VentureBeat

TODAY’S HEADLINES:

• VaxGen, Raven Bio terminate merger agreement (release)
• Aerovance gets $20M in venture debt for respiratory disease (release)
• EKOS raises $5M for ultrasound catheters (peHUB)
• Intelligent Bio-Systems draws $353K for high-speed genome sequencing (peHUB)
• Quintessence Bio takes in $5M for cancer-directed proteins (VentureWire)
• 7 Health Ventures adds three members to investment team (release)
• Contract manufacturer Cytovance names Darren Head CEO (release)

VaxGen, Raven Bio terminate merger agreement – A weirdly structured, always hard-to-understand merger between the failed vaccine biotech VaxGen and startup Raven Biotechnologies has collapsed. The two companies called off the combination after it became clear that a majority of VaxGen shareholders would reject it.

The deal aimed to create a new company out of VaxGen’s cash holdings and biomanufacturing facilities and Raven’s antibody-drug program, which remains at an early stage of development. The merger would also have given Raven a quick route to public listing of its stock. Both companies are located in South San Francisco, Calif.

But many VaxGen shareholders — in particular, the investment firm MedCap Management & Research, which waged a sharp effort to derail the deal — believed the deal undervalued VaxGen, which they figured would yield a better return to investors through liquidation. VaxGen, a once pioneering maker of experimental vaccines against HIV and anthrax that is now little more than an empty shell, said it would immediately assess its strategic alternatives, including possible liquidation.

Aerovance gets $20M in venture debt for respiratory disease – Aerovance, a Berkeley, Calif., developer of asthma and eczema drugs, took on $20 million of venture debt. The startup drew down $10 million of that sum at closing; the rest will become available once it achieves unspecified milestones.

A syndicate of lenders provided the funding, including Oxford Finance Corporation, Silicon Valley Bank and Comerica Bank. Aerovance, which spun out of Bayer Pharmaceuticals in 2004, said the funding would enable it to continue looking for a drug-company partner for its asthma drug and to pursue other “strategic goals.”

EKOS raises $5M for ultrasound catheters – EKOS, a Bothell, Wash., maker of ultrasound-enhanced drug-delivery systems, raised $5 million in new equity funding, peHUB reports, citing a regulatory filing. No investors were disclosed. As we wrote last June when the company raised $10 million in venture debt, EKOS makes catheters that use both drugs and ultrasound to break up blood clots.

Intelligent Bio-Systems draws $353K for high-speed genome sequencing – Waltham, Mass.-based Intelligent Bio-Systems raised $353,000 in a first funding round, peHUB reports, citing a regulatory filing. The company is developing next-generation DNA analysis systems and promises to deliver technology that can sequence a full human genome for just $5,000 in about 24 hours, as we described earlier.

Featured companies: CG Therapeutics, Complete Genomics, ConforMIS, Flexible Medical Systems, LeMaitre Vascular, MAP Pharmaceuticals, ParaPro, Vascular Architects, Zars Pharma

(UPDATED on 10/1/07: See below.)

[NOTE: Posting has been slow recently for personal reasons. I'll be doing my best to catch up today.]

Complete Genomics raises funding for high-speed sequencing — Complete Genomics, a Mountain View, Calif., developer of high-speed genome sequencing technology, said it raised an undisclosed sum in a second funding round, VentureWire reports (subscription required). The company said the funding was significantly larger than its $6 million first round last year, but declined to say by how much. Investors included OVP Venture Partners and Enterprise Partners Venture Capital.

Complete Genomics is one of several companies aiming to bring down the cost of genome sequencing in order to, among other things, eventually make it possible for individuals to base medical and lifestyle decisions on their individual genetic profiles. The company, founded in 2005, hasn’t disclosed many details about its technological approach, although its Web site vaguely describes it as “a novel combination of high-density DNA nanoarrays, sequencing-by-hybridization and combinatorial probe-ligation chemistry, and high-performance computing techniques.”

The high-speed sequencing market has been in a state of flux recently. Cambridge, Mass.-based Helicos Biosciences, went public in May. Solexa, a U.K.-based sequencer that later moved to the U.S., also went public in 2005 via a reverse merger and then was acquired earlier this year by Illumina. 454 Life Sciences was acquired by Roche earlier this year. VentureWire also lists Pacific Biosciences as a recent venture-backed sequencing company.

UPDATE: Complete Genomics announced an interesting new joint venture with BioNanomatrix of Philadelphia ten days after this funding; see our coverage here.

MAP Pharma prices IPO, looks to raise $92M — Mountain View, Calif.-based MAP Pharmaceuticals said it plans to price its initial-offering shares at $14 to $16 apiece, a range that could potentially raise $92 million. That’s up from the $86 million take MAP estimated in June (see our coverage at the time).

MAP makes reformulated versions of existing drugs for delivery via inhalers. Its lead candidate is a new inhaled version of budesonide, a corticosteroid used to treat pediatric asthma.

Implant maker ConforMIS ponders new funding, possible IPO — ConforMIS, a Lexington, Mass., medical-device company, is raising a “mezzanine” round of financing while it plans for an IPO within two years, VentureWire reports. The company, which makes personalized knee implants, raised a $10 million “debt facility” in August (see our coverage in the second item here).

LeMaitre acquires Vascular Architects for $2.8M — LeMaitre Vascular, a publicly traded maker of devices and implants for vascular surgery based in Burlington, Mass., acquired venture-backed Vascular Architects of San Jose, Calif., for $2.8 million in cash. Vascular Architects makes devices for the removal of plaque deposits that can clog arteries and cause life-threatening blood clots. The company had previously raised more than $42 million in equity and $5 million in debt, according to VentureWire.

Lice-drug maker ParaPro gets $2.1M grant — ParaPro, a Carmel, Ind., specialty pharmaceutical company developing a topical cream for treating head lice, received a $2.1 million grant from Indiana’s 21st Century Research and Technology Fund. The company said the funding will finance late-stage trials of its lice treatment, which it calls Spinosad.

CG Therapeutics names Christopher Henney chairman, seeks funding — Chris Henney, who co-founded three of Seattle’s most successful biotechs — Immunex, Icos and Dendreon — is now also the new chairman (PDF link) of CG Therapeutics, a new cancer-vaccine company in Seattle. The company said Henney will play a key role in lining up corporate partners and seeking new funding. CG Therapeutics is currently working on a first funding round intended to support mid-stage trials of its cancer vaccine in lung and colon cancer.

Zars Pharma delays IPO — Salt Lake City’s Zars Pharma, a developer of topical drugs, postponed its IPO until next week. Zars priced its IPO at $14 to $16 a share in August, and was slated to hit the market this week. See our previous coverage here and in the third item here.

At that, Zars is in far better shape than Cumberland Pharmaceuticals, which has been expected to go public on a day-to-day basis since mid-August. We last wrote about Cumberland here.

Flexible Medical Systems raises $1.2M for remote diagnostics — Rockville, Md.-based Flexible Medical Systems, a device and diagnostics maker focused on non-invasive devices that continuously monitor vital signs, raised $1.2 million in a seed financing. “Accredited investors” provided the funding.

FMS is developing diagnostic monitors that continuously draw “interstitial fluid” through the skin without a needle or other punctures. This fluid can theoretically be used to monitor protein levels in blood, although it’s also worth noting that other attempts to do this sort of thing — especially continuous blood-sugar monitoring for diabetics — have had a mixed history.

(UPDATED at 5:55pm PT: See below.)

Featured companies: Sierra Surgical Technologies, HerbalScience Nutraceuticals, Topigen Pharmaceuticals, EKR Therapeutics, Molecular Partners, Celsense, Glucose Sensing Technologies, Falcon Genomics, Waters, Calorimetry Sciences, Parion Sciences, Gilead Sciences, Isto Technologies, Fluidnet, NABsys

Sierra Surgical raises $7.1M — Palo Alto, Calif.-based Sierra Surgical Technologies, a developer of female sterilization technology, raised $7.1 million in a first funding round, PE Hub reports, citing a regulatory filing. Alta Partners and De Novo Ventures provided the funding.

Singapore’s HerbalScience raises $28M for natural extracts — HerbalScience Nutraceuticals, a Singapore-based natural-extracts company with offices in Naples, Fla., raised $28 million from the private-equity firms Aisling Capital and Weston Presidio, VentureWire reports (subscription required). The investment purchased a 25 percent stake in HerbalSciences, which makes purified extracts from various natural substances, valuing the company at $112 million.

Topigen Pharma pulls in $25M against lung disease — Montreal’s Topigen Pharmaceuticals, a biotech developing inhalable drugs to treat asthma and other lung diseases, raised $25 million (C$26 million) in a third funding round. Investors included NovaQuest, MMV Financial, BDC Venture Capital, Desjardins Venture Capital, Caisse de Dépot et Placement du Québec (Caisse), T2C2/BIO 2000 and Lothian Partners 27 (sarl) SICAR.

The funding will “accelerate” mid-stage human trials for Topigen’s leading drug candidates, a small-molecule treatment for chronic obstructive pulmonary disease and an RNA inhibitor for asthma.

EKR receives over $13M, licenses opiod drug — EKR Therapeutics, a Cedar Knolls, N.J., specialty pharmaceutical company, raised more than $13 million in a private placement. Investors included Quaker BioVentures, NewSpring Capital, and ESP Equity Partners. EKR also acquired rights to DepoDur, an extended-release opioid, from Pacira Pharmaceuticals.

Switzerland’s Molecular Partners gets $15.6M for novel binding proteins — Zurich-based Molecular Partners, a biotech developing drugs based on a new class of binding proteins, raised $15.6 million (CHF18.5 million) in a first funding round. Investors included Index Ventures, BB Biotech Ventures, Johnson & Johnson Development Corp. and Endeavour.

Molecular Partners is focused on developing therapeutics proteins it calls “DARPins,” which the company says offer the same ability to stick selectively to other molecules as monoclonal antibodies, but with greater stability and ease of manufacturing. DARPins are based on the notion of “repeat proteins,” which as the name suggests are modular proteins that contain repeated elements — something like posts spaced at regular intervals along a barbed-wire fence. (See the image at left.) The protein itself ends up looking something like a string that’s been knotted at regular intervals, only much more complicated.

Repeat proteins are found in almost all species, and in nature serve to bind other proteins in order to facilitate protein-protein reactions. By shuffling the modular elements in these proteins, they can be engineered to stick to specific molecules such as cell-surface proteins, potentially making them useful as drugs. The company has a more detailed description here.

Although Molecular Partners likes to play up the advantages of DARPins (the acronym stands for “designed ankyrin repeat proteins”) over antibodies — here, for instance — there are a few disadvantages the company doesn’t mention. As large molecules, DARPins most likely won’t get inside cells, limiting their potential as drugs to interactions with free-floating and cell-surface proteins. (Monoclonal antibodies have the same limitation.) Potentially more important, however, is the fact that the effectiveness of many antibody-based drugs results from their ability to stimulate a particular immune response, not just to stick to the appropriate target. DARPins, which aren’t immune-system molecules the way antibodies are, seem unlikely to do the same.

Pittsburgh-area biotechs, device makers get $350K — The Pittsburgh Life Sciences Greenhouse, a public-private life-sciences investment partnership, invested $350,000 in three Pittsburgh-area life-science startups. Falcon Genomics, a developer of chip-based cancer-detection diagnostics, received $150,000. Another $100,000 went to Celsense, which uses an MRI tracing agent to image transplanted cells. The final $100,000 was invested in Glucose Sensing Technologies, which is developing a catheter-based glucose sensor for continuous blood-sugar monitoring in intensive-care units.

Waters acquires Calorimetry Sciences — Milford, Mass.-based Waters, a laboratory-instrument maker, acquired Calorimetry Sciences of Linden, Utah. Terms of the deal weren’t announced. Calorimetry Sciences, which makes high-performance devices intended to measure the heat produced or absorbed by chemical reactions, will be merged into Waters’ TA Instruments division.

Fedora Commons wins $4.9M grant for open collaboration software — Fedora Commons, a non-profit organization devoted to open-source technologies for creating and sharing digital content, received a $4.9 million grant from the Gordon and Betty Moore Foundation. From the release:

With this funding, Fedora Commons will foster an open community to support the development and deployment of open source software, which facilitates open collaboration and open access to scholarly, scientific, cultural, and educational materials in digital form. The software platform developed by Fedora Commons with Gordon and Betty Moore Foundation funding will support a networked model of intellectual activity, whereby scientists, scholars, teachers, and students will use the Internet to collaboratively create new ideas, and build on, annotate, and refine the ideas of their colleagues worldwide. With its roots in the Fedora open-source repository system, developed since 2001 with support from the Andrew W. Mellon Foundation, the new software will continue to focus on the integrity and longevity of the intellectual products that underlie this new form of knowledge work. The result will be an open source software platform that both enables collaborative models of information creation and sharing, and provides sustainable repositories to secure the digital materials that constitute our intellectual, scientific, and cultural history.

Parion licenses lung-disease drug to Gilead for up to $146M — Parion Sciences, a Durham, N.C., biotech focused on diseases of the mucous membranes, struck a licensing and co-development deal with Gilead Sciences for its drug P-680 worth up to $146 million. The drug, an epithelial sodium-channel inhibitor, could potentially be useful in a variety of lung diseases, including cystic fibrosis. The companies will also work to identify other similar drug candidates.

Isto Tech raises $8.8M, prepares to launch synthetic bone grafts — St. Louis’ Isto Technologies, a developer of cell-based cartilage and bone regeneration technology, raised $8.8 million in a fifth funding round as it prepares for its first product launch, VentureWire reports. Investors included Ascension Health Ventures, Alafi Capital, Life Sciences Partners, Mid-America Transplant Services and private individuals. Isto’s leading product, InQu, is a synthetic biomaterial intended to help tissues heal and bones to regenerate; Isto expects FDA approval later this year.

Fluidnet rises from ashes, raises $6.4M for IV pumps — Portsmouth, N.H.-based Fluidnet, a “reincarnation” of its bankrupt predecessor FluidSense, raised $6.4 million in a first funding round to launch a new intravenous-infusion pump next year, VentureWire reports. Cardinal Partners and Rockport Venture Partners provided the funding.

NABsys raises $750K for high-speed genome sequencing — NABsys, a Providence, R.I., startup focused on high-speed gene-sequencing technologies, raised $750,000 in seed funding, VentureWire reports. Slater Technology Fund and individual investors provided the funding, which closely follows a $1.3 million grant from the National Institutes of Health.

UPDATE (10:55am PT): Added items on Molecular Partners and the Pittsburgh Life-Sciences Greenhouse investments.

UPDATE REDUX (5:55 pm PT): Added items on Waters/Calorimetry Sciences, Fedora Commons, Isto Technologies, Fluidnet, NABsys.

MAP Pharmaceuticals, a Mountain View, Calif., developer of reformulated drugs for inhalation, filed to raise up to $86 million in an initial public offering. The company’s registration statement with the SEC is here.

MAP is the latest drugmaker to brave the IPO waters, which have been markedly unfriendly for pharmas and biotechs in recent months. The much-anticipated Jazz Pharmaceuticals IPO, for instance, was marked down twice, and even then the company’s shares traded down following the offering. Others, such as Aegerion Pharmaceuticals and Perlegen Biosciences, have simply withdrawn their planned IPOs.

MAP is focused on new versions of old drugs for asthma and migraine headaches. Its lead candidate is a form of budesonide, which is already marketed as an asthma drug delivered via nasal inhaler.

Asthmatx, a Mountain View, Calif., developer of a bronchial device for asthma treatment, raised $50 million by selling a 15% stake to Olympus Medical Systems, a unit of Japan’s camera and precision-device maker Olympus.

Last October, Asthmatx withdrew an IPO at the last minute, citing a desire to pursue “alternative strategic options” — that is, better offers. And it seems to have found one; Dan Primack at PE Wire figures that Asthmatx’s current $280 million pre-money valuation is close to twice what it would have been in the planned IPO.

Asthmatx makes an experimental device that uses heat to thin smooth-muscle tissue in the airways of asthmatic patients, with the aim of inhibiting the muscular contractions typical of an asthma attack. (The company gently refers to this process as “delivering controlled thermal energy” to the airway’s smooth muscle.) Known formally as bronchial thermoplasty, the technique involves a catheter and a small heatable wire “basket” that a physician can extend into the airways of the lungs. Patients are sedated during the procedure, but don’t have to be hospitalized.

In March, a team of doctors funded by Asthmatx reported in the New England Journal of Medicine that bronchial thermoplasty with the company’s Alair device appeared to reduce the frequency of asthmatic attacks compared to a control group. That study, however, is difficult to interpret, as a significant number of patients dropped out during a “washout” period in which they had to give up their asthma medications for two weeks prior to the onset of treatment. The researchers also cautioned that thermoplasty “may increase the potential for a strong placebo effect,” which of course would make it difficult to know how much the treatment actually helped patients.

Asthmatx had previously raised $42.5 million in venture funding from a number of backers, including Polaris Venture Partners, Menlo Ventures, Vanguard Ventures, HBM BioCapital, MedVenture Associates, Boston Scientific and Montreux Equity Partners. A release of sorts on the funding is here; VentureWire has more here (subscription required).