Author: Luke Timmerman

Luke Timmerman wrote:

One of the hot biotech startups from the Midwest is setting up shop in Boston. Lycera, the Ann Arbor, MI-based company with a novel idea for attacking autoimmune diseases, has decided to move its headquarters to Cambridge, MA and is naming a young management talent as CEO.

Lycera is announcing today it has hired Bill Sibold, the former senior vice president of U.S. commercial business at Biogen, to be its new CEO. Sibold, 43, is taking over at a company that made waves last year when it closed a Series A venture round worth $36 million from InterWest Partners, Arch Venture Partners, Clarus Ventures, and EDF Ventures.

The company was founded in 2006 to build on research from the University of Michigan laboratory of Gary Glick. He looked at the landscape of treatments for people with autoimmune disorders—conditions in which the immune system goes haywire and attacks healthy tissues—and saw room for improvement. A number of biotech drugs are effective against these disorders, such as Amgen’s etanercept (Enbrel) and Roche and Biogen Idec’s rituximab (Rituxan), but they and other drugs like them have the drawback of requiring injections and disabling some of a patient’s immune defenses, potentially making the patient vulnerable to infections. The concept at Lycera is to pursue different targets on cells, which make it possible to tamp down the autoimmune activity, without making people vulnerable to infection.

The market potential of any drug that really works for autoimmune diseases is enormous. About 80 diseases fall into this class, with names like rheumatoid arthritis, lupus, and psoriasis. The conditions collectively affect an estimated one out of every 12 people in the U.S., according to the National Institutes of Health. Rheumatoid arthritis alone is now a $10 billion a year market dominated by companies like Amgen, Johnson & Johnson, and Abbott Laboratories.

“Even though this is at an early stage, I think Lycera can be a great company that can compete with anybody,” Sibold told me, during a phone interview from the Ann Arbor offices.

Lycera envisions growing up over time from two bases of operation. Ann Arbor will remain the home to the drug discovery team, which is made up of about 15 people, many of whom used to work together at Pfizer before the company closed its research center there. Clinical development, regulatory affairs, business development, and executive leadership is being established in Cambridge, to take advantage of the region’s rich talent pool, Sibold says.

Sibold, 43, has the kind of background that venture capitalists want in an executive, and that is hard to find outside of Boston or the San Francisco Bay Area. He’s got a Harvard Business School …Next Page »

Luke Timmerman wrote:

At least one more patient has been diagnosed with a rare, and potentially fatal brain infection after taking natalizumab (Tysabri), the hit drug for multiple sclerosis from Biogen Idec and Elan, according to Biogen CEO James Mullen.

There are now 28 confirmed cases of patients with progressive multifocal leukoencephalopathy (PML) as of the last count in mid-December. That’s one more case than I counted in a detailed summary of PML risk that we published on November 19. Mullen made his remarks in front of a group of investors today at a Goldman Sachs conference titled “Healthcare CEOs Unscripted: A View From the Top.”

Mullen talked about the hit drug’s difficult history with PML as part of a wide-ranging and candid conversation with Goldman analyst May-Kin Ho in New York. These were the first public remarks Mullen, 51, has made since the Cambridge, MA-based company (NASDAQ: BIIB) announced this week he is stepping down in June as CEO, after a decade at the helm. He offered his thoughts on how to mitigate the risk for multiple sclerosis patients, his reflections on what worked and what didn’t in the 2003 merger with San Diego-based Idec Pharmaceuticals, and how the industry needs to change its ways to keep innovation alive. Here are the highlights that I picked up from the webcast.

On how Biogen Idec plans to keep doctors, patients, and investors informed about PML risk:

Biogen Idec says it plans to offer monthly updates to physicians about the latest statistics on PML cases, and infection rates. It will also staff a hotline for physicians who want to gather detailed, updated information and context from the company’s medical staff. The company plans to lay out the numbers in a more detailed fashion, with rates on incidence of infection, numbers showing how long certain groups of patients have been on the drug, combined with data on how many total patients are receiving treatment. “That’s the best way for people to visualize what’s going on,” Mullen says.

“The whole communications strategy around that has been challenging,” Mullen said. “We’ve gotten lots of feedback. Pretty much whatever we’ve done, someone won’t like it.”

On why he’s leaving the company in June:

Mullen noted that the Tysabri risk-management situation has stabilized during the past year. A new patent that lasts until 2026 has extended the lifespan of pegylated interferon beta (Avonex) which may help it fend off cheaper “follow-on” biologic competitors. And the product pipeline looks encouraging as well, he said.

“There are a lot of good prospects out there for Tysabri, and there aren’t, if you will, a lot of huge, thorny issues to be wrestled to the ground here in the short term. It’s a good time for a transition.”

From a personal perspective, he added: “If you’re going to have a mid-life crisis, you can do one of two or three things, right? Sports cars I’m too big for. Mistresses are not approved at home. Maybe a career change is what’s in order. I decided to go with Number 3. I think it’s a good time, for, you know, a transition. We’ve also got a new chairman with Bill Young. We’ve got some new board members. We’ll have a few more new board members. It’s a good time for people to sort of re-think …Next Page »

Luke Timmerman wrote:

Halosource, the Bothell, WA-based company with a cheap and simple technology for purifying water in developing countries, has raised another $10 million in a venture financing that could be worth as much as $15 million, Xconomy has learned.

The investment is being led by Prime Partners Asia Merchant Capital of Singapore, according to Halosource’s chief financial officer, James Thompson. The financing, a Series D round, includes existing investors, although a majority of the money is coming from new investors, Thompson says. Halosource has a long list of investors that includes Credit Suisse, Siemens, the Abu Dhabi Investment Authority, and a few notable Seattle investors—Alexander Hutton Venture Partners, Buerk Dale Victor, and WRF Capital. The company has now raised about $30 million since 2007.

Roughly 1 billion people around the world lack access to clean drinking water, and this is the root cause of a variety of illnesses that kill an estimated 2.2 million people a year, according to the United Nations. But as more people emerge from poverty, businesses like Halosource have discovered they are demanding consumer products to provide them with clean water. The market is worth an estimated $18 billion worldwide, and growing at a clip of 19 percent annually, according to research firm Frost & Sullivan.

Halosource has been a pioneer in this emerging market over the past couple years, with a product it calls Halopure. The technology is now being used to purify water for about 4 million people in India. That’s about twice as many people as who were using it a year earlier, Thompson says. Halosource is privately held and doesn’t disclose its sales figures, although Thompson said the company recently recorded its first profitable month, and that it is aiming to reach sustainable profitability in the near future. The company has about 100 employees now, and will look to hire a few more with this new shot of cash.

“This is capital that will continue to fuel our growth globally,” Thompson says. “We want to build a great company around a significant need in the marketplace.”

I wrote about a big break Halosource got back in March, when it was certified as safe and effective by the U.S. Environmental Protection Agency. It’s not really that strategically important for Halosource in the U.S., where we take clean water for granted, but it was a key …Next Page »

Luke Timmerman wrote:

ZymoGenetics is on the prowl for a lot more cash from investors—possibly more than $85 million.

The Seattle-based biotech company (NASDAQ: ZGEN) said today it is looking to sell 12 million new shares to investors in an underwritten stock offering, plus another 1.8 million shares to its underwriters. The company currently has about 69 million shares outstanding. Leerink Swann is acting as the sole manager of the offering.

ZymoGenetics didn’t release the terms of the offering, although this is clearly a big transaction in the making. The company’s stock has been on a roll, more than doubling in 2009, and reaching a closing price of $6.77 today. Assuming that ZymoGenetics offers investors a 7 percent discount to today’s close—which is about what Dendreon offered to investors in a similar deal last month—then the investors would get shares at about $6.30 a share. Multiply that by 12 million shares, and ZymoGenetics could pull in $75.5 million, plus another $11.3 million if the underwriters purchase their 1.8 million shares over the following 30-day period.

The company plans to use the cash for both its research and development, and for the commercial push behind its sole marketed product, recombinant thrombin (Recothrom). That drug hasn’t lived up to its initial sales projections, but ZymoGenetics insists that its version will still become the dominant player in a market for surgical bleeding that’s worth more than $250 million a year. Zymo recently retained the full U.S. rights to that drug after its partner, Germany-based Bayer, walked away from the product in every country except Canada.

ZymoGenetics has traditionally tried to keep at least a two-year operating cash cushion in the bank at all times, although it fell below that threshold during some hard times in 2008. It has made efforts to curb its spending in the past year, with two rounds of layoffs that brought its employee headcount down to about 300.

Luke Timmerman wrote:

Stratos Genomics, a Seattle-based company developing faster and cheaper DNA sequencing technology, has been granted three months of access to a microfabrication laboratory operated by the Washington Technology Center on the University of Washington campus. Stratos’ proposal is to create a “Nanopore Noise Reduction Project” that “creates, encodes and measures surrogate molecules derived from DNA targets to produce DNA sequence information,” according to a statement from the Washington Technology Center. The award is the first that the WTC has granted under a technology stimulus program for small businesses in Washington.

Luke Timmerman wrote:

Acton Pharmaceuticals, the Marlborough, MA-based developer of an inhalable drug for asthma, said today it has secured $15 million in a Series A financing round led by Sequoia Capital.

The company doesn’t have to navigate most of the usual technology and regulatory risks that are inherent in biotech. Acton is getting started with a license from New York-based Forest Laboratories to an inhalable corticosteroid drug called flunisolide HFA (Aerospan) that was cleared for sale by the FDA back in January 2006. Acton, in a statement, said it plans to complete “certain manufacturing requirements” and then start marketing the product in early 2011.

The market for inhalable corticosteroid drugs, which tamp down an excessive inflammatory response in the lungs of asthmatic patients, is worth an estimated $7 billion a year, Acton said. The company plans to build up its own specialized sales force that will pitch its product to allergists and pulmonologists, with the hopes of eventually adding more products to the portfolio. Its aerosol is made with a propellant that doesn’t use ozone-damaging CFC compounds, which are being phased out of asthma inhalers, Acton said.

“Our shared vision with Sequoia Capital along with our strong capital structure will enable us to complete development of Aerospan and build a substantial sales, marketing, scientific, and business development infrastructure that we believe will attract new opportunities for clinical stage and marketed products,” said CEO John Simon, in a statement.

Acton was founded by Simon and David Kriesler, the company’s president and chief operating officer. Both of them are veterans of Forest Laboratories, although Simon was most recently a vice president at Sepracor, and Kriesler’s last position was at JDS Pharmaceuticals. Scott Carter, who leads healthcare investing for Sequoia, is joining Acton’s board.

Luke Timmerman wrote:

Some of the best-selling drugs in the pharmaceutical industry are what biotechies call “naked” antibodies. These are engineered Y-shaped proteins that zero in on markers of diseased cells, while sparing healthy ones. They generate an estimated $30 billion in annual sales, from big names like Roche’s trastuzumab (Herceptin) for breast cancer.

But to hear one of the nation’s leading developers of antibody drugs talk today, those treatments aren’t really on the cutting edge anymore.

“It’s unlikely in the future of Seattle Genetics that we’ll put another naked antibody into the clinic,” CEO Clay Siegall says. “The future will be with antibodies that are empowered.”

Seattle Genetics (NASDAQ: SGEN) has come to that conclusion after it has spent more than a decade trying to make antibodies more potent. The company, founded in 1998, has never been able to take a naked antibody drug all the way through to FDA approval, and it has shelved a number of candidates over the years—SGN-10, SGN-15, SGN-30. But Seattle Genetics has generated its most promising data yet from a next-generation “empowered” antibody for Hodgkin’s disease. The technology that makes this possible—linking a regular antibody to a toxin that can give it extra-tumor killing punch—has now been licensed to eight other drug companies. More data emerged this year from competitors Roche and ImmunoGen that suggests they, too, have found a way to link an antibody with a toxin to create a souped-up antibody drug that beats the original. And Seattle Genetics has designs on pushing the envelope further in the future with another next-generation technique for making antibodies more potent.

Scientists have been dreaming about creating powerful targeted therapies, known as antibody-drug conjugates, for three decades, but the efforts usually failed because the linkers weren’t stable, and the toxins broke off in the bloodstream before they could reach the intended target, causing side effects. Seattle Genetics’ technology is built on the idea that its synthetic linkers remain stable until the antibody reaches the tumor and unleashes its toxic payload.

The lead drug candidate at Seattle Genetics, brentuximab vedotin, opened the eyes of cancer researchers a little more than a year ago with its data. Scientists said that 17 of the 44 patients (38 percent) had their tumors completely disappear or mostly go away after they took the drug. When they looked at patients who got higher doses that are more likely to be tested in late stages, the data look even better. Of the 28 patients who got those doses, about one-third had their tumors completely disappear, while 93 percent had at least some measurable tumor shrinkage. That drug is now in a pivotal clinical trial that could produce results by the end of this year, and may reach the U.S. market by the end of 2011.

While Seattle Genetics still has a couple of naked antibodies moving through clinical trials, Wall Street isn’t counting on them. Last month, Roche pulled the plug on a partnership to develop …Next Page »

Luke Timmerman wrote:

Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) said today it has received an undisclosed milestone payment from its partner, Roche, for starting studies that pave the way for clinical trials of a certain drug candidate. The Roche collaboration, formed in July 2007, provided $331 million in upfront cash and equity, and could be worth more than $1 billion over time, Alnylam has said. Analyst Simos Simeonidis of Rodman & Renshaw, in a note to clients, said the milestone is positive because it shows Roche is making progress in developing RNA interference therapies, and it provides some operating cash to Alnylam without diluting the value of its stock.

Luke Timmerman wrote:

Cambridge, MA-based CombinatoRx (NASDAQ: CRXX) said today it has named Mark Corrigan as its new CEO, following the merger with NeuroMed Pharmaceuticals. Corrigan, 52, is the former executive vice president of R&D at Sepracor and a director of CombinatoRx. He will be paid an annual base salary of $450,000, may get a bonus worth half his base salary, and could get restricted stock units worth as much as 3 percent of the company’s market capitalization if CombinatoRx’s lead pain drug wins FDA approval by October 1, according to a regulatory filing. Robert Forrester, the former chief operating officer, is leaving the company, while NeuroMed’s former CEO, Christopher Gallen, will stay as executive vice president of R&D.

Luke Timmerman wrote:

Ensemble Discovery has found a second Big Pharma partner to support its R&D engine. The Cambridge, MA-based biotech is announcing today it has secured a partnership with Pfizer, the world’s largest pharmaceutical company, to develop a new class of drugs that combine some of the more desirable traits of conventional small molecule drugs and bigger protein therapies.

Terms of this deal aren’t being released, but Ensemble CEO Mike Taylor tells me they are “similar” to the template his company established back in April when it formed an alliance with Bristol-Myers Squibb. That deal called for Bristol to pay $5 million upfront, another $7.5 million for research expenses over the next two years, and milestone payments worth as much as $29.5 million based on the success of each individual molecule in development. Pfizer, like Bristol, has also agreed to pay the salaries of a “substantial” number of Ensemble’s 30 or so employees, Taylor says.

Both of those Big Pharma giants are paying for the right to develop a new class of therapies that Ensemble likes to call “Ensemblins.” These are synthetic mid-sized molecules that can be made into convenient oral pills, like classic small-molecule chemical drugs. But Ensemble hopes to gain an advantage by engineering its treatments to have precise targeting capability that’s commonly found in large-molecule protein drugs like antibodies, which are injected. The company was founded in 2004 based on research by David Liu at Harvard University, and it has received $32 million in venture capital from Flagship Ventures, Arch Venture Partners, Harris & Harris Group, CMEA Ventures, and Boston University.

But venture capital doesn’t last forever, so winning support from Bristol and Pfizer over the past year certainly solidifies the financial future of a little company like Ensemble, with a promising technology that still hasn’t yet entered clinical trials. The Pfizer deal means that Ensemble now has enough cash to operate “well into 2011,” Taylor says.

“Even though money can be hard to come by, we wanted to be strategic and selective in picking our deals,” Taylor says. “We really sought out companies that were committed to working with us to develop this therapeutic space.”

Naturally, that begged the question of why Ensemble thinks Pfizer would be committed. Pfizer (NYSE: PFE) says it historically spends $7 billion a year on R&D, and maintains 250 partnerships across industry and academia. Plus, it did just complete a $68 billion acquisition of Wyeth in October, creating an even bigger pharmaceutical colossus.

Taylor says he’s not worried about Ensemble getting lost in the shuffle, partly because of personal relationships his company has with Pfizer. Taylor himself has longstanding ties inside the company, since he was a senior vice president of Pfizer’s global R&D division, responsible for the research portfolio, before he left to become Ensemble’s CEO in July 2007. Ensemble’s chief scientific officer, Nick Terrent, worked for Pfizer in the 1980s, and has his name on the patent for the hit Pfizer drug sildenafil (Viagra). Tony Wood, the global head of chemistry at Pfizer today, is a “champion” of the Ensemble approach within Pfizer, Taylor says.

“Despite the distractions they had to deal with, they maintained a diligent focus on getting this deal done,” Taylor says. “It reflects on the value they place on our platform.”

In a statement, Pfizer’s Wood added: “The Ensemble technology platform will give us access to an area of chemical space not currently well-represented in our file that holds the potential to be of utility in addressing novel target types.”

While Ensemble hopes to create a broad portfolio of new compounds for its partners, it is also spending some of its energy on developing a pipeline of its own internal products. The company has set its sights on an oral pill that blocks an inflammatory protein called TNF. Lots of companies have tried to do this, and none have succeeded, but the target itself has been a gold mine for Amgen, Johnson & Johnson, and Abbott Laboratories, who all hit TNF with injectable protein drugs that treat autoimmune disorders like rheumatoid arthritis. Ensemble hasn’t picked a lead drug candidate for blocking TNF, although it hopes to do that in 2010, Taylor says.

Luke Timmerman wrote:

There’s no denying that Ambrx CEO Steve Kaldor is a competitor. Still, when I visited him in his San Diego office a few weeks ago, Kaldor was happy to tip his cap to a couple of trail-blazing competitors who have done a lot over the past year to make his life easier.

Ambrx ended the year with about the same number of employees (80), the same amount of cash in the bank as it did a year ago (about $60 million), a new partner in Pfizer, and enough money to operate for multiple years. And while some of that is certainly Ambrx’s own doing, Kaldor sent out a big thank you to Roche and Waltham, MA-based ImmunoGen (NASDAQ: IMGN).

Why? Those companies have built up a body of evidence that suggests they may have the first “empowered” antibody for cancer that has a chance to become a commercial hit. The drug, called T-DM1, combines the ability of an antibody to seek out diseased cells, with a potent toxin that gives the treatment extra tumor-killing kick. This is supposed to be one of the new frontiers in the world of antibody drugs, which have been around more than a decade and have created a market worth an estimated $30 billion a year. While scientists have dreamed for three decades about making more potent versions of plain antibodies, most efforts have fizzled, usually because the toxin broke off and floated in the bloodstream before it could get to the target, causing side effects.

Ambrx has been around since 2003 and has raised more than $106 million in venture capital to engineer protein drugs with new properties that can make them last longer in the blood, or enable them to carry those potent little toxins. But this was the year Ambrx amped up its effort to make so-called “empowered antibodies” that are sometimes called antibody drug conjugates. About one-third of Ambrx’s staff are now working on empowered antibodies, and half of the company’s resources are going toward antibodies, Kaldor says. One of the reasons is that pharma companies have seen the T-DM1 data and want to find a partner who can help them get in the game, too.

“It’s been amazing to see. T-DM1 is floating a lot of other boats,” Kaldor says.

He adds: “It’s been a long haul, but across the industry, people are coming to the realization that if they want to be in the second-generation antibody space, they have to do antibody-drug conjugates.”

One other company, Bothell, WA-based Seattle Genetics, has offered some more evidence to support the “empowered antibody” approach. That company (NASDAQ: SGEN) has produced some compelling data that its drug can cause complete remissions in Hodgkin’s disease patients. The data was strong enough that Seattle Genetics was able to retain 100 percent of the U.S. commercial rights to the drug, while enticing Millennium: The Takeda Oncology Company to pay $60 million in upfront cash for co-promotion rights in all countries except the U.S. and Canada.

“Seattle Genetics clearly had a lot of leverage,” Kaldor says. “People are really craving to get into the space.”

Ambrx doesn’t say much specifically about how this is really affecting its business. The latest …Next Page »

Luke Timmerman wrote:

Intellikine has only been cooking up new drugs in the laboratory for a little more than two years, and now its first candidate is being tested in human beings.

The San Diego-based biotech dosed the first patient in a clinical trial of INK128 just before Christmas Day, says Intellikine CEO Troy Wilson. The experimental drug, a once-daily pill, will be tested at a series of doses among cancer patients with a variety of solid tumors.

The Intellikine study is one to watch, because the company raised $28.5 million last July from a prominent group of investors who are betting it will become a strong competitor among companies seeking to block a hot target for cancer, the PI3 kinase. Intellikine is developing a vast portfolio of drug candidates that can block various types (known as isoforms) of this particular kinase. But Intellikine’s lead drug is actually aiming for target that operates a little further downstream, called TORC1 and TORC2. These are enzymes that are involved in sending signals vital to cell growth, proliferation, metabolism, and energy use, Wilson says.

There are already drugs on the market—Pfizer’s temsirolimus (Torisel) and Novartis’ everolimus (Affinitor)—that work by blocking the first enzyme, TORC1, but not the second, Wilson says. While those drugs have proven themselves and won FDA approval, Intellikine and other competitors like OSI Pharmaceuticals and AstraZeneca hope that if they can also shut down TORC2, they will block one of the escape valves that enables tumors to develop resistance to the anti-cancer drug, Wilson says. OSI and AstraZeneca are already in early-phase clinical trials, racing ahead of Intellikine’s drug, Wilson says.

“We’re not first. I wish we were. But sometimes it’s a good place to be when you’re a fast follower and you can learn things,” Wilson says.

Intellikine isn’t saying much about the clinical trial protocol for INK128, and I didn’t find a listing on clinicaltrials.gov. The trial will be conducted at Sarah Cannon Research Institute in Nashville, TN; Premiere Oncology in Scottsdale, AZ; and Vall d’Hebron University Hospital in Barcelona, Spain, Wilson says. The main goal will be to evaluate safety, and researchers hope to identify a maximum tolerated dose, Wilson says.

The field of PI3 kinases is still relatively young, so I spent some time with Wilson just trying to iron out some of the confusing nomenclature people use to figure out what’s really different here.

Wilson offered his view on three different classes he sees within the field. The first …Next Page »

Luke Timmerman wrote:

[Updated 6:05 pm Eastern 1/4/10] Biogen Idec, the world’s largest maker of multiple sclerosis drugs and an anchor of Boston’s biotech cluster, is looking for a new CEO. The Cambridge, MA-based company (NASDAQ: BIIB) said today that longtime CEO James Mullen is stepping down on June 8, and also will be relinquishing his seat on the board at this year’s annual meeting.

Mullen, 51, joined the company in 1989 as director of facilities and engineering, and rose through the ranks on the business side over the next two decades. He became vice president of operations in 1992, and then ran Biogen’s international operations from 1996 to 1999. He was named CEO and president of Biogen in June 2000, and he has held both of those titles since the 2003 merger with San Diego-based Idec Pharmaceuticals.

Mullen presided over a period in which Biogen emerged as the world’s largest maker of multiple sclerosis drugs and one of the biotech industry’s leading companies. But it has recently come under fire from billionaire investor Carl Icahn for failing to deliver investment returns on par with its biotech peers, and for its inability to introduce any new marketed products since natalizumab (Tysabri) was approved by the FDA in November 2004.

Pressure from shareholders wasn’t a factor in Mullen’s decision to step down, says Tim Hunt, Biogen’s vice president of communications.

“After more than 20 years at the company, he’s retiring,” Hunt says. “He feels it’s the right time for a transition in leadership.” He said Mullen has “a good working relationship” with the board, and that the timing is right, because “the situation with Tysabri has stabilized,” and the company is confident in its pipeline of experimental product candidates. Tysabri, the hit MS drug, has had a tortured history because of its link to a rare, and potentially fatal brain infection called progressive multifocal leukoencephalopathy (PML).

Mullen will continue to earn a prorated portion of his annual base salary of $1.25 million through June 8, and will collect a bonus worth 125 percent of his base salary, Biogen said in a regulatory filing. All of his unvested stock options will vest on his retirement date of June 8. If the company is sold before his retirement date, Mullen will collect a severance payment worth triple his annual base salary and target bonus.

Biogen has started a search for Mullen’s replacement, and he said he will help the new leader with the transition.

Mullen noted in a statement: “I have had the opportunity to work with many talented and dedicated colleagues over the past 21 years, and I am proud of all that we have accomplished together. With our strong product portfolio, pipeline, global presence and financial profile, the company is well positioned to continue to enhance the lives of patients and deliver value to its investors.”

[Updated 6:05 pm Eastern with CEO pay details.] Biogen has endured a tumultuous year at the top, which intensified last May when Icahn mounted a proxy fight, urging shareholders to oust directors for what he called “failed leadership.” It was a blistering attack on Biogen’s marketing, dealmaking, research and development, and management. In his May proxy filing, Icahn pointed out that Mullen sold $85 million worth of his shares in the company at an average price of $59 a share since the merger with Idec. He noted that Mullen was paid $60.8 million in total compensation, combining salary, bonus, and stock options over the preceding five years, while Biogen’s stock declined from $66.61 to $47.63 in that time.

Icahn’s arguments had some sway with shareholders, as he won two of the four seats he campaigned for last spring, and since then, four more directors have resigned or announced plans to resign.

Separately, Biogen announced that it has added Caroline Dorsa as a director who will fill a term that expires in 2011. Dorsa is chief financial officer of Public Service Enterprise Group, and a former senior vice president of Merck.

Shares of Biogen climbed 36 cents to $54 in after-hours trading following the announcements.

Luke Timmerman wrote:

Nobody would have guessed the seeds for one of Seattle’s most promising biotech companies were being planted just before Thanksgiving in 2003. That’s when Randy Schatzman had the depressing task of firing all 90 people who worked for him, and closing the doors at Celltech R&D in Bothell, WA.

Celltech’s headquarters back in the U.K. had decreed that research to discover new drugs was getting too expensive. Investors favored safer bets on treatments already in late stages of development.

But during those dark days, Schatzman and three other senior managers who worked together at Celltech had a different idea. None had ever started a biotech company. They didn’t have a lot of money or connections to venture capitalists. But they saw an opportunity to make antibody drugs that were more effective against disease, faster to develop, and cheaper to manufacture than anything on the market. And they knew they worked well together as a team. So they sketched out ideas out a few cocktail napkins at McMenamin’s bar and restaurant in Mill Creek, WA for a new company they called Alder Biopharmaceuticals.

Alder, as regular readers of this site know, burst onto the national biotech scene two months ago. The company, which is developing an antibody for rheumatoid arthritis and cancer, struck a deal with Bristol-Myers Squibb that brought in $85 million in upfront cash, as well as milestone payments that could be worth more than $1 billion over time. Alder’s lead antibody drug has completed a clinical trial of 120 patients with rheumatoid arthritis. While it hasn’t yet presented the results in a peer-reviewed scientific paper, they were compelling enough to clinch the Bristol deal, and set up a final-stage development plan designed to give Amgen’s breakthrough arthritis drug, etanercept, a “run for its money,” Schatzman has said.

That’s impressive for any startup biotech, but it’s astonishing for a company that had zero support from venture capitalists in its first 20 months, and was essentially bootstrapped by the founders. Altogether, Alder’s four co-founders ran up $1 million of expenses from their personal savings, time, and credit cards to launch their company on its current trajectory. None of those four guys took a dime in salary for those initial 20 months, until the first big venture round arrived in August 2005.

To hear Schatzman and another co-founder, Mark Litton, tell the story, they were only able to overcome those long odds against them because a village of people in Seattle biotech offered helping hands.

“This is a small biotech community, and everybody knows everybody. I really don’t think we could have done this anywhere but Seattle,” Schatzman says. …Next Page »

Luke Timmerman wrote:

Dicerna Pharmaceuticals has found some deep pockets to support its approach to creating RNA interference drugs. The Watertown, MA-based company is announcing today that it has formed an alliance with Japan-based Kyowa Hakko Kirin.

Under the deal, Kyowa Hakko Kirin will get access to Dicerna’s proprietary RNAi drug technology against one undisclosed target on cancer cells. In exchange, Dicerna will get $4 million in upfront cash, plus $120 million in milestone payments for success in development and commercialization, as well as royalties on future product sales. The partnership can be broadened over time to include as many as 10 more drug targets for cancer and other diseases, each with the same financial terms. Dicerna also has an option to co-promote and equally split the profits in the U.S. on the initial cancer drug.

This is the first significant partnership for Dicerna, a company founded in 2007 on the idea that it had found a “second doorway” of RNA interference. Like Cambridge, MA-based Alnylam Pharmaceuticals and others, Dicerna is seeking to specifically silence disease-related genes. One key difference is that Dicerna’s drugs are a little longer than so-called small interfering RNA molecules, and they interact with an enzyme called dicer that’s involved at an earlier step in the RNAi process. Kyowa Hakko Kirin has a long history of manufacturing and marketing biotech drugs in Japan, and it has its own internal teams devoted to RNAi research and development.

“They looked carefully at different siRNA opportunities for some time, and they chose this one,” says Dicerna CEO Jim Jenson. “They are committed to biotech, and they are a strong player in Japan.”

Dicerna still has a lot to prove about its method, as none of its treatments are yet in clinical trials. The partnership does provide cash that will enable Dicerna to add a few new faces to its staff of 23 employees, Jenson says. It also helps provide outside validation that should enable the company to raise a Series B venture round in 2010, which he expects will be worth …Next Page »

Luke Timmerman wrote:

Carlsbad, CA-based Life Technologies sells a bunch of stuff to biomedical researchers, but one market it has never tried to capture is the one for flow cytometers. These are common lab tools that can count and catalog large numbers of cells in a biological sample. They can be useful in many ways, including, say, looking to add up the number of certain white blood cells a patient produces when infected with HIV.

The big players who make these tools are firmly entrenched. Becton Dickinson, Beckman Coulter, and Millipore dominate a market worth an estimated $1.4 billion a year, which is still growing at an 8 percent annual clip. Now Life Technologies (NASDAQ: LIFE) is on a mission to grab some market share with a first-of-its-kind tool it calls the Attune Acoustic Focusing Cytometer. I got an overview of the product and the business strategy behind it from Nicolas Barthelemy, the company’s president of cell systems.

The idea for the product has its roots at the Los Alamos National Laboratory, which spun off Acoustic Cytometry Systems, a company Life Tech acquired in November 2008. The instrument is designed to work by channeling cells through a tube like any flow cytometer, with a laser-based detection device that measures the size and type of certain cells. But there’s one big difference. Current systems use water pressure to push cells through the detection point, while the Life Tech system uses a cuff that pumps in sound waves.

This means that scientists can dial up or dial down the sound pressure if they want to speed up or slow down the flow of cell. If you’re looking for an extremely rare kind of cell in the blood that might be an early predictor of disease, you could slow down the cell flow so that the laser is more likely to spot it. Or if the experiment needs to churn through and compare diluted water samples that may be contaminated, the new tool can speed up and handle the greater throughput, Barthelemy says. Mike Olszowy, head of flow cytometry at Life Technologies, told GenomeWeb Daily News last month that the new tool will be able to pull about 200,000 cells in approximately one minute—which can take 15 minutes on a traditional flow cytometer.

Barthelemy says Life Tech is hopeful this tool, and the consumable chemicals needed to operate it, will become popular enough to generate $100 million in annual sales by its third year on the market. At least in the beginning, Life Tech hopes to market the tool to scientists who don’t already use flow cytometers, offering them a product that is compact enough to fit on a lab bench, and costs less than $100,000, making it tens of thousands of dollars cheaper than the competition, Barthelemy says.

“We’ve broken the paradigm,” Barthelemy says.

The initial strategy isn’t to take on the big players on their home turf in the centralized, specialty labs that perform most flow cytometry experiments, Barthelemy says. The Life Tech tool is only …Next Page »

Luke Timmerman wrote:

MDRNA, the Bothell, WA-based company developing RNA interference technology, said today it has raised $1 million through a debt financing to ensure it has “sufficient resources” to meet its near-term goals of finding a partner or securing more financing in 2010. The company (NASDAQ: MRNA) said in a regulatory filing that it issued promissory notes at a 12 percent annual interest rate that come due on February 1, 2010 or possibly earlier. MDRNA also issued warrants to investors who may choose to buy more than 1 million shares of its stock at $1.02 a share over the next five years. MDRNA shares fell 8 percent on the news to 92 cents a share at 10 am Eastern time.

Luke Timmerman wrote:

Every day in 2009, I got out of bed and thought about how to create excellent, original stories for Xconomy Seattle. So did my brother-in-arms, editor Greg Huang.

We want Xconomy to be a source of original, in-depth, engaging content for you. We are always looking to dig up things about the local tech, biotech, and cleantech communities that you won’t find anywhere else. We know Xconomy is not your only source of news and information, but we want it to be your favorite source, on all kinds of innovation happening here in the Northwest. Every day of the work week.

So while Greg and I certainly do keep score on our unique visitors and page views, and we are proud of the growth in readership, that’s not what we think will set us apart over time. We will keep looking for excellent stories; unique stories; ones like the editor’s picks that I’m listing below. We hope you enjoy them, and maybe you’ll even turn us on to a few more exciting ideas and entrepreneurs in 2010.

The top seven technology stories:

“The Rise of Seattle’s High-Tech Cluster, As Told by Madrona’s Tom Alberg“

“From MIT Blackjack Team to Amazon Acquisition: The Lexcycle Story“

“Royalty Based Venture Financing, Born in Boston, Could Shake Up VCs and Startups from New England to the Northwest“

“A Tale of Three Cities: How Boston, Boulder, and Seattle Measure Up as Tech Innovation Hubs“

“Cray’s Comeback: CEO Peter Ungaro on Clouds, Exaflops, and the Future of Supercomputing“

“New Microsoft Board Member Maria Klawe on Bill Gates, College Students, & Seattle Innovation“

“Data Domain Founder, Kai Li, on EMC Acquisition and the Future of Data Storage“

“UW Computer Scientist Oren Etzioni on Startups, Venture Capital, and the Future of Web Search“

The top seven biotech stories:

“Dendreon Saga Heads Toward Climax as Cancer Drug Aims to Prove It Prolongs Lives“

“Born a Creationist, Merck’s Schadt Leads Open Source Effort to Unravel Genome“

“UW’s Protein Guru, David Baker, Eyes Alternative Biofuels, Vaccines in New 3-D Structures“

“Cell Therapeutics Teeters on the Brink as Cash Runs Out on Promising Cancer Drugs“

“Vertex Drug Could be ‘Man on the Moon’ for Cystic Fibrosis, Says UW Researcher Bonnie Ramsey“

“Clarisonic Skin Cleanser Cracks $40M in Sales on Kudos from Oprah and YouTube Beauty Queen“

“PATH, Fueled by Bill Gates’ Fortune, Builds Global Health Hothouse in Seattle“

The top four cleantech stories:

“Will Solar Ever Live Up to the Hype? Paul Allen, Vinod Khosla Bet on Infinia’s Sun Engines“

“The Washington Cleantech Cluster: The A-to-Z List of Alternative Energy Players“

“With Cash From Siemens and ArcelorMittal, Powerit Looks to Expand, Tap the Smart Grid“

“Green Car Company Rides Wave of Plug-In Hybrids, Battery Technology“

Luke Timmerman wrote:

This was the last week of 2009 that anybody could realistically get deals done, and quite a few did.

—Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI) secured a partnership to develop its experimental prostate cancer treatment with Israel-based Teva Pharmaceutical, the generic drug giant. OncoGenex pulled in $60 million in upfront cash, but investors objected to the deal when they learned that Carlsbad, CA-based Isis Pharmaceuticals will actually capture almost one-third of the future milestones and royalties that would otherwise go to OncoGenex.

—ZymoGenetics (NASDAQ: ZGEN), the Seattle-based biotech company, said it has regained full U.S. rights to recombinant thrombin (Recothrom) after its partner, Bayer, decided to walk away from the product in al markets except Canada. This drug has been a big disappointment in the marketplace, although CEO Doug Williams says the company still expects it to supplant a rival drug from King Pharmaceuticals as the dominant product for stopping excess surgical bleeding.

—Seattle-based Cell Therapeutics (NASDAQ: CTIC) found a way to survive a near-death experience in 2009, and now the board is offering up a potentially lucrative series of management bonuses if the company can hit a few more goals over the next couple years. The executives will certainly be in a much better position to cash in if they succeed in persuading an FDA advisory panel that the company’s treatment for non-Hodgkin’s lymphoma, pixantrone, should be cleared for sale in the U.S. That big day is now scheduled for February 10.

—VLST, the Seattle-based company seeking to discover new targets for drugs against autoimmune diseases, has cut an undisclosed number of jobs to preserve its cash. The company is still working to fill up the pipeline of drug candidates for its partner, Novo Nordisk.

—Seattle Genetics (NASDAQ: SGEN), the Bothell, WA-based developer of antibody drugs for cancer, put the capstone on a big year when it clinched a licensing deal with GlaxoSmithKline that brought in $12 million in upfront cash. GSK will use the Seattle Genetics technology for linking antibodies against an undisclosed number of targets to potent toxins.

—Oncothyreon (NASDAQ: ONTY) looked like a goner a year ago, …Next Page »