VentureBeat

Featured companies: BioMicro Systems, Diasome Pharmaceuticals, FitLinxx, FitSense, Novartis, Radius Health

[NOTE: This is a catchup briefing, posted on 9/29/07. I’ve adjusted the item’s timestamp to keep the briefings in chronological order. Good news is that this should be the last one. –D.P.H.]

Diasome names new CEO, aims to raise $15M for nanotech diabetes drugs — Diasome Pharmaceuticals, a Conshohocken, Pa., biotech focused on nanotech drug delivery, named David Tierney as its new CEO and is close to raising $15 million in a combination of bridge and second-round financing, VentureWire reports (subscription required).

Tierney was most recently CEO of Valera Pharmaceuticals, and previous served as an executive at both Biovail and Roberts Pharmaceutical, a unit of Shire. He takes over from Diasome founder Len Rosenberg, who remains president and COO.

Diasome has already raised most of its bridge funding, but declined to tell VentureWire how much it sought. BioAdvance Ventures and various individuals provided that funding. The remainder of the $15 million should be wrapped up by the end of the year. Diasome makes nanotech particles designed to deliver drugs directly to liver cells, with the specific intent of treating diabetics by shuttling insulin specifically to the organ primarily responsible for regulation of blood sugar.

Radius Health adds $10M, strikes Novartis deal for osteoporosis — Cambridge, Mass.-based Radius Health licensed an osteoporosis drug candidate to Novartis in a deal worth up to $500 million. At the same time, the company raised an additional $10 million in third-round funding from Novartis via a fund managed by MPM Capital. The company’s release is here (PDF).

The drug in question, BA058, is a synthetic version of human parathyroid hormone-related protein, a key molecule for promoting bone growth. It is currently in mid-stage human testing for osteoporosis. VentureWire has more here.

Exercise-data firm FitLinxx acquires FitSense — Venture-backed FitLinxx, a Norwalk, Conn., developer of exercise-tracking devices, agreed to acquire FitSense, a Southborough, Mass., maker of wireless health-data technology. Details of the acquisition weren’t disclosed; the release is here.

BioMicro Systems draws $1.7M for microfluidic devices — The Salt Lake City company called down $1.7 million of a $2 million second round of funding, PE Hub reports, citing a regulatory filing. From PE Hub:

Shareholders include vSpring Capital and Glen Arden Associates. The company developers microfluidic biochip technologies for genomics, proteomics and diagnostics research.

(UPDATED: See below.)

Vaccine developer Protein Sciences is all over the blogosphere today (see, for instance, items on Pharmalot and the WSJ health blog), thanks to a breathless Bloomberg piece on the little Meriden, Conn., biotech. According to Bloomberg reporter John Lauerman’s article, Protein Sciences is poised to vanquish establish flu vaccines from Big Pharma giants Novartis and GlaxoSmithKline, in an interesting case study of what happens when a quote-worthy biotech executive catches the ear of a reporter eager for a new story line.

From Bloomberg:

GlaxoSmithKline Plc and Novartis AG, two of the world’s biggest vaccine makers, may have bet on the wrong technology in the race to develop a better flu shot.

The drugmakers are building U.S. factories to grow influenza virus in animal cells as an advance over the decades- old technique of making flu shots using chicken eggs. Now a small, privately held biotechnology company may leapfrog ahead of them with a more advanced method using DNA.

That company is Protein Sciences, which plans to use genetic engineering — technically called “recombinant DNA” — to produce influenza surface proteins from genes inserted into insect cells. The company’s chief operating officer, Manon Cox, scoffed at the traditional vaccine makers, telling Bloomberg that even their newer animal-cell technology “is an amazingly stupid investment to make for the future…. It’s as if we’re still living 100 years ago and recombinant DNA was never developed.”

The background: Flu vaccines are traditionally time-consuming and laborious to produce, since the most widely-used vaccine consists mostly of proteins harvested from inactivated flu virus, requiring mass quantities of virus. Until recently, the most reliable way to culture the virus was to grow it in vast collections of sterile chicken eggs, a 60-year-old process that takes about six months from start to finish. In the past few years, big vaccine makers like GSK and Novartis have been moving toward growing the virus in mammalian cell cultures, a much faster process than the old chicken-egg technique, although it’s not yet in widespread use.

Generally speaking, injecting people with a mixture derived from the inactivated virus immunizes them against infection by the real, live virus. A more recent intranasal vaccine developed by MedImmune — soon to be part of AstraZeneca — uses attenuated live flu virus to create the same effect.

Enter Protein Sciences and Novavax, of Malvern, Pa., which produce immunizing proteins directly, without the intermediate step of growing cultures of live virus. Using recombinant DNA, Protein Sciences inserted the genes for influenza surface proteins called hemagglutinins into insect cells, which then obligingly pump out zillions of hemagglutinin proteins when cultured. Ideally, injecting people with these proteins will also protect them against actual infection.

Recombinant production offers a number of advantages even over cell-cultured virus production. It’s fast and efficient, for one thing, and tinkering with the inserted genes can yield new vaccines relatively quickly. Both Protein Sciences and Novavax aim to produce vaccines against a possible avian flu pandemic, should that virus ever acquire the ability to pass between people.

On the other hand, this sort of vaccine — technically known as a “subunit vaccine” because it consists only of viral pieces — has some drawbacks as well. Although researchers have been working on subunit vaccines for well over a decade, only two have so far proven themselves, for typhoid and hepatitis B. In general, subunit vaccines tend to produce weaker immune responses than those derived from whole virus, which may reflect the possibility that recombinant proteins don’t always retain the same shape as their natural counterparts.

In the case of Protein Sciences, its recombinant flu vaccine consists solely of hemagglutinin proteins, whereas traditional vaccines also incorporate a second flu protein called neuraminidase — not to mention whatever other viral remnants survive the chemical centrifuging process that harvests the surface proteins in the first place. (See, for instance, the production process described in this PDF link to the package insert for Novartis’ Fluvirin.)

All of which is to say that it’s a bit soon to declare recombinant subunit vaccines victorious over the traditional version. A working recombinant flu vaccine would unquestionably be a great step forward for public health, but the evidence really isn’t there yet. Protein Sciences, for instance, conducted a large study of its vaccine — which goes by the contrived name FluBl0k (yes, that’s a zero in place of the letter “O”) — in 460 volunteers during the 2004-2005 flu season and says a high dose of FluBl0k “showed 100% protective efficacy against laboratory confirmed influenza,” but hasn’t yet published those results. An earlier study showed that FluBl0k was more effective in raising certain antibody levels than traditional flu vaccine, but didn’t test its efficacy against actual infection. (Read that study in PDF form here.)

UPDATED: Turns out there’s another reason to at least be cautious about Protein Sciences’ technology and its claims. In the early 1990s, the company — then known by the name MicroGeneSys — was developing an HIV subunit vaccine called VaxSyn that it wanted to test in human trials. When the NIH rejected its application, MicroGeneSys hired a lobbyist and got Congress to earmark $20 million for the trials in the Pentagon budget — a hugely controversial move at the time. In 1996, the resulting Army-run trial of VaxSyn showed “no clinical improvement that could be attributed to the vaccine.”

To be fair, it appears that the company’s management has turned over completely since those days. On the other hand, this saying is always worth bearing in mind.

It’s been clear for some time that bad blood has been building between Oregon Health and Science University researcher Brian Druker (pictured at left), who first showed that the cancer drug Gleevec could produce near-miraculous remissions in certain leukemia patients, and the drugmaker Novartis, which owns Gleevec. When asked, Druker has long acknowledged that he had to cajole dubious officials at Novartis — then Ciba-Geigy — into keeping Gleevec alive, in part because those officials thought that chronic myelogenous leukemia was too small a market to be worth bothering with.

Now, though, Druker’s simmering frustration with his one-time partner seems to have boiled over into something approaching open animosity, at least when calibrated for the academic context from which it originates. In an opinion piece published at LiveMint.com — apparently a joint venture of the Hindustan Times and the WSJ, although that’s not stated explicitly anywhere on the site — Druker lambastes Novartis for setting high prices for Gleevec (known as Glivec in non-U.S. markets) and for abusing its patent rights. This comes just a week after an Indian court rejected a Novartis patent application on a certain form of the Gleevec molecule (see Pharmalot and the WSJ health blog for more).

It’s worth a look at the whole piece, but I was particularly struck by Druker’s sly dig at Novartis drug researchers and their bosses (emphasis added):

Many scientists, if not most of those I have collaborated with in these settings, are engaged in research primarily motivated by the pursuit of knowledge as a means to help patients. For many of these scientists it is, therefore, of great concern that the results of their efforts can’t reach patients and save lives because of pricing strategies and patent policies such as “patent evergreening” (minor changes to existing molecules designed to extend patent monopolies) used by partners further down the drug development process.

Given my unfamiliarity with LiveMint.com, I’ve pinged both Druker and the OHSU news office to confirm the authenticity of this essay. I’ll update if and when I hear back. (Hat tip: Pharmalot.)

Nile Therapeutics, a Berkeley, Calif., biotech hired Peter Strumph, formerly chief of operations for struggling heart-drug maker CV Therapeutics, as CEO. Nile is currently developing a second-generation natriuretic peptide, CD-NP, for the treatment of heart failure. Here’s hoping it fares better than the first-generation version of this drug, J&J’s Natrecor. The company’s release is here.

Macroflux, a Mountain View, Calif., spinoff from Alza, hired M. Cory Zwerling as CEO. The company is developing “needle-free” delivery of complex drugs, similar in certain ways to StrataGent Life Sciences, which we wrote about here. Here is the company’s release.

ForHealth Technologies, a Daytona Beach, Fla., company, named Steve Thomas as its new CEO, VentureWire reports (subscription required). The company makes an automated filler for intravenous drug syringes. It’s apparently not clear that Thomas will move from his San Diego home, at least according to this article.

This last one is a bit old, but still worth noting. Scott Gottlieb, the former FDA official turned American Enterprise Institute pundit, whose various opinings on the biotech industry we have noted here and here, is apparently also a paid consultant to Novartis — an association that for some reason never seems to get noted when he writes long attacks on the New England Journal of Medicine for the WSJ’s editorial page. Perhaps readers can benefit from this information the next time Gottlieb unburdens himself of his accumulated wisdom. (Hat tip: Pharmalot.)

Now that AstraZeneca has made the bold — or impulsive — decision to snap up MedImmune for $15.6 billion in cash, one big question is whether the U.K. pharmaceutical giant has kicked Big Pharma’s appetite for biotech acquisitions into high gear.

The green-eyeshade types are generally still scratching their heads over the rich price, which amounted to a 21 percent premium over MedImmune’s close on Friday. The biotech was known primarily for Synagis, an antibody-based drug that prevents a common respiratory infection in babies, and FluMist, a so-far underperforming influenza vaccine that’s delivered via a nasal spray instead of injection. MedImmune has next-generation versions of both drugs in development, but neither seems likely to set the world on fire. The company also reportedly has more than 40 other experimental drugs in its pipeline, but of course it’s far from certain that any of them will ever even make it to market, much less become the blockbusters that AstraZeneca is presumably looking for.

In fact, odds are good that AstraZeneca fell victim to the “winner’s curse,” the well-known tendency of bidders to overpay, sometimes dramatically, in competitive auctions. The WSJ reports that at least four large companies, including Eli Lilly, had been involved in the MedImmune bidding — a classic blueprint for overheated competition. Somewhere, Carl Icahn is smiling.

So, of course, are other biotech investors, who have to be hoping that whatever fever AstraZeneca came down with continues to spread. The WSJ story notes that the deal is “sure to push up valuations for similarly sized companies,” and indeed the Amex biotechnology index bumped up almost two percent on the news. Other blogs are now rife with speculation over which companies might now be in play — the WSJ Health Blog thinks Biogen Idec, Medarex and some specialty pharma companies could be next, while over at Pharmalot, Ed Silverman tosses ImClone Systems, Xoma, PDL BioPharma and Telik into the mix.

Should the expected free-for-all materialize, it will obviously have major implications for venture investors, who are already plunging more deeply into the sector. At the same time, I’d also expect to see more blood on the floor on the pharma side, as it’s far from clear to me that buyers like AstraZeneca really understand what they’re getting into. I suspect that many biotech acquisitions by pharma don’t end well — the cultures are very different, and it’s very easy for even a substantial biotech like MedImmune to get lost inside the vast structure of a $26 billion behemoth like AstraZeneca.

That, at least, was generally the logic behind the rage for pharma-biotech partnerships, in which drug companies could trade cash for future rights to experimental drugs without all the messiness that acquisitions entail. But it seems the desperation of Big Pharma knows no bounds these days.

One additional point: Little noted in all the hoopla is the fact that the acquisition takes out the last North American maker of flu vaccines, following last year’s purchase of Chiron by Novartis and that of Canada’s ID Biomedical by GlaxoSmithKline the year before. So far, the concentration of vaccine production in the hands of European pharmas hasn’t seemed to concern U.S. regulators much. And it probably won’t, either — at least until the next avian-flu scare, that is.