VentureBeat

TODAY’S HEADLINES:

• ProGenTech takes in $21M for DNA purification systems (release)
• Diabetes-drug maker Phenomix raises $18M while seeking IPO (Edgar)
• Genome-tool maker BioTrove gets $23M in preparation for IPO (Edgar)
• Sweden’s DermaGen pulls in more than €1M for dermatitis (release)
• Digital health-record co. Medsphere receives $3M bridge (VentureWire)
• CareAnyware, healthcare IT provider, takes $2M in debt (release)
• Health B2B community CompareNetworks raises funding (release)
• ActivBiotics assets sold for $3.5M (release)
  

ProGenTech takes in $21M for DNA purification systems – ProGenTech, an “East-West” tool and equipment maker, raised $21 million in a third funding round. Investors included Bay City Capital of San Francisco and DT Capital of Shanghai.

ProGenTech makes purification systems that isolate DNA from blood or other biological samples for processing and analysis. The startup is based in Shanghai and Emeryville, Calif.

Diabetes-drug maker Phenomix raises $18M while seeking IPO – Phenomix, a San Diego biotech developing new diabetes drugs, raised a total of $73.3 million in its third funding round, according to a recent amendment to its IPO filing. VentureWire reports that the startup had raised $55 million as of March 2007, suggesting the company pulled in an additional $18.3 million since then.

Phenomix claims to be a “fast follower” in drug development, a company that aims to create better versions of drugs that take aim at biological mechanisms already proven to work by earlier drugs. Its leading drug candidate is an inhibitor of dipeptidyl peptidase-4, or DPP-4, an enzyme that plays a role in insulin production, for use in type 2 diabetes. The company is looking to raise $86.3 million in its IPO.

Genome-tool maker BioTrove gets $23M in preparation for IPO – BioTrove, a Woburn, Mass., biomedical equipment maker, raised $22.7 million in a third funding round just prior to filing for an IPO, according to its SEC registration statement. The funding was first reported by VentureWire.

The company makes tools and systems for DNA analysis and drug screening. It filed yesterday to raise $75 million in its initial offering. BioTrove’s backers in the latest fundraising included Catalyst Health and Technology Partners, CB Health Ventures, Vox Equity Partners, and Fletcher Spaght Ventures.

TODAY’S HEADLINES:

• Luminous Medical raises $24M for automated glucose monitoring (release)
• Alimera Sciences gets $30M for eye-disease drug (release)
• Vaccine maker LigoCyte draws $28M (release)
• Heartbeat tracker CardioNet trims IPO, aims for listing today (IPOhome)
• Axial Biotech takes in $6M for spinal diagnostics (release)
• Insulin bioengineer enGene receives $6.4M (release)
• GlucoLight raises funding for, well, glucose monitoring (release)
• Germany’s InflaRx gets seed funding for sepsis work (release)
• Cell imager Amnis pulls in $3.5M (VentureWire)
• Korea Bone Bank gets funding for bone transplants (release)

Luminous Medical raises $24M for automated glucose monitoring – Carlsbad, Calif.-based Luminous Medical, a medical-device maker, raised $23.5 million in a second funding round. Investors included Adams Street Partners, RiverVest Venture Partners, Finistere Ventures, De Novo Ventures and Latterell Venture Partners.

Luminous is developing an automated blood-sugar sensor for diabetic patients being treated in hospital intensive-care units and operating rooms. According to the company, keeping a tight rein on blood-glucose levels, which can soar or crash unexpectedly in diabetics, helps prevent complications while shortening hospital stays and reducing the risk of death.

Measuring such tight control, however, typically requires manually checking blood-glucose levels every 30 to 60 minutes, the company says. The Luminous device, by contrast, uses infrared spectroscopy — a technique that identifies particular molecules by measuring which wavelengths of light they absorb — to measure glucose and other blood chemicals non-invasively.

The company licensed its technology from InLight Solutions of Albuquerque, N.M., which previously invested $60 million in the technology. The device has not been approved by the FDA.

Axial Biotech takes in $6M for spinal diagnostics – Axial Biotech, a Salt Lake City diagnostic-test maker, raised $6 million as part of its second funding round. Investors included Johnson & Johnson Development, vSpring Capital and Ohio Biotech Group.

Axial, founded in 2002 by a group of spinal surgeons and geneticists, is an odd hybrid of biotech and devices. The company aims to produce tests that will predict and measure the severity of spinal problems such as scoliosis, as well as unspecified “motion-preserving technologies” — presumably an alternative to the stigmatizing back braces that orthopedists have long inflicted on children with the condition.

Insulin bioengineer enGene receives $6.4M – Canada’s enGene, a Vancouver biotech looking for ways to jump-start natural insulin production in diabetics, raised $6.4 million in a first round of funding. Investors included Saad Investments, Masa Life Science Ventures and private investors.

EnGene has an audacious — which is to say, of course, also quite chancy — approach to diabetes, in which the immune system attacks and kills insulin-producing “beta cells” in the pancreas (type 1 diabetes) or the body grows desensitized to insulin and requires higher levels (type 2 diabetes). In either case, patients often require insulin shots to maintain blood-sugar levels necessary or proper metabolism.

EnGene proposes to engineer cells in the small intestine — known as “K cells” — to produce insulin themselves. The advantage of this technique lies in the fact that K cells, like beta cells, respond to sugar levels in the gut, although they normally secrete a separate molecule. Once bioengineered to produce insulin as well, these cells could help regulate blood sugar automatically much the way beta cells normally do.

Of course, gene therapy has, in general, been a great disappointment so far, so there’s no shortage of uncertainty associated with this sort of technique. EnGene has tested its technique in mice, but not yet in humans. The startup plans to seek a second round of funding in the second half.

Alimera Sciences gets $30M for eye-disease drug – Alimera Sciences, an Alpharetta, Ga., drug developer with a focus on eye disease, raised $30 million in a third funding round. The company will now take a majority stake in its drug for diabetic macular edema, a vision-degrading complication of diabetes, which Alimera is developing with its partner pSividia.

We’ve written before about Alimera, which is presumably still contemplating an IPO this fall. All five of the company’s existing VC backers participated in the round: BA Venture Partners, Domain Associates, Intersouth Partners, Polaris Venture Partners and Venrock Associates.

Vaccine maker LigoCyte draws $28M – LigoCyte Pharmaceuticals, a Bozeman, Mont., biotech focused on new vaccines against infectious disease, raised $28 million in a third funding round. Investors included Forward Ventures, JAFCO, Novartis Venture Fund, Fidelity Biosciences, MedImmune Ventures, Athenian Venture Partners and MC Life Sciences Ventures.

The company is developing new vaccines using “virus-like particles” — usually structural viral proteins, minus the replication machinery packed in DNA or RNA — against gastroenteritis, anthrax and flu. It is also working on antibody drugs against inflammatory disease.

TODAY’S HEADLINES:

• Health-info site HealthCentral Network pulls in $50M (paidContent)
• BrightHeart Vet corrals $29M to acquire animal hospitals (release)
• AviaraDx raises $8M for cancer diagnostics (peHUB)
• Valor Medical aims for $15M for brain-aneurysm treatment (VentureWire)
• IPC, inpatient-care provider, raises as much as $56M in IPO (IPO Home)
• Phenomix, diabetes and hepatitis drug maker, files for $86M IPO (Edgar)
• TVM Capital promotes Keiarasch “Kia” Parssanedjad to principal in life sciences (release)

BrightHeart Vet corrals $29M to acquire animal hospitals — BrightHeart Veterinary Centers, an Armonk, N.Y., operator of veterinary hospitals, raised $28.5 million in a funding round intended to further the chain’s expansion. Investors included LLR Partners and Caltius Mezzanine.

BrightHeart currently runs facilities in New York, Connecticut, Illinois and Alberta, Canada, two of which it acquired just last week. The company intends to continue growing via acquisition.

AviaraDx raises $8M for cancer diagnostics — AviaraDx, a Carlsbad, Calif., developer of molecular cancer diagnostics, raised $8 million in a first funding round, peHUB reports, citing a regulatory filing. AviaraDx was spun out of the former Arcturus Bioscience, whose other assets were mostly acquired by Molecular Devices in 2006.

AviaraDx sells tests that identify tumors by their molecular “fingerprints” and predice which breast-cancer tumors are most likely to recur following surgery. The company isn’t providing much detail on its future development plans.

Valor Medical aims for $15M for brain-aneurysm treatment — Valor Medical, a San Diego device maker developing a new polymer-based treatment for brain aneurysms, is seeking $15 million in a second funding round, VentureWire reports. The company’s Neucrylate is a substance designed for use as a “filler” in aneurysms, which are dangerous arterial swellings that can rupture unexpectedly. Valor intends to begin clinical testing this year.

Phenomix, diabetes and hepatitis drug maker, files for $86M IPO — San Diego-based Phenomix, a biotech developing new drugs for diabetes and hepatitis, filed to raise $86.3 million in an initial offering. The company aims to be a “fast follower” that develops new drugs that address biological mechanisms that have been “validated” by successful drugs elsewhere.

Suppose a simple blood test were to tell you that you’ve got a better than 50 percent chance of developing “type 2″ diabetes — a form of the disease long associated with age and obesity — within the next five years. Would you make the recommended lifestyle changes, by eating right and exercising more? Would you even consider starting lifelong medication that might postone or prevent the disease entirely?

These are the sorts of choices that Tethys Bioscience, an Emeryville, Calif., biotech, would like to force on you before much longer. Tethys is preparing to launch a new diagnostic test — dubbed Diabetes PreDx (”dx” is a common medical abbreviation for “diagnostic” or “diagnosis,” although here it’s pronounced in a way that sounds like “predicts”) — that it says can accurately identify people who are most at risk of developing diabetes. The company plans to launch the test in a preliminary version later this month, with a full rollout planned for June.

The Tethys approach is conceptually simple, if still somewhat breathtaking on a practical level. Diabetes PreDx measures a patient’s blood sample for roughly 100 proteins that the company has linked to the progression of diabetes, then produces a numerical score that quantifies an individual’s diabetic risk. People with scores at the low end of the spectrum will actually have a substantially lower risk of diabetes — as much as five times lower — than conventional measures might suggest, while those at the other end may face an equally elevated risk.

This is obviously a pretty big deal if the test works the way Tethys says it does. The company says it refined and validated its test over the past five years — it was founded in 2002 — using tens of thousands of historical blood samples and matching them against whether the donors actually developed diabetes. Tethys says it’s already presented supporting data at various scientific meetings over the past year, although it doesn’t appear to have actually published any of it yet.

Tethys isn’t saying exactly which proteins it’s identified for the test, although the company’s CEO, Mickey Urdea, acknowledged that some are indicators of glucose metabolism, while others are related to liver function, inflammation and blood coagulation.

“This is why using a single marker, or a combination of two markers, has always been insufficient” to make accurate diabetes-risk predictions, Tethys chief scientific officer Mike Richey says. “There are multiple pathways by which people reach [a diabetic state of] glucose dysregulation.”

What, exactly, could a high-scoring individual do to alter his or her fate? Obviously, the first step would be to start paying closer attention to diet — specifically to the consumption of sugary or refined-carbohydrate foods that tend to trigger repeated surges of insulin production in the body — and to exercise more. In addition, Tethys officials suggest that some of the safer diabetes medications now in use, particularly the generic drug metformin and newer drugs such known as DPP-IV inhibitors such as Merck’s Januvia, might be able to prevent irreversible damage well before it occurs.

Diabetes PreDx is the result of years of stealthy work by a group of former employees at Chiron’s diagnostic unit, who came together at Tethys to find a way to make useful blood tests that could help patients and their doctors postpone or prevent the onset of serious chronic diseases. The company is also at work on a predictive test for osteoporosis, and has another diagnostic candidate in the pipeline. Tethys hasn’t said what it will charge for Diabetes PreDx, but says its models show that identifying and, presumably, postponing the onset of diabetes in a single individual can save the healthcare system $1,100. So don’t expect the test to be particularly cheap.

Tethys also just raised an undisclosed sum in a third round of funding, bringing its total financing so far to $54 million. Investors in the round included Intel Capital, Kleiner Perkins Caufield & Byers and Mohr Davidow Ventures.

TODAY’S HEADLINES:

• Israel’s Alma Lasers files for $86M IPO (Edgar)
• Allscripts acquires hospital-management software co. ECIN for $90M (release)
• AgaMatrix, glucose-sensor maker, raises $24M (PE Hub)

Israel’s Alma Lasers files for $86M IPO — Alma Lasers, an Israeli maker of lasers for cosmetic procedures, filed to raise $86.3 million in an initial offering. The company, based in Caesarea, calls its products “energy-based aesthetic treatment systems,” and sells them to dermatologists for hair removal and wrinkle treatment.

Alma markets its products in 64 countries, including the U.S., and says it has sold more than 3,300 systems since 1999. In a departure for this sort of company, Alma turned a profit in 2004 and 2005, and was also profitable in the first nine months of 2007, pulling in net income of $15.3 million on revenues of $62 million in that period.

Alma’s established business may make it an easier sell for investors than similar companies that have tried to go public recently. Reliant Technologies, for instance, a Mountain View, Calif., laser company we covered here, here and here, yanked its IPO filing in November.

AgaMatrix, glucose-sensor maker, raises $24M — AgaMatrix, a Salem, N.H., maker of blood-glucose sensor devices, raised $23.7 million in a third funding round, PE Hub reports, citing a regulatory filing. Investors include Ferrer Freeman & Co., Notable International and Collaborative Seed & Growth Partners.

AgaMatrix makes and sells a line of blood-sugar testing devices for diabetics under the WaveSense brand. The main selling point for these particular testers appears to be their data-management capabilities, which allow diabetics to download and analyze their blood-sugar readings over a period of time. AgaMatrix’s “Zero-Click” software, for instance, automatically identifies a glucose meter once it’s plugged in, downloads data into a user profile and instantly displays charts that help diabetics spot trends in their blood-sugar levels.

AgaMatrix is also developing a new wireless version of its meters it calls the Jazz Codeless, which apparently does away with the need for a cable. That device hasn’t yet received marketing approval from the FDA, however. Other startups, however, have greater ambitions — see, for instance, our coverage of Pelikan Technologies, which aims to reduce the pain associated with blood drawing for testing via a computer-controlled lance, here.

One of the constant but unavoidable challenges in trying to control diabetes is the frequent need to test blood-sugar levels by sticking a needle into a fingertip — a step that tells diabetics when they need a snack (to raise blood glucose) or a shot of insulin (to lower it). “Lancing” fingers several times a day can render the tips so tender that it restricts ordinary activity — playing the piano, for instance — for some diabetics. While that may sound like a minor inconvenience compared to the awful side effects that uncontrolled diabetes can cause, such as gangrene and blindness, it’s often enough to keep some diabetics from testing their blood as frequently as they should.

Over the years, a number of companies have worked to minimize the pain of blood testing. (One of them, the former Therasense, was acquired by Abbott Laboratories for $1 billion in 2004.) Now Pelikan Technologies, a Palo Alto, Calif., company whose lineage traces back to Hewlett-Packard Laboratories, is preparing to launch a new electronically controlled device that it claims will virtually eliminate the pain associated with lancing.

The main advantage Pelikan claims is that its lancing is computer controlled in a way that prevents undue damage to the fingertip and minimizes pain by keeping the lancet from penetrating too deeply. Most lancets, the company alleges, go right past the capillaries that carry blood and into an underlying network of nerves — thus the pain. Pelikan’s lancet is supposed to stop short at the capillary level, although the company doesn’t say exactly how. (From the Web site, it looks as though users are supposed to select the insertion depth from one of 30 different settings, which doesn’t sound terribly convenient to me.) One of the company’s diagrams is at left; for their complete description, see here.

The Pelikan Sun also supposedly creates a straighter wound that heals more easily, and withdraws the needle more slowly to reduce the amount of damage caused to surrounding tissue. The lancet takes a disk prefilled with 50 needles, which also reduces the time and inconvenience of refilling a lancet pen.

Pelikan plans to launch its lancet, which is already on sale in Australia and Europe, in the U.S. early next year. The company is also at work on a new device that will combine the lancet with an electronic glucometer that measures sugar levels, in an attempt to reduce the number of items diabetics have to carry around with them. Normally a diabetic must first stick a finger with an injector-style pen device that quickly jabs a tiny needle in and out, then dab the blood on an absorbent treated strip that slots into a glucometer. The company hopes to launch the combined device next year as well.

Pelikan just raised $69 million in a sixth funding round, and pulled in another $20 million in venture debt financing. Investors in the equity round include Clarus Ventures, HBM BioVentures, Global Life Science Ventures, Mannheim Holdings and Bio*One Capital. The debt was provided by GE Capital and Oxford Finance.

Featured companies: American Aerogel, Clinicient, Frazier Healthcare Ventures, Genome Diagnostics, RadPharm, RainDance Technologies, Vivacta

UPDATED: Expanded items on Vitae, RadPharm, Vivacta and Genome Diagnostics. Intelligent Bio-Systems is now covered in a standalone item here.

Vitae Pharma takes in $15M for blood pressure, diabetes drugs — Vitae Pharmaceuticals, a Fort Washington, Pa., biotech focused on new drugs for hypertension and metabolic disorders, raised $15 million in a fourth funding round, VentureWire reports (subscription required). Boehringer Ingelheim, which struck a major partnership with Vitae in mid-October (PDF link), provided the funding.

That partnership calls for the two companies to co-develop Vitae drug candidates that inhibit a protein called 11beta-HSD1, an enzyme that helps regulate the hormone cortisol. The drugs may be useful in treating diabetes, obesity and hypertension. B-I agreed to pay Vitae $36.5 million in cash, research funding and an at-the-time unspecified equity investment, as well as up to $300 million in potential milestone payments.

Vitae’s other major drug program involves compounds that inhibit the protein renin, which regulates blood pressure and vascular function. Renin inhibitors, which could be useful in treating hypertension, have been a white whale of sorts for the drug industry over the past 30 years (see, for instance, this somewhat technical discussion of the history here).

UK’s Vivacta draws in $12M for medical diagnostics — Vivacta, a U.K. medical-diagnostic company formerly known as PanOpSys, raised $12 million in a second funding round. Investors included AGF Private Equity, HBM BioVentures, Spark Ventures and Viking.

Vivacta is developing a fast, “point of care” diagnostic system intended to deliver laboratory-quality test readings from drawn blood in doctors’ offices or at a hospital bedside. The technology is based on a “piezoelectric” film coated with antibodies to particular blood proteins. Piezoelectric devices produce current when compressed, so theoretically this approach should allow a direct measurement of blood proteins by generating current proportional to the density of antibodies that capture any particular blood protein.

RadPharm gets $10M for medical-image reviews — RadPharm, a Princeton, N.J., provider of medical-image review services, raised $10 million in a second funding round. Investors include Siemens Venture Capital, Ampersand Ventures, Adams Street Partners and Tang Capital Management.

RadPharm essentially provides outsourced analysis of medical images ranging from CAT scans to X-rays for clinical trials, whose outcomes can hinge on the way those images are read and analyzed. Trials of cancer drugs, for instance, frequently look at whether tumors shrink, stabilize or grow, and determining that requires someone to look at actual patient X-rays or other images and decide what they actually show. RadPharm’s service provides “centralized, independent, blinded interpretation” of such scans.

Genome Diagnostics, cancer-test maker, aims for $1.6M — Genome Diagnostics, a Pasadena, Calif., developer of cancer diagnostic tests, has raised several hundred thousand dollars toward an anticipated $1.6 million first funding round, VentureWire reports. B.C. Capital of Israel and several individual investors provided the funds.

According to VentureWire, the company aims to produce a diagnostic test for prostate cancer based upon gene variations detected by sequencing a patient’s entire genome. That sounds unlikely on several levels, the first of which is that “whole-genome sequencing” — VentureWire’s description of what the company is doing — is still incredibly expensive, with an estimated cost of $100,000 or more.

It seems far more likely that the company will do a rough-and-ready genome scan that samples only several hundred thousand of the genome’s three billion DNA “letters” that are known to vary between individuals — at least, that is, unless Genome Diagnostics is betting that the cost of whole-genome sequencing will drop to the fabled $1,000 or so by the time it gets its product to market. And maybe that’s exactly what the company is doing, although that would mean that its initial testing costs are going to be extraordinarily high.

It’s also far from clear exactly what sort of prognostic information the company hopes to obtain from a genome scan of either type, since most genetic-association studies can only show increases or decreases in the probability of disease, and with such a margin of error that it’s difficult to see how that information could possibly serve a diagnostic purpose. I’ll try to circle back to the company in order to get a better idea of what they’re up to for a future post.

OTHER HEADLINES OF NOTE:

• Clinicient receives $5M for healthcare revenue-management software (release)
• Genome sequencer Intelligent Bio-Systems raises funding (VW)
• American Aerogel raises $3.2M for biopharma gels (VW)
• Frazier Healthcare Ventures raises $600M life-sciences fund (Seattle P-I)
• RainDance Technologies appoints Christopher McNary as CEO (release)

Featured companies: Biospace Med, Carbylan BioSurgery, GVK BioSciences, IntraSafe Medical, InViragen, Medingo, ParadigmHealth, Precimed, SV Life Sciences

UPDATED: Expanded items on Carbylan, Medingo, and GVK Biosciences.

Carbylan raises $20M for arthritis, sinusitis drug implants — Palo Alto, Calif.-based Carbylan BioSurgery, a medical-device maker focused on polymer-based drug-delivery technologies, raised $20 million in a second funding round. Investors included Vivo Ventures, Alta Partners and InterWest Partners.

Carbylan is developing a biomaterial-based drug-delivery system in which drug-impregnated polymers of hyaluronic acid are injected into the body in liquid form. Those polymers bind to one another and to the body’s tissues, allowing controlled release of the drug in a particular location. The company’s first drug candidates are aimed at treating sinusitis and osteoarthritis.

Israel’s Medingo gets $27M to develop insulin patch — Medingo, a Tel Aviv, Israel, medical-device maker, raised $27 million. The company’s group parent, Elron Electronic Industries, invested between $13 million and $22 million in the round, including $4 million in convertible loans.

Radius Ventures invested $5 million in the round. Medingo is developing an insulin-delivery patch — although given that it’s remote controlled and holds a reservoir of insulin, it’s probably more like a computerized disk that regulates insulin flow. Medingo says it can be worn anywhere during almost any activity, including showers, swimming, and the other five of the “seven S’s” the company touts on its Web site. (We’re a family Web site, but yes, that particular “S” is there.)

Medingo says it expects to receive FDA approval next year. Not bad for a company founded just two years ago. Medingo’s timetable sounds a bit on the optimistic side to me, but maybe they’re really on the ball with this new-style insulin pump.

Indian contract researcher GVK Biosciences raises $27M from Sequoia Capital — GVK Biosciences, an Indian contract research organization, raised 1 billion rupees ($27 million) from Sequoia Capital. The company runs clinical trials and performs other biomedical services for pharmaceutical clients.

OTHER HEADLINES OF NOTE:

• Inverness acquires care and disease manager ParadigmHealth for $230M (release)
• Biospace Med raises €12M for orthopedic imaging (release)
• IV-system maker IntraSafe raises $2M (VentureWire, sub req’d)
• SV Life Sciences adds Robert Palmisano as venture partner (release)
• InViragen receives funding for dengue vaccine (release)
• Greatbatch acquires orthopedic-instrumentation supplier Precimed (release)

Featured companies: DirectFlow, Direvo, Indigo Biosystems, MacroGenics

Direct Flow raises $27M for heart-valve implants — Santa Rosa, Calif.-based Direct Flow Medical, a startup developing heart implants, raised $27 million in a second funding round. Investors included Johnson & Johnson Development, Foundation Medical Partners, VantagePoint Venture Partners, ePlanet, EDF Ventures, New Leaf Venture Partners and Spray Venture Partners.

Direct Flow makes minimally invasive aortic-valve replacements for the heart. This particular field happens to be booming — we’ve previously covered competitors JenaValve, AorTx and Sadra.

MacroGenics signs Eli Lilly pact worth initial $43M for autoimmune disease — MacroGenics, a Rockville, Md., biotech developing antibody-based therapies for autoimmune disease, signed a partnership with Eli Lilly that could be worth more than $600 million. MacroGenics is working on antibodies designed to tamp down autoimmune responses by inducing tolerance to antigens that might otherwise promote strong immune reactions to the body’s own cells. The company’s first drug candidate targets diabetes — specifically “type one” diabetes that results when the immune system targets insulin-producing cells in the pancreas.

OTHER HEADLINES OF NOTE:

• Indigo Biosystems gets funding for lab-data software (VentureWire, sub req’d)
• Germany’s Direvo pulls in €12M for biomanufacturing (release)

Featured companies: American Oriental Bioengineering, Guangxi Boke, Inspired Technologies, Nanosphere, Patton Medical Devices

UPDATED: Expanded items on Nanosphere and Patton Medical Devices.

Molecular-diagnostics firm Nanosphere sets IPO range, now expects $129M — Northbrook, Ill.-based Nanosphere, a maker of nanotech-derived molecular diagnostics, now expects to raise up to $129 million by selling as many as eight million shares in an initial offering. The company’s latest SEC filing is here. Nanosphere intends to price its shares between $14 and $16 apiece.

The latest IPO terms represent a significant step up from Nanotech’s initial plan to raise $100 million in the offering, which we wrote about here (seventh item). Either way, it’s still a fairly princely sum, particularly given that only two U.S. pharma/biotechs — the specialty pharmas Jazz Pharmaceuticals (covered here) and Eurand — have managed to pull in more than $100 million with IPOs this year. Of course, none of these companies holds a candle to Talecris Biotherapeutics, which apparently still thinks it can raise $1 billion in an initial offering.

Nanosphere manufactures a molecular-diagnostics system, called Verigene, which runs sophisticated protein and nucleic-acid detection tests for personalized medicine and other uses. Its first two tests were approved within the past month — one tests for specific gene variants that affect how quickly a patient metabolizes a clot-prevention drug (see our discussion of this sort of test), while the other identifies gene mutations linked to a higher risk of blood clots. Nanosphere is also developing tests for cancer and heart disease applications.

This sort of genomics-related diagnostics is certainly hot right now, which may explain the company’s confidence in its IPO chances. On the other hand, if investors are merely embracing biotech diagnostics at the expense of biotech therapies — perhaps under the assumption that diagnostic tests are less risky and complex than biotech drugs — then chances are good that they’ll end up disappointed.

IPOHome notes that Nanosphere is expected to hit the market in the week of Oct. 29. Keep an eye out for it.

Patton Medical raises $15M for insulin ports — Austin, Tex.-based Patton Medical Devices, a medical-device company focused on diabtes care, raised $15 million from private investors. The company is developing a surgical “port” through with diabetics can inject insulin without further piercing the skin.

HEADLINES OF NOTE:

• Inspired Technologies takes in funds for lung treatment (release)
• American Oriental acquires Guangxi Boke for $36.5M (release)
• SpineOvations, maker of injectable spine-stabilization products, names new CEO (release)

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.

Novocell, a San Diego embryonic stem-cell company, raised $25 million in a third round of funding. That’s presumably a bit of a letdown for the company, which had previously hoped to pull in as much as $35 million in the round. I wrote earlier about Novocell’s fundraising here.

The round was led by Johnson & Johnson Development, the venture arm of J&J itself, joined by Sanderling Ventures, Asset Management Company and Pacific Horizon Ventures.

In my earlier piece, I explored whether J&J’s involvement marked the first time that Big Pharma had directly funded an embryonic stem-cell company. It turns out that’s probably true, although J&J’s investment in Novocell dates back to at least 2005, a fact I didn’t learn until a few days after I wrote that post. (I had updated the previous item with that acknowledgement, but the update somehow got lost in WordPress, so I’ll just make the point again here.)

I’ve also heard from some sources that J&J’s interest isn’t so much in stem cells as in a separate Novocell technology for “encapsulating” cells to protect them from immune-system rejection after a transplant. Although that sort of technology might be useful for protecting stem-cell transplants, it’s also got potential utility outside the stem-cell field. For instance, if transplants of insulin-producing pancreatic islet cells ever became feasible as a diabetes treatment, encapsulation might be one way to ensure that the cell transplants “take” without forcing patients onto immunosuppressive drugs for the rest of their lives. (Exactly how to procure a reliable supply of islet cells is a separate problem, since donors and cadavers tend to be in short supply — and that’s where stem cells are likely to enter the picture.)

Novocell, in fact, is currently performing early-stage trials of exactly that sort of therapy, using islet cells procured from cadavers. The encapsulated cells are injected into “tissue pockets” just under the skin of the thighs or the lower abdomen. Last year, the company presented preliminary data from the study in which the cells transplanted into the first two treated diabetics appeared to show early signs of functioning without triggering an immune-rejection response.

Since the study was supposed to include 12 patients who would be monitored for 12 months, new data from that study might not be too far off, which probably helps explain J&J’s interest in leading this new round.

Amgen suddenly has a voracious appetite for startups. In its second deal this week, the biotech giant acquired Cambridge, Mass., biotech Alantos Pharmaceuticals for $300 million in cash. (The release is here.)

Founded in Heidelberg, Germany in 1999, Alantos changed its name from Therascope in 2003 and moved to Cambridge in 2004. The company develops traditional “small molecule” drugs — that is, therapies that can be delivered as pills rather than shots — for a variety of conditions; its lead candidate is a novel type of diabetes drug called a DPP-IV inhibitor now in early-stage trials. Should it succeed, that drug seems likely to face significant competition; Merck’s DPP-IV inhibitor Januvia is already on the market, and several other pharmas and biotechs are pursuing their own.

According to VentureWire (subscription required), Alantos’ backers included Oxford Bioscience Partners, SV Life Sciences, Heidelberg Innovation, Ventech and ABN Amro. It has raised a total of $47 million, making this a nice payday for the company’s European investors.

Following Amgen’s $420 million acquisition of Ilypsa, that makes $720 million the big biotech has dropped on startups this week — a substantial sum by any measure. Last fall, Amgen also acquired Mountain View, Calif.-based Avidia for up to $380 million, so that’s well over $1 billion it has committed to startup acquisitions over the past nine months.

The mini-spree marks a recent departure for the biotech, which over the past five years has tended to acquire other public biotechs with marketed or late-stage products such as Immunex, Abgenix and Tularik. It suggests that Amgen is feeling some pressure to refill its pipeline, although since the payoff is still likely some time away, it likely isn’t related to the company’s recent problems with its anemia-drug franchise or its new colon-cancer drug Vectibix.

More genetic links for breast cancer – Whole-genome association studies that tease out links between minute genetic variations and the likelihood of disease are definitely building momentum. Over the last several days, researchers reported six new variations that increase the risk of breast cancer for women who have inherited them. (For background, see this Boston Globe piece or my recent take on the subject.) It’s now conceivable that scientists may soon have an excellent handle on the genetic contributions to this particular disease.

As with any much-hyped medical discovery, however, the caveats here are almost as important as the headlines. These findings aren’t going to be translated into new diagnostic tests, much less treatments, any time soon. That’s largely because no one has yet figured out why these particular genetic changes should affect a woman’s cancer risk. And that, in part, stems from the fact that these variations aren’t mutations in identifiable genes, just alterations in stretches of DNA — regions sometimes unkindly called “junk DNA” — whose function is unknown.

In fact, these findings are purely statistical conclusions drawn from analyses of large groups of people and their genomes. While it seems unlikely that they’re simply spurious correlations — among other things, the number of research teams confirming each others’ findings argues against that — odder things have happened on the frontiers of science. Nick Wade of the NYT has more.

Dire straits for diabetes drug – A little more than a week ago, the New England Journal of Medicine published cardiologist Steve Nissen’s analysis suggesting that the heavily prescribed diabetes drug Avandia may boost the risk of heart attacks by roughy 40 percent. Nissen himself acknowledged that his paper — a “meta-analysis” that drew conclusions by pooling data from several dozen different clinical trials, a frequently used but often controversial technique — wasn’t conclusive, and a variety of his critics ranging from Avandia’s maker, GlaxoSmithKline, former FDA official Scott Gottlieb and the editors of the U.K. medical journal the Lancet (PDF) have argued that the medical community should wait for the results of a large clinical trial that won’t produce data for another year or two.

Since then, however, Republican Sen. Charles Grassley has accused the FDA of reaching the same conclusion internally but without taking any action; GSK warned that the large Avandia trial everyone is waiting for may be jeopardized because patients concerned about the drug’s safety are bailing out; and early indications suggest that ordinary patients may be doing likewise. It’s a huge disaster for what had been a $3 billion-a-year drug, and one that could have been mitigated if GSK and the FDA had been more open about potential safety problems early on. Because there’s no question that an important cost-benefit question — that is, whether diabetics benefit more from the blood-sugar control Avandia makes possible than they put at risk with the potential higher risk of heart attacks — has been lost in the furor.

Chinese drug official sentenced to death – Think FDA officials have it tough these days? Yesterday, the Chinese government sentenced its former top food and drug official, Zheng Xiaoyu, to death for taking $850,000 in drug-company bribes to overlook fake or defective medicines and food products.

Man Bites Dog Watch: Biotech CEO says drug prices are too high – Elan Pharmaceuticals CEO Kelly Martin appears to have broken one of the industry’s taboos by arguing that the common practice of charging all the market will bear for new biotech drugs — the very reasoning that has led to drugs for rare genetic diseases that cost $200,000 a year — is “unsustainable.” While there’s not enough detail in this interview snippet from the Financial Times (via Forbes) to know exactly what Martin means by this, it certainly sounds as if Elan might be edging toward some kind of slightly more rational pricing policy — or at least acknowledging that Medicare and private insurers aren’t likely to continue paying through the nose forever. Too bad some people seem to think that Elan might make a tasty takeover target for Big Pharma, whose own addiction to high prices hasn’t shown much evidence of waning.

Amgen’s woes continue to mount – From bad to worse to… even worse, I guess. Last week, experts at the European Union’s drug regulator recommended against approval of Amgen’s colon-cancer drug Vectibix, saying its benefits didn’t outweigh its disadvantages. Vectibix has hit a number of snags recently, including a halted clinical trial in which a combination of Vectibix and Genentech’s Avastin appeared to worsen patients’ odds of survival. The London-based European Medicines Agency was also concerned that evidence suggesting that Vectibix slows the progression of cancer was weak.

Separately, the EU gave preliminary approval to Roche’s Mircera, a potential competitor to Amgen’s best-selling anemia drugs Epogen and Aranesp. Mircera’s U.S. approval has been delayed and Amgen has sued Roche for patent infringement in any case, but seeing a competitor edge closer to the starting line can’t be good news for the beleaguered biotech. The LAT has more; so does Pharmalot.

Odds and ends from around the Web – A collection of quick takes on interesting items that might warrant a deeper look down the line:

• Ten years after Bill Clinton launched a drive to find an AIDS vaccine within a decade, the goal is nowhere in sight (Scientific American)
• Dendreon, still reeling from the FDA’s decision to postpone approval of its prostate-cancer vaccine, cuts staff by 18 percent (AP via Forbes)
• Medicare announced it won’t reimburse for artificial disks used as alternatives to spinal fusion, at least in patients 60 and older, dashing the hopes of medical-device makers (NYT)
• A California doctor’s group has begun posting its prices for straightforward procedures in an attempt to ward off competition from inexpensive walk-in medical clinics (LAT via the Merc)
• Medical researchers have teamed up with hedge-fund managers to offer a $1 million prize for the best new ideas in cancer research (Reuters)