VentureBeat

TODAY’S HEADLINES:

• Affinergy gets $3M in grants for biological “linkers” (release)
• Specialty pharma EUSA raises $50M, spends $23M for public biotech Cytogen (release)
• Calderome takes in $12M for cancer diagnostics (peHUB)
• Pulse Health raises $2M for handheld free-radical device (release)
  
• LifeMasters takes in $15M for wellness, disease-management programs (release)
• Dubai Techno Park launched $300MVC fund for life sciences, other sectors (release)

Affinergy gets $3M in grants for biological “linkers” – Affinergy, a Duke University spinout in Research Triangle Park, N.C., received grants worth more than $3 milllion to support development of biological “linker” molecules with potential uses in coatings for medical devices and the development of new therapeutics. The grants were awarded by the federal National Institutes of Health through its small-business innovation research program.

The startup is developing biological molecules that can selectively bind various substances to particular surfaces. Such linkage molecules could, for instance, attach healing growth factors to surgical meshes or other implanted biomaterials or help target drugs at particular cell-surface proteins. The company hasn’t described its goals in much detail, although it said one of the grants is for work aimed at accelerating a patient’s natural healing process.

Specialty pharma EUSA raises $50M, spends $23M for public biotech Cytogen – In today’s man-bites-dog news, the venture-backed specialty pharma EUSA Pharma agreed to acquire the publicly traded biotech Cytogen for $22.6 million. The EUSA release is here; Cytogen has its own release here.

In one sense, the news isn’t terribly surprising, as Cytogen effectively put itself up for sale last November when it announced it was “reviewing strategic alternatives.” The twist here is that EUSA is taking the biotech private — a sign of just how far Cytogen’s fortunes have fallen since the heady days of the 1999-2000 biotech bubble, when its stock almost touched $200 a share. EUSA, which has offices in Doylestown, Pa., and Oxford, England, is offering 62 cents a share, a 35 percent premium over Cytogen’s closing price yesterday of 46 cents.

On the business front, however, it’s hard to say that the combination will be much more exciting than either company has been individually. Both EUSA and Cytogen traffic in a range of largely unrelated drugs for pain and cancer treatment.

EUSA raised $50 million to finance the cash transaction, for working capital and to restructure Cytogen. Investors included TVM Capital, Essex Woodlands, 3i, Goldman Sachs, Advent Venture Partners, SV Life Sciences, NeoMed and NovaQuest.

Calderome takes in $12M for cancer diagnostics – Calderome (no Web site), a South San Francisco, Calif., developer of cancer diagnostics, has taken in $11.9 million of a $23 million first funding round, peHUB reports. (peHUB identifies the company as located in Menlo Park, Calif., but two Calderome job postings on Biospace indicate its headquarters are actually in South San Francisco.)

In fact, I’m loving job listings at the moment, because the company also advertised one of those positions on Craigslist here. According to that listing:

Calderome, Inc. is an early stage cancer diagnostics company addressing the emerging opportunities in personalized medicine. The Company’s strategic vision is to develop a novel molecular cytology approach to improve the diagnosis of cancer, saving patients thousands of unnecessary surgeries every year. The company has spent the last year validating its business model with key stakeholders: physicians, patients and payers and has recently closed a significant round of private equity financing with premier venture capital investors….

In other words, it sounds very much like the company is developing a cell-based diagnostic, possibly involving a test that can pick up tumor cells that circulate in the bloodstream, that can help diagnose cancer without the need for invasive biopsies. That’s merely speculation, however.

Investors in the round include Kleiner Perkins Caufield & Byers, TPG Biotechnology Partners and Versant Ventures.

Vast amounts of power are locked away in the movements of the ocean, but because of technical challenges, the number of startups that have attempted to harness wave power thus far is relatively small when compared to wind or solar.

OreCon is the latest, with plans for a sort of giant, self-contained buoy that floats atop the water, each unit generating a megawatt and a half of energy. The company has raised $24 million, which it plans to use in building a full-scale example.

One of the problems with putting mechanical equipment in the ocean is that the salt and other chemicals in sea water tend to destroy moving parts. OreCon uses a design called the Oscillating Water Column to keep most of the parts well above water level.

In an OWC, which is a well-known setup, the pressure from waves outside the device causes water to rise and fall within it, which in turn pushes air in and out through a turbine, creating energy. They tend to be fairly inefficient, though. (See this brief animation to get a better idea of what happens in an OWC.)

OreCon’s innovation is using what it calls “multi-resonant chambers”. In its proprietary design, the company deploys multiple OWCs around a 40 meter platform that’s tethered to the sea floor a few miles off shore.

The first unit should be deployed somewhere off the coast of England in Cornwall, near Plymouth, where OreCon was founded six years ago. Closer to home, rival designs by Finavera Renewables and Pelamis Wave Power are planned for deployment off the coast near San Francisco.

The funding OreCon raised was for £12 million (about $24 million US dollars). The round was led by Advent Venture Partners, and Venrock, Wellington Partners and Northzone Ventures also participated.

Wisair, an Israeli ultra-wideband firm, has raised a large round of funding and says it’s gearing up to deliver more wireless USB products to the market, a technology that could cut down on the clutter of wires on the average computer user’s desk.

USB is the standard connection for most electronics that you hook up to your computer, among them cameras and MP3 players, and some equipment like the keyboard and mouse. Wired USB hasn’t been replaced by a technology like Bluetooth because wired connections provide much higher data transfer rates than any wireless product currently on the market can support.

Wireless USB technology makes use of ultra-wideband, a radio standard that’s short range but has very high bandwidth, reaching speeds of nearly 500 megabytes per second in perfect conditions. That’s plenty for any regular data transfer.

However, there’s competition from every angle. Aside from other ultra-wideband startups like Artimi and Tzero (coverage here and here), companies making Bluetooth-capable electronics are using UWB to make it more competitive, and next-generation WiFi technologies are also catching up.

Wisair’s current product is a pair of dongles, one of which connects to a device and the other to your computer, which can then communicate with each other. To continue being competitive in the future, the company will likely have to miniaturize further and convince electronics companies to include WUSB in their products.

The $24 million funding was led by Susquehanna Growth Equity, a private equity fund. Also participating were new investors Advent Venture Partners, Bridge Capital Fund of Japan and Yasuda Ventures, and existing investors Apex Partners, Broadcom, Intel Capital, Vertex, and the Zisapel brothers.

Dailymotion, a Paris, France-based video-sharing site that’s a distant competitor to YouTube, has raised $34 million in funding, according to the Wall Street Journal.

The site, like many others, lets you share personal videos privately with friends or publicly with anyone. Like its competitors, people can also comment on each other’s videos, embed Dailymotion video clips in other sites, tag videos, view selected channels, etc.

However, Dailymotion has distinguished itself by tailoring its site to country locations. In France, it offers a French language site, and does community-building events there — for example, it months ago it started foster debate among French politicians, before YouTube started something similar here in the U.S. Dailymotion is neck and neck with YouTube for top ranked video site in that country. Dailymotion does something similar in Germany and other European countries. It lets people click on a flag icon at the top, for example the UK’s flag, if they want to view the site in English (see below)

Other distant competitors to YouTube have also raised large amounts of funding recently. Metacafe raised $30 million last week, Veoh raised $26 million in June.

One might call these sites also-rans compared to YouTube — YouTube has 61.77 percent of the US market, for example, while Daily Motion has 0.76 percent, according to Hitwise (table below). Internationally, the news is better for the company, as it was the ninth-fastest growing site on the web in May, with 28 million users, according to Comscore.

With these large cash infusions, these video sites may better described as also-runnings, not also rans. Video sites are expensive to run because they require the constant transfer of large amounts of video data between their own servers and end user’s computers — and need cash to pay for large amounts of traffic.

The hope of these investors, maybe, is that consumer web companies with solid traffic levels are still attractive purchases even if they aren’t market leaders. Many larger media companies are looking to establish their own online video brands, and have the money to buy their way into the market.

For example, Fotolog, a photo-sharing site not unlike Flickr (purchased last year by Yahoo) and Photobucket (purchased months ago by Fox/Myspace) was itself purchased last week by French media firm Hi-Media for $90 million.

New investors include Advent Venture Partners LLP and AGF Private Equity, which is a division of Allianz AG. Previous investors, Atlas Ventures and Partech International, participated in the round.

(UPDATED at 7:10pm PT: See below.)

Featured companies: NeurAxon, VytronUS, Avila Therapeutics, CardioNet, Ventana Medical Systems, CytoLogix, PlaCor

NeurAxon raises $32M for pain drugs — You have to hand it to Waltham, Mass.-based NeurAxon — the company certainly knows how to keep itself in the news. Today, it announced it has raised $32 million in a second funding round, a week after it reported a positive early-stage trial result for its experimental migraine treatment.

Investors included Delphi Ventures, OrbiMed Advisors, BDC Venture Capital, Genesys Capital Partners, H.I.G. Ventures, NeuroVentures Fund, Ventures West Capital and Lawrence Bloch, NeurAxon’s CEO.

Stealthy VytronUS gets $6.6M — Los Altos, Calif.-based VytronUS, a secretive medical-device company, raised $6.6 million in a first funding round, PE Hub reports, citing a regulatory filing. Delphi Ventures and New Enterprise Associates provided the funds.

Avila Therapeutics receives undisclosed first funding — Avila Therapeutics, a Waltham, Mass., biotech focused on cancer and viral disease, raised an undisclosed first funding round in February, VentureWire reports (subscription required). Investors included Abingworth Management, Advent Venture Partners, Atlas Venture and Polaris Venture Partners. The company doesn’t have a Web site.

Wireless heart monitor CardioNet files to raise $150M in an IPO — CardioNet, a San Diego medical-device firm focused on wireless heartbeat monitors, filed to raise up to $150 million in an IPO. The company still isn’t profitable, although its sales appear to be set to double this year.

The In Vivo blog has some additional insight into CardioNet’s rather convoluted funding history.

Defunct device maker wins patent case against Ventana — CytoLogix, a failed medical-device startup formerly based in Cambridge, Mass., won a patent-infringement suit against publicly traded Ventana Medical Systems of Tuscon, Ariz. A jury awarded CytoLogix $10.8 million in damages, but said Ventana wasn’t liable for related antitrust claims. CytoLogix attorneys have said they will seek to have the damages paid to the company’s shareholders, VentureWire reports.

From VentureWire:

CytoLogix alleged in the patent litigation that Ventana learned about CytoLogix’s proprietary intellectual property by gaining access to a confidential business plan that CytoLogix had distributed in the mid-1990s as part of its search for venture capital. This allegation stemmed from an admission made by Ventana’s then-Chairman Jack Schuler, as part of an address he made in October 1999, at a U.S. Trust investment conference in Tarrytown, N.Y.

In the speech, Schuler described in detail how years before, Ventana had made use of information in the business plan. A 2002 Barron’s article about the litigation quotes him in the speech as having acknowledged the competition in a major way.

CytoLogix sold its business operations to Dako in 2002, and currently exists only to pursue the litigation. Ventana, meanwhile, is trying to fend off an unsolicited takeover offer from Roche.

The original Barron’s article on the lawsuit is here, and there’s a little more detail on the decision in this AP story.

PlaCor names new CEO — PlaCor, a Plymouth, Minn., developer of blood-cell diagnostics, named John Reinke as CEO, effective Sept. 4. PlaCor is developing diagnostic tests of platelet reactivity intended to determine patient response to anticoagulant treatment following serious blood-clot incidents, which can lead to heart attacks or strokes. Current CEO Bill Haworth will become the company’s chief scientific officer.

UPDATE (7:10pm PT): Added items on Ventana/CytoLogix lawsuit and PlaCor.

Conatus Pharmaceuticals, a San Diego developer of drugs for inflammation and liver disease, closed a $22 million private placement that brings its first round of funding to $27.5 million. Investors included Aberdare Ventures, Advent Venture Partners, Bay City Capital, and Gilde Healthcare Partners.

Conatus was founded by former executives of Idun Pharmaceuticals in mid-2005 after Pfizer acquired their company. The funding will support mid-stage clinical trials of its lead compound, CTS-1027, for liver disease. The first trial, in hepatitis C patients, is expected to begin by the end of this year. Conatus licensed CTS-1027 from Roche last November.