of 2009 gives us another piece of the puzzle. One noteworthy aspect of the report, in fact, is how the contours of 2009 fit with 2008.

Venture funding was on a near-record pace during the first three quarters of 2008 before the bottom fell out in the fourth quarter. Last year was like a mirror image. The climate for venture investments during the first nine months was difficult, even scary, before signs of improvement emerged in the fourth quarter—with both the deal count and dollars invested up significantly over the previous quarter.

The real insight of Cooley’s report, though, is in its analysis of deal terms. Cooley says its report is based on an analysis of the 376 venture deals nationwide that its lawyers worked in 2009. Those deals led to venture investments of more than $3.8 billion during the year. One general finding: if you’re an entrepreneur, deal terms during the fourth quarter showed signs of slow improvement, although terms are not as good as they were a few years ago. Some more specific highlights:

—The trend in median pre-money valuations is improving, although still below recent historical annual averages. Cooley says it saw steady increases in median pre-money valuations for all venture investments during the fourth quarter.

—Up rounds (in which the value of investors’ shares has appreciated from one financing to another) increased to 45 percent in the fourth quarter—compared to 26 percent during the first three quarters. But the percentage of down or flat rounds continues to outpace the number of up rounds.

— 58 percent of fourth-quarter deals included fully participating preferred, which are terms that typically benefit investors at the expense of founders. That’s better than the previous three quarters, when 60 percent of the deals were fully participating preferred. But in 2007, just 53 percent of the deals were fully participating preferred. (A great explanation of the term from Brad Feld is here.)

In short, Cooley concludes that while valuations remain below their historical levels, the overall trend looks promising.

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