VentureBeat

TODAY’S HEADLINES:

• VaxGen, Raven Bio terminate merger agreement (release)
• Aerovance gets $20M in venture debt for respiratory disease (release)
• EKOS raises $5M for ultrasound catheters (peHUB)
• Intelligent Bio-Systems draws $353K for high-speed genome sequencing (peHUB)
• Quintessence Bio takes in $5M for cancer-directed proteins (VentureWire)
• 7 Health Ventures adds three members to investment team (release)
• Contract manufacturer Cytovance names Darren Head CEO (release)

VaxGen, Raven Bio terminate merger agreement – A weirdly structured, always hard-to-understand merger between the failed vaccine biotech VaxGen and startup Raven Biotechnologies has collapsed. The two companies called off the combination after it became clear that a majority of VaxGen shareholders would reject it.

The deal aimed to create a new company out of VaxGen’s cash holdings and biomanufacturing facilities and Raven’s antibody-drug program, which remains at an early stage of development. The merger would also have given Raven a quick route to public listing of its stock. Both companies are located in South San Francisco, Calif.

But many VaxGen shareholders — in particular, the investment firm MedCap Management & Research, which waged a sharp effort to derail the deal — believed the deal undervalued VaxGen, which they figured would yield a better return to investors through liquidation. VaxGen, a once pioneering maker of experimental vaccines against HIV and anthrax that is now little more than an empty shell, said it would immediately assess its strategic alternatives, including possible liquidation.

Aerovance gets $20M in venture debt for respiratory disease – Aerovance, a Berkeley, Calif., developer of asthma and eczema drugs, took on $20 million of venture debt. The startup drew down $10 million of that sum at closing; the rest will become available once it achieves unspecified milestones.

A syndicate of lenders provided the funding, including Oxford Finance Corporation, Silicon Valley Bank and Comerica Bank. Aerovance, which spun out of Bayer Pharmaceuticals in 2004, said the funding would enable it to continue looking for a drug-company partner for its asthma drug and to pursue other “strategic goals.”

EKOS raises $5M for ultrasound catheters – EKOS, a Bothell, Wash., maker of ultrasound-enhanced drug-delivery systems, raised $5 million in new equity funding, peHUB reports, citing a regulatory filing. No investors were disclosed. As we wrote last June when the company raised $10 million in venture debt, EKOS makes catheters that use both drugs and ultrasound to break up blood clots.

Intelligent Bio-Systems draws $353K for high-speed genome sequencing – Waltham, Mass.-based Intelligent Bio-Systems raised $353,000 in a first funding round, peHUB reports, citing a regulatory filing. The company is developing next-generation DNA analysis systems and promises to deliver technology that can sequence a full human genome for just $5,000 in about 24 hours, as we described earlier.

Featured companies: AerovectRx, Dicerna Pharmaceuticals, Harmony Information Systems, Intelligent Hospital Systems, Merrion Pharmaceuticals, Syntaxin, SymBio Pharmaceuticals

UPDATED: Expanded items on Harmony Info, SymBio Pharma and Merrion Pharma, added Dicerna item.
UPDATE REDUX: Added Syntaxin item.

U.K. biotech Syntaxin raises £16M for pain and nervous-system drugs — Syntaxin, a U.K. biotech focused on drugs that affect cell secretion, raised £16 million ($33.2 million) in a second funding round. The company’s release is here.

Investors in the round included SR One, the venture capital arm of GlaxoSmithKline; Life Science Partners; Abingworth; Johnson & Johnson Development; and Quest for Growth. Syntaxin is developing drugs derived from bacterial toxins that block the release of chemicals known as neurotransmitters, which may be useful in treating pain, respiratory disease, neurological problems and obesity and related metabolic disorders.

Harmony Info, a healthcare IT provider, raises $28M to fund acquisition and expand sales — Reston, Va.-based Harmony Information Systems, a maker of healthcare software for government agencies and nonprofits, raised $28 million in a second funding round consisting of equity and debt. Investors included JMI Equity, Updata Partners, ORIX Venture Finance and Comerica Bank.

On Monday, Harmony announced the acquisition of rival Synergy Software Technologies for undisclosed terms. Harmony provides IT systems that handle electronic medical records, billing and insurance-claims management.

Japan’s SymBio Pharma closes in on ¥2B funding — Tokyo’s SymBio Pharmaceuticals, a specialty pharma founded in 2005, is near closing a ¥2 billion ($17.4 million) third round of funding, VentureWire reports (subscription required). The company is focused on acquiring and developing drugs for cancer, blood disease and autoimmune conditions.

Co-founder Lowell Sears, a former Amgen CFO and now CEO of Sears Capital Management, has long been active in the Asian pharmaceuticals market. From VentureWire:

He was a founding investor, for instance, in Peninsula Pharmaceuticals Inc., an Alameda, Calif.-based company that licensed late-stage antibiotics from Japanese companies. Johnson & Johnson acquired Peninsula in 2005, and Forest Laboratories Inc. bought Peninsula spinout Cerexa Inc. in January.

Sears and Fuminori Yoshida, whom Sears once hired to be president of Amgen’s Japanese unit, started SymBio to do the reverse of Peninsula by acquiring Asian product rights.

Like JapanBridge, an MPM Capital-founded company we wrote about here, SymBio essentially aims to acquire drugs or drug candidates from elsewhere in order to win regulatory approval and sell them in Japan.

Irish specialty pharma Merrion slashes IPO range — Dublin’s Merrion Pharmaceuticals, a specialty pharma we last checked in on over the weekend, sharply lowered its expected IPO range. The company, which had hoped to sell as many as 4.6 million shares (listed in the U.S. as American Depositary Shares) for $10 to $12, now expects only $6 to $7 per ADS.

That lowers Merrion’s maximum IPO take to $32.2 million, down from an earlier $55.2 million, and gives the company a post-offering market capitalization of up to $122.9 million. Merrion rejiggers existing drugs to make them easier to take by mouth.

New RNA-interference biotech Dicerna shoots for $13M, aims to work around RNAi patents — Dicerna Pharmaceuticals, a stealthy, Boston-based biotech in the field of RNA interference, aims to raise $13 million in a first funding round, the In Vivo blog reports. The company, co-founded by John Rossi of Duarte, Calif.’s City of Hope National Medical Center and Mark Behlke of Integrated DNA Technologies, is focused on making new drugs via the “gene-silencing” properties of RNAi while sidestepping a patent thicket that has grown up around the technology. The company expects to close its funding in November.

Unless you’re a nucleic-acid chemist (or a patent lawyer focused on same), the details of Dicerna’s strategy are most likely beside the point, although I’m sure the In Vivo folks would welcome your attention if you’re really interested. Suffice to say that the company’s founders believe they’re found a new way to build these gene-silencing molecules that isn’t covered by some of the fundamental patents in the field. If that’s true — and no one will really know for years, if ever — it could spark new attention from Big Pharma and other biotechs that have so far sat out the increasingly frantic, and expensive, race to make RNAi drugs.

As with any early-stage technology, it’s helpful to bear in mind that no one has yet demonstrated that RNAi molecules can even work as safe and effective drugs, much less that they’ll be the magic bullet that some have claimed. Still, a lot of money has been sloshing around the field recently (see our coverage in the third item here), and there’s little doubt that deep-pocketed folks still on the sidelines will want to at least check out Dicerna’s claims.

OTHER HEADLINES OF NOTE:

• IH Systems pulls in $7.6M for robot syringe-filler (release)
• AerovectRx names Ed Cannon as new CEO (release)

Featured companies: 23andMe, APT Pharmaceuticals, Hyperion Therapeutics, Isis Biopolymer, Virogenomics

UPDATED at 10:30am PT.

APT Pharma raises $22M for transplant and heart drugs — Burlingame, Calif.’s APT Pharmaceuticals, a specialty pharma currently focused on a drug to fight organ-transplant rejection, raised $22 million in an extension of its first funding round. Investors included Versant Ventures, Great Point Partners, Vivo Ventures and Charter Life Sciences.

APT, which acquires its drug candidates instead of developing them itself, has raised a total of $30 million to date. Its lead candidate is an inhalable form of the immunosuppressive drug cyclosporine, called Pulmoniq, which is intended to prevent rejection and improve survival in lung-transplant patients.

23andMe reveals size of first funding round — PE Hub reports that Google-backed 23andMe has raised $8.9 million, citing a regulatory filing. Apparently, however, this isn’t new funding. When the personal-genomics startup (see our coverage here and here) announced its funding back in May, all we knew was that Google had invested $3.9 million, with unspecified participation by Mohr-Davidow Ventures and New Enterprise Associates bringing the round to somewhere around $10 million. I’m now told that the $8.9 million figure is just the total of that first round, which also included participation of some angel investors.

Hyperion Therapeutics drums up $15M in debt — The South San Francisco specialty pharma pulled in $15 million in debt financing from Comerica Bank and Life Sciences Capital. Hyperion, which raised $40 million in equity just a month ago (see our coverage in the first item here), in-licenses drug candidates from other companies and runs them through clinical trials.

The company also announced a slate of senior executives, many of them from Ucyclyd, a Medicis Pharmaceutical unit with which Hyperion recently concluded a licensing deal. Hyperion’s lead drug candidates address a gastrointestinal disorder and liver disease.

Drug-delivery company Isis Biopolymer draws $1.5M — Isis Biopolymer, a Warwick, R.I., device maker focused on a new drug-delivery technology, raised $1.5 million in seed funding, VentureWire reports (subscription required). GP Bullhound of London provided the funding.

Isis is exploring ways of using electrophoresis, a low-level electric current that can theoretically drag large, charged drug molecules across barriers like skin, as a new way of delivering drugs without needles via a patch-type device — one the company tells VentureWire is “more of a Band-Aid than an iPod.” The company has launched a $5 million first round of fundraising, and expects to begin human trials of its patch early next year.

Virogenomics gets $2M grant for bio-sensor work — NIST awarded Tigard, Ore.-based Virogenomics a $2 million grant to develop a system that tests for a variety of biological molecules at once, the company said. A closer read of the company’s press release suggests that it is developing a kind of protein chip — essentially a way of scanning for the presence of particular proteins in a sample such as blood serum — that relies on some sort of microelectronic “transducers” to signal detection.

At least from this description, it’s not really clear why this sort of technology would warrant a NIST grant, as any number of companies are developing similar-sounding protein chips. Virogenomics is something between a biotechnology firm and an incubator; the company says it licenses promising technologies and develops them in-house until it can spin them off into new startup companies. (Virogenomics strikes me as a pretty odd name for this sort of tech-development outfit, unless it’s a failed biotech that later developed a new purpose, although that’s just a guess.)

Featured companies: ProNAi, Rubicor

ProNAi raises $2M for IV cancer drugs — ProNAi, a Kalamazoo, Mich., biotech focused on intravenous cancer drugs, raised $2 million toward a $4 million bridge round, VentureWire reports (subscription required). The company aims to raise a $25 million second round later tihs year. Its investors include Apjohn Ventures, Sigvion Capital, Amherst Fund, Grand Angels, the Michigan Economic Development Corp., the Biosciences Research Commercialization Center and the Michigan Technology Tri-Corridor.

ProNAi develops drugs based on “nucleic acid interference” to fight cancer. Its lead candidate, PNT2258, could enter early-stage clinical trials against skin and prostate cancer later this year.

Rubicor raises $10M in debt for breast-biopsy devices — Redwood City, Calif.-based Rubicor Medical, a developer of devices for taking minimally invasive biopsies of suspected breast tumors, raised $10 million in venture debt. The loan was provided by Comerica Bank and Oxford Finance.