VentureBeat

Featured companies: Cerus, LabNow, Reliant Pharmaceuticals

UPDATED: Expanded items on Reliant Pharmaceuticals and Cerus.

GSK acquires Reliant Pharma for $1.65 billion — And then there were none. Reliant Pharmaceuticals, a Liberty Corner, N.J., specialty pharma that filed for an initial offering back in August, has instead decided to sell itself to GlaxoSmithKline for the eye-popping sum of $1.65 billion. The release is here. The acquisition news comes just days after doppelganger Reliant Technologies abandoned its own IPO bid (see our coverage here).

Although that sum is pretty large, it’s a mere 18 percent premium over the $1.4 billion market capitalization Reliant Pharma would have fetched had it priced at the top of its expected per-share range at $27. As we noted earlier — see our previous coverage here and here — Reliant is kind of a mixed bag insofar as specialty pharma companies go. It yanked an earlier attempt to go public back in 2005, and remains unprofitable despite pulling down $360 million in revenue for the first nine months of this year.

Reliant sells four unrelated cardiovascular drugs, the most significant of which is Lovaza, an omega-3 fatty-acid pill for people with high levels of triglycerides. Although GSK touts it as the only omega-3 supplement “clinically proven” to reduce triglyceride levels in adults with high triglycerides, it’s kind of hard to imagine that this really sets it apart from all the other omega-3 supplements you can find on the shelves of your local drugstore or supermarket. (Here at Chez Hamilton, we take the Costco house brand fish-oil supplement, which is plenty high in omega-3s, even if it hasn’t been “clinically proven” to reduce triglycerides. For Reliant’s song-and-dance as to why Lovaza is superior to fish-oil supplements, click here.) Yet Lovaza is exactly what GSK touts as its reason for dumping a billion-plus bucks of its shareholders’ money on this company.

Don’t think that Reliant has a secret weapon in its labs, either –because, you know, Reliant doesn’t really have labs. Like most specialty pharmas, it’s a bottom-feeder, acquiring drugs that no one else wants or can find a good use for. That can be a perfectly good business, and there’s no question that Reliant’s shareholders have done well in this transaction, but no one should mistake what companies like Reliant do for actual innovation. As for why GSK thinks this company is so valuable — well, chalk it up to desperation and the madness of crowds.

Cerus spins out venture-backed immunotherapy unit — Concord, Calif.-based Cerus is spinning off its cancer-vaccine program into a new, and as-yet unnamed, venture-backed company. The release is here.

Cerus will focus its own efforts on its Intercept blood-safety system, which theoretically neutralizes viral and bacterial pathogens in donated blood using a small molecule that binds to DNA or RNA and “cross-links” the molecules, rendering them incapable of replication. Intercept has had tough sledding in the U.S., but is approved in Europe.

Cerus didn’t identify backers of the new immunotherapy company, although it said David Cook and Thomas Dubensky have joined it as CEO and chief scientific officer, respectively. Cerus will retain a 16 percent interest in the new company, and is eligible for milestone payments of more than $90 million, plus royalties, should any of the new company’s vaccines pay off.

OTHER HEADLINES OF NOTE:

• Cerus spins out venture-backed immunotherapy unit (release)
• LabNow receives $20M for AIDS blood-analysis device (release)

For a few brief months earlier this year, Dendreon’s Provenge looked like it might become the first cancer vaccine approved by the FDA, despite some iffy data supporting its effectiveness. The fate of Provenge now hangs in the balance following the FDA’s controversial decision to ask for additional data. But that hasn’t stopped Bellicum Pharmaceuticals from trying to improve on the work of its forbear.

(One quick note: Merck’s Gardasil and similar vaccines, which are frequently referred to as “cancer vaccines,” aren’t, really. These vaccines do what vaccines have always done, which is boost the body’s defenses against infection — in this case, by the human papilloma virus, which can cause cervical cancer. These vaccines don’t attack tumors directly.)

Cancer vaccines really don’t get much respect these days, after a series of high-profile failures and disappointments. The idea is simple enough: Use proteins unique to tumors to “train” the immune system so that it recognizes and attacks tumors, which normally skate past the body’s defenses like groupies waving backstage passes at a bouncer. But no cancer vaccine has ever worked unequivocally in human trials, as Dendreon’s experience with Provenge shows. At least Dendreon is still chugging along, though: Several other companies have gone down the tubes when their vaccines didn’t work, including all-but-forgotten names like CancerVax and Therion Biologics.

Enter Bellicum, a Houston biotech whose Latin name roughly translates as “call to war,” and whose strategy puts an interesting genetic twist on the basic notion of a cancer vaccine. (See our previous coverage in the sixth item here.) Like Dendreon, Bellicum’s basic strategy relies on dendritic cells, which are workhorses of the immune system that activate other defensive cells and teach them how to recognize invaders. (Tumors usually evade this system because, to the body’s watchdogs, they pretty much look like any other normal cell.)

To make Provenge, Dendreon extracts dendritic cells from a patient, marinates them with a protein “antigen” (that is, a molecule that stimulates an immune response) specific to prostate tumors, then re-infuses them into the patient. Theoretically, these newly primed dendritic cells will next begin recruiting an immune-cell army ready to have it out with any tumor cells they might encounter. Whether Provenge actually works or not, however, won’t really be known until an ongoing 500 patient trial produces some data, perhaps as early as next year.

Scientists at Houston-based Bellicum, however, think that process still has a number of shortcomings. Activated dendritic cells typically shut themselves off after about 24 hours and then die off another day later, limiting their ability to properly stimulate an immune response. That led a Baylor research team led by David Spencer — who is now also Bellicum’s chief scientific officer — to look for ways to either prolong that activation period or to “toggle” it so that the cells spent their entire activated lifetime in the lymph nodes, which are hotbeds for triggering immune reactions.

Those researchers focused on a dendritic-cell receptor protein — imagine sort of a docking port on the cell surface — called CD40, which is a sort of control switch for the dendritic-cell immune response. Normally, CD40 is only “switches on” when a dendritic cell docks with a particular type of T cell. The Baylor researchers, however, figured out how to genetically engineer a version of CD40 that could be switched on remotely by administering a particular drug molecule. If you’re interested, that team explained its work in a 2005 Nature Medicine paper that I’ve uploaded here (PDF).

The upshot of all this is that — theoretically, at least — Bellicum should be able to expose a patient’s dendritic cells to tumor antigens, genetically modify their CD40 receptors, return them to the patient and then switch them on once they’ve returned to the lymph nodes, thereby maximizing the dendritic-cell immune-stimulating effect. The process would look something like this:

To summarize, this slide shows dendritic cells (DCs) returned to the patient after modification and exposure to tumor antigens, where they migrate to the lymph nodes and activate killer T cells (formally known as cytotoxic T lymphocytes, or CTLs), which specialize in taking out infected cells. Here, the killer cells swarm tumors and destroy them. In theory, of course.

Bellicum says the system has worked well in animals and in laboratory tests using human dendritic cells, although it hasn’t yet tried the vaccine in humans. The company, however, hopes to move into early-stage tests in prostate-cancer patients by early next year.

Of course, no one knows if the strategy will work any better than other cancer vaccines, and there are certainly grounds for skepticism. There are an awful lot of moving parts in Bellicum’s vaccine-production process, which of course increases the chance that something unexpected will go wrong. What’s more, the immune system has a tendency to outfox even the most sophisticated attempts at manipulating it. Still, when in comes to opening up new avenues in the struggle against cancer, any attempt to refine what has so far been a disappointing strategy should probably be welcomed.

Featured companies: 20/20 GeneSystems, Bellicum Pharmaceuticals, Cumbre Pharmaceuticals, Dara BioSciences, Enterprise Partners Venture Capital, Fermentas, International, Iasis Medical, New Leaf Venture Partners, Point Therapeutics, Power Medical Interventions, Rules-Based Medicine, Spinal Restoration, Still River Systems, Targanta Therapeutics

(UPDATED: See below.)

[NOTE: In the interests of getting items up as quickly as possible, I'm going to begin posting linked headlines, which I'll subsequently flesh out in many -- but not all -- cases. As the news gets heavier, the briefing is taking longer and longer to put together, to the point where I sometimes don't have much time to write about anything else. Feel free to let me know in comments how well this works for you.]

Spinal Restoration raises $16M for disc augmentation — Spinal Restoration, an Austin, Tex., developer of an implantable material designed to treat lower back pain, raised $16 million in a second funding round. Investors included Santé Health Ventures, MB Venture Partners, Austin Ventures and Path4 Ventures.

The startup is working on a filler biomaterial for ruptured spinal discs. This fibrin sealant, which is derived from human sources, is designed to be injected into ruptured discs in order to seal internal fissures and to prevent the leakage of the disc’s contents, potentially in a way that could encourage further healing. If it works, the process could potentially replace spinal fusion for patients whose injuries don’t respond to rest and physical therapy.

Antibiotic maker Targanta becomes latest disappointing biotech IPO — The Cambridge, Mass., developer of an in-licensed antibiotic for drug-resistant infections priced its IPO below its expected range, then saw its newly listed shared decline in early trading. Targanta priced as many as 5.8 million shares at $10 apiece, below its $12 to $14 range (see our coverage), raising the company a maximum of $57.5 million — down considerably from the $92.6 million it had hoped for.

Following the listing, Targanta’s shares dropped almost immediately, and by early afternoon were trading at $9.35, down 65 cents, or 6.5 percent.

I raised concerns about Targanta’s strategy here (capsule version: The company’s antibiotic Oritavancin faces a slew of competition and hasn’t even been tested in-house, as Targanta licensed it at a late stage from another company). Now it looks as though investors may have harbored similar reservations.

Power Medical sets IPO terms, aims to raise up to $62M for computer-assisted surgical instruments — Power Medical, a Langhorne, Pa., developer of computer-assisted surgical tools, said it would price up to 4.4 million shares at $12 to $14 apiece, which would allow it to raise as much as $61.6 million. Its SEC filing is here.

The company’s latest plans amount to a significantly smaller IPO than the $100 million offering it had initially contemplated. We last wrote about Power Medical’s IPO plans here.

Tularik spinoff Cumbre Pharma raises insider financing for anti-infective drugs — Dallas-based Cumbre Pharmaceuticals, a specialty pharma developing new anti-infective drugs, raised a new funding round from individual investors. Terms of the transaction weren’t disclosed.

Cumbre spun out of the former biotech Tularik (since acquired by Amgen) in 2001. It is focused on developing “hybrid” antibiotics formed by fusing together individual antibiotic compounds in hopes of producing more potent drugs that can take on microbes resistant to current antibiotics. Its lead compound, CBR-2092, has completed early-stage human trials, and is intended to attack drug-resistant staphylococcus infections.

Investors in the round included a number of prominent individuals in the life sciences. Among them were Tularik co-founder David Goeddel, Tularik and Cumbre co-founder Steven McKnight, Xenoport president William Rieflin, and former EDS president Morton Meyerson.

New Leaf Venture Partners raises $450M healthcare fund — New Leaf, a bicoastal VC firm with offices in New York and Menlo Park, Calif., raised $450 million for a new healthcare-technologies fund. The firm intends to target later-stage biotech and specialty pharma companies, early-stage medical-device developers, and new molecular diagnostics.

Bellicum Pharma draws in $3.8M for cancer vaccines — Bellicum Pharmaceuticals, a Houston biotech aiming to develop cancer vaccines, drew in $3.8 million in seed funding and a grant from the state of Texas. The company pulled in seed funding of $2.3 million from local angel investors; the $1.5 million grant was awarded by the state’s Emerging Technology Fund.

Bellicum is developing a therapeutic vaccine against prostate cancer that is designed to turn the body’s own immune-system defenses against tumors. (Dendreon, whose Provenge vaccine has been in the news over the past several months, is taking a similar approach.) The new wrinkle in Bellicum’s approach is that the company genetically modifies dendritic cells, which help direct immune responses against invaders in the body, so that they can be “activated” at a particular time and in a particular location in the body by applying a triggering chemical. There’s more here.

Other headlines of note:

• Dara BioSciences goes public with Point Therapeutics merger (release)
• Genetic Immunity raises $2M in bridge financing for HIV immunotherapy
• Rules-Based Medicine acquires EDI (release), wins $1.1M federal contract (release)
• 20/20 GeneSystems receives $2M NIST contract for tumor profiling (release)
• Summit Ventures invests in genomic-tools provider Fermentas (PDF release)
• Proton-therapy company Still River Systems raises $6.9M (PE Hub)
• Enterprise Partners suspends newest life-sciences fund (PE Hub)
• Iasis Medical raises $1.5M for undisclosed medical devices (PE Hub)

UPDATE: Expanded Targanta, Power Medical, Cumbre, New Leaf, and Bellicum items.
UPDATE REDUX: Corrected a typo in the Power Medical IPO data.

House-Senate confrontation set over biogenerics – Late last month, a key group of senators reached agreement on legislative provisions that would authorize copycat versions of biotech drugs, which are typically complex proteins manufactured by genetically engineered cells (see details here and here). These provisions would finally put biotech drugs — which don’t face cut-rate competition once their key patents expire — on a par with traditional pharmaceuticals, and have been a long time in coming. They’re not perfect, but they’re about as good a compromise as we’re likely to see any time soon..

The catch is that biogenerics supporters want to attach this langauge to a reauthorization of the FDA’s user-fees act, the awkwardly named PDUFA, which has to pass by September to keep the FDA operating smoothly. The Senate’s version passed in May, whereas the House just approved its version yesterday — but didn’t include a biogenerics pathway. The senators want to add it to their version of the bill, which has to be reconciled with the House version in a conference committee. But key House members, including Energy and Commerce Chairman John Dingell, a Michigan Democrat, appear likely to object, since they haven’t had a chance to weigh in on the provision.

The upshot: Turf wars between the houses of Congress may cost us our best shot at biogenerics legislation in some time. Tying the measure to PDUFA would be one of the best ways to sidestep legislative roadblocks that opponents and their biotech/pharma backers are likely to throw up — but the window is closing rapidly. The WSJ has more here.

Digital medical records are good for your health — or are they? One of the strongest arguements for digitizing medical records is that they’ll help prevent medical errors and improve medical care. A recent review of other studies in the journal Health Services Research gave digitized records a strong vote of confidence when it found that hospitals that switched to electronic drug-ordering systems saw a 66 percent drop in medication errors. (Such mistakes apparently kill 500,000 U.S. hospital patients every year.) Similarly, a report from the Pharmaceutical Care Management Association predicts that electronic prescribing could save Medicare as much as $29 billion over the next two years while preventing two million medication errors.

As with any technology, however, electronic records are no panacea. Another study of walk-in doctor visits found no improvement in treatment quality among practices that used electronic medical records versus those that still relied on paper. The study’s conclusion: Implementing digitized records is just the first step — doctors and medical groups still need to do a lot of work to get the most out of them.

On a related note, a Senate committee recently passed legislation that would offer subsidies to convince doctors to install digital health-record systems.

RNAi is hot, hot, HOT — Once again, it’s boom times for a new drug technology, and this time the spotlight is on RNA interference — a fascinating but largely unproven method for turning off individual genes by using a short stretch of double-stranded RNA to activate ancient gene-silencing machinery inside cells.

The party really got started last year, when Merck paid $1.1 billion to acquire Sirna Therapeutics, a fledgling RNAi company that had barely managed to move a single drug into an early-stage trial. Now things have heated up even further. Last Friday, AstraZeneca struck a $400 million deal with Silence Therapeutics. Then on Tuesday, Roche stepped up to forge a $1 billion deal with Alnylam, an early pioneer in the area.

What’s worth remembering is that no matter how promising a technology like RNAi seems, putting it to practical use almost always takes far longer and costs more than people expect in the early stages. Just take a look at the roll call of other drug technologies that have undergone similar cycles of hype and disappointment — gene therapy, antisense, therapeutic vaccines. All remain promising — but none of them worked the first time out of the gate. Even monoclonal antibodies took close to two decades before anyone could make a reasonable drug with them. Maybe RNAi will be different — but I wouldn’t bet my wallet on it.

Have cancer vaccines gotten a raw deal? A paper in Clinical Cancer Research (described here) argues that regulators and companies may be too quick to dismiss clinical-trial results if they focus on tumor shrinkage rather than long-term outcomes like survival. That may well be true, as tumor shrinkage is a notoriously bad measure of whether drugs work or not, although it’s also worth noting that a reconsideration still wouldn’t have helped Dendreon’s Provenge vaccine, since its survival data was so statistically equivocal. (Separately, the SEC has now opened an informal inquiry into Dendreon’s public disclosures about Provenge this year.)

DNA transplant “transforms” microbial species – J. Craig Venter’s group at his eponymous institute takes the honors, described here in the WaPo. Next up: Transferring an entirely synthetic genome into a DNA-less microbe to create “artificial life,” something Venter says may happen within months. Similarly, here’s the NYT on the new science of “synthetic biology.” Brace yourselves.

Does “pay for performance” improve medical care? A few weeks ago, the WSJ said no, citing a Medicare experiment. Today, the NYT says yes, citing… a Medicare experiment! I’ll have more to say once my head stops hurting.

Pre-implantation genetic diagnosis may harm fertility – Or so say the authors of a Dutch study described by the WSJ here. Several researchers seem to think the results need to be verified elsewhere before abandoning the procedure, in which a single cell is extracted from an IVF embryo for genetic analysis.

Stem cells tailor their own environments — At least according to Canadian researchers, who explored the specifics of how embryonic stem cells communicate with the cells around them. The Globe and Mail has the story.

Simple enzyme short-circuits bacterial drug resistance – Basically, it prevents bacteria from swapping the genes that confer resistance to antibiotics.

High-throughput output –

• Vermont sets up a Web site comparing pharmacy drug prices (Kaiser)
• Researchers discover molecule that may promote food allergies (BBC)
• Breast-cancer risk genes may not influence survival (WSJ)
• Congressional Democrats want to know who muzzled the former surgeon general (Bloomberg)
• Scientists identify gene linked to autism (BBC)
• Robotics help stroke patients regain function (NYT)

(NOTE: This item originally incorrectly stated that J. Craig Venter’s company, Synthetic Genomics, was involved in the research that transplanted one microbe’s genome into another. In fact, it was Venter’s own research institute, the J. Craig Venter Institute.)