VentureBeat

Featured companies: Allozyne, Arteriocyte Medical Systems, Arthrosurface, Bay City Capital, EnteroMedics, OncoVista, Novotech, Power Medical Interventions, Reliant Technologies

UPDATED: Expanded items on Allozyne, Reliant Tech, Power Medical and Bay City Capital.
UPDATE REDUX: Added item on EnteroMedics IPO.

Seattle’s Allozyne draws $30M for new interferon — Allozyne, a Seattle biotech focused on tweaking existing protein-based drugs to improve their properties, raised $30 million in a second round of financing. Investors included MPM Capital, OVP Venture Partners, Amgen Ventures, ARCH Venture Partners and Alexandria Real Estate Equities.

Allozyne’s twist on improving protein-based drugs — i.e., most biotech drugs — is to substitute “non-natural” amino acids into the proteins themselves. (Recall that a protein is essentially just a long chain of amino acids.) By swapping out natural amino acids with synthetic versions at key points in the protein, Allozyne hopes to improve the effectiveness and safety of protein drugs. The company’s description of it’s approach is here.

The company’s first drug candidate is a modified version of interferon beta, which is currently used to treat multiple sclerosis. The funding will support the first early-stage human trials of the drug, and will also “accelerate” development of a second candidate.

In addition, Allozyne will prepare to exit Accelerator, a Seattle biotech incubator connected with the Institute for Systems Biology. We previously wrote about Accelerator here.

Med-device maker Reliant Tech sets IPO terms, aims for $86M take — Not to be confused with Reliant Pharmaceuticals, which set its IPO terms yesterday, Mountain View, Calif.-based Reliant Technologies set its price range today and now hopes to raise up to $86.5 million in an offering of as many as 5.4 million shares. Reliant hopes to price those shares between $14 and $16 apiece.

Reliant makes medical lasers for “skin rejuvenation” treatments. Our previous coverage of the company is here.

Power Medical IPO falls short, raises up to $49M for robotic-surgery systems — Power Medical Interventions, a Langhorne, Pa., maker of computer- and power-assisted surgery tools, fell short of its IPO hopes and now stands to raise no more than $49 million from its offering. Its latest SEC filing is here.

The company priced its shares at $11 apiece, well under the $12 to $14 range it previously established. (Our coverage is here.) Power Medical could sell as many as 4.4 million shares in the offering.

The result is a sharp disappointment for Power Medical, which had originally hoped to raise as much as $100 million in its offering. The company’s lackluster start contrasts with the soaring welcome spinal-implant maker TranS1 received earlier this month (our coverage here). If it’s any consolation, though, Power Medical shares staged an early recovery, rising 60 cents, or 5.5 percent, to $11.60 in early trading today.

Bay City Capital closes $500M life-science fund — The San Francisco-based VC firm Bay City Capital, which focuses on life-science investments, closed a $500 million fifth fund, VentureWire reports (subscription required). The fund is significantly larger than its predecessor, which closed at $350 million in 2004.

Bay City intends to back 15 to 20 biotech, medical-device and diagnostics companies with the fund, which suggests it will tend to favor later-stage deals — now a long-standing VC trend. The firm told VentureWire that it will invest at all stages, including “seed-stage bets on start-ups launched in-house and structured investments in publicly traded companies.”

EnteroMedics sets IPO terms, looks for $92M to support obesity-control implants — St. Paul, Minn.-based EnteroMedics, a device company developing a neuromodulation implant designed to regulate appetite, set its IPO terms and now aims to offer up to 5.75 million shares at a price of $14 to $16 apiece. The offering could value the company at as much as $261 million while raising up to $92 million.

EnteroMedics is one of several companies angling to introduce new obesity treatments that don’t rely on drugs or invasive surgery. Although its technology is still being tested to assess its effectiveness, EnteroMedics has launched a spiffy new Web site with lots of pictures and animations to illustrate how it believes its implant will work. For our previous coverage of the company, see here and here.

OTHER HEADLINES OF NOTE:

• Arteriocyte Medical Systems spins out, gets $10M for med devices(release)
• Arthrosurface raising $5M for knee implants (VW)
• Contract researcher Novotech raises $8M for expansion(release)
• OncoVista goes public via reverse merger (release)

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.