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With oil past $120 a barrel and possibly headed to $200, cellulosic ethanol companies are looking like a smarter investment choice every day. Following the increase of Range Fuels’ second funding to $166 million, its competitor Mascoma has pulled the wraps off an $81 million funding of its own, with $10 million coming a major oil and gas producer, Marathon Oil Corporation.

Range, Mascoma, Coskata and others are all racing to raise huge amounts in an attempt to bring the world’s first full-scale cellulosic plant online. The stakes are high: If the process proves to be cheap enough, investors will be eager to pour money into new plants. On the other hand, waiting to see if competitors fail won’t be particularly helpful — each company has its own proprietary process.

Mascoma will begin production this year at a demonstration plant in Rome, New York, but is also planning facilities in Michigan and Tennessee. By comparison, its two largest competitors will build a single, big plant each, a bet that could presumably result in a more spectacular success, or failure.

Backing each company is a network of high-profile investors, some of whom overlap. General Motors has investments in both Coskata and Mascoma. Morgan Stanley is with Range Fuels, which also counts Khosla Ventures as an investor — and Khosla has invested in Mascoma, as well. Taking venture fundings and government grants together, Range Fuels is the most heavily funded, Mascoma coming second with just over $200 million now, and Coskata third.

It’s possibility none of the three emerge with a competitively priced product — something that also hinges on whether oil prices continue to climb, or fall back to somewhat saner levels. If all three find their methods too expensive, there is still a constellation of smaller cellulosic startups waiting for their own turn in the spotlight, like Zeachem.

Other investors in the round included Khosla, Flagship Ventures, Atlas Ventures, General Catalyst Partners, Kleiner Perkins Caufield & Byers, Pinnacle Ventures and Vantage Point Venture Partners. Out of the total amount, $20 million was venture debt provided by Pinnacle.

Mascoma, an East Coast biofuel startup with a multi-pronged approach to commercializing cellulosic ethanol, has just become one of the most heavily funded companies of its kind with a $50 million funding reported by peHUB.

Based in Cambridge, Mass., Mascoma is in the process of building several demonstration-scale ethanol plants in three other states: Michigan, New York and Tennessee. It’s partnered with a variety of different corporations and universities at each location.

What that boils down to is hedging its bets — by experimenting with several different feedstocks and processes, Mascoma is making itself more likely to hit the jackpot, a cost-effective cellulosic ethanol facility. The feedstocks it’s using include wood, switchgrass, and in New York, mixed materials like paper sludge and corn stover.

The $50 million funding was broken into a $30 million venture round and $20 million in debt. Participating were one new investor, General Catalyst Partners, and previous investors Khosla Ventures, Atlas Venture, Flagship Ventures, Kleiner Perkins Caufield & Byers, Pinnacle Ventures and VantagePoint Venture Partners. Including various government grants, the company has taken just over $100 million to date.

A number of companies decided to compete with DEMO for media coverage today by announcing some rather large acquisitions:

Paypal ponied up $170 million for Fraud Sciences, which prevents online fraud;

Nokia paid $153 million for Trolltech, which helps developers build cross-platform applications;

GSI Commerce gave $157 million for E-Dialog, an e-commerce company;

Finally, Imeem bought Anywhere.fm, an internet radio service.

Here are a few notes on each:

Paypal’s acquisition of Fraud Sciences was an all-cash deal for $170 million. The company had taken less than $20 million in funding to date, from investors Redpoint Ventures and BRM Capital. Fraud Sciences tracks online buyers to pin-point suspicious behavior, and is supposed to be particularly good at detecting fraudulent overseas transactions, a particular pain point for Paypal. (Press release)

Nokia also paid cash for Trolltech, which was a publicly-listed company on the Oslo Stock Exchange, but also had investors including Index Ventures. Simply put, Trolltech’s application development framework, called Qt, makes it much easier for developers to build applications that work across both PCs and mobile phones, as well as on the web. That sets Nokia up nicely to compete with Google’s Android, which we’ve covered here. (Press release)

Neither GSI Commerce nor E-Dialog is well known locally, but the acquisition price should turn some heads for its investors, which include Flagship Ventures and Commonwealth Capital Ventures. The company had taken about $20 million in funding, according to Xconomy. (Reuters)

Imeem likely didn’t pay that much for Anywhere.fm, at least in comparison to the price of the above three acquisitions. Then again, for a three-man startup that came out of Y Combinator less than a year ago, with no venture funding, even a few million is significant. Anywhere.fm, which only ever took angel funding, has about 60,000 users and will continue to operate as its own service. It will likely benefit greatly from the business deals Imeem has made with the major music labels, covered in more depth here. (Press release)

updated

Just as cars guzzle oil and spew out carbon dioxide, so does plastic manufacturing. Worse, landfills are overflowing with plastics that won’t degrade for hundreds of years, and harmful chemicals from some plastics threaten living organisms or eat away at the ozone layer.

Quite a few companies are working on, or already offer, plastics with safer properties. For example, some newer plastics are made from organic materials like sugar, biodegradable within weeks, or safe for animals (or the thumb-sucking variety of humans) to eat.

Novomer, of Ithaca, New York, says its manufacturing technology offers similar benefits, but with more precision and reliability in production. Where companies like NatureWorks rely on biological processes to make new forms of plastic, Novomer uses old-fashioned chemistry — think steaming vats and chain reactions. Compared to methods of biologically growing or combining materials, chemical reactions are more precise and reliable, says Novomer’s president, Charles Hamilton. This makes overall production cheaper, he said.

Traditional methods of making plastic have their basis in chemistry, but often rely on breaking down complex petroleum molecules and rebuilding them into new forms. Novomer’s zinc-based catalytic chemicals, discovered at Cornell University and licensed to the company, can start off with simple materials and force them to combine. This allows for easier customization of the end product.

Novomer’s process can use carbon monoxide and, conveniently, carbon dioxide, the gas most often accused of causing global warming. Incidentally, we recently reported on another startup that wants to capture carbon dioxide released during manufacturing processes. Calera, backed by Khosla Ventures, says it can reclaim escaping CO2 for re-use it in the process of making cement.

There’s also Segetis, another Khosla Ventures company we’ve covered that says it can build new materials from low-cost, commonly available feedstock, just like Novomer. However, it bases its products on biological materials (corn, for instance).

Novomer says it will use its funding identify a plastic polymer in its existing portfolio that offers a good business opportunity, and begin scaling up production of that polymer for the mass market. The company already manufactures and sells small batches of specialized plastics.

The $6.6 million funding was co-led by Physic Ventures and Flagship Ventures. Although it is Novomer’s first venture funding, it previously took angel funding and about $1.3 million in grants from several governmental organizations.

Update: This round also included a strategic investment from DSM Venturing, the investment arm of Royal DSM, a large material sciences company in the Netherlands.  The specific amount of DSM’s investment was not disclosed, but it was part of the $6.6 million total.

Featured companies: Acceleron Pharma, Bledsoe Brace Systems, Eurobiobiz, Genoptix, Harmony Information Systems, ImmuneWorks, Pasteuria Bioscience, Renal CarePartners, Quantum Genomics, Synergy Software, Vitreo Retinal Technology

UPDATED: Expanded items on Genoptix and Acceleron Pharma.

Diagnostics biotech Genoptix prices IPO above range, raises up to $98M — Genoptix became one of the first biotechs in a long time to demonstrate some oomph with an IPO, pricing its shares above its expected range and then soaring nearly 50 percent in its first day of trading. Genoptix priced its shares at $17 apiece, above its expected range of $14 to $16, netting itself as much as $97.8 million in the process. (Actually, existing shareholders sold close to three-quarters of a million shares in the IPO, so the proceeds to Genoptix are more like $85.6 million.)

At the very least, the positive reception appears to support the notion that biotech investors are currently more interested in reliable service businesses such as Genoptix’s diagnostics work than they are in traditional biotech moon shots, since they offer lower risk even at the cost of slower growth. Perhaps there’s hope for Talecris Biotherapeutics after all.

We’ve covered the company here and here. The offering initially valued Genoptix at $265.2 million, although today’s share run-up to $25.35 now values the company at $395.5 million. Genoptix provides diagnostic services to cancer and blood-disease specialists in order to help with diagnosing and selecting appropriate treatments for various cancers.

Acceleron Pharma draws in $31M for tissue-regeneration drugs — Cambridge, Mass.-based Acceleron Pharma, a biotech focused on “regenerative” drugs that target a family of growth and development proteins, raised $31 million in a third funding round. Investors included Bessemer Venture Partners, MPM BioEquities, QVT Financial, Advanced Technology Ventures, Flagship Ventures, OrbiMed Advisors, Polaris Ventures, Sutter Hill Ventures and Venrock.

The company’s lead drug candidate, ACE-011, aims to stimulate bone regrowth in cancer patients. That drug should move into mid-stage clinical trials in the first quarter of next year. The company intends to begin early human tests of two other drugs — one designed to increase muscle mass and strength, the other an “anti-angiogenesis” cancer drug — next year.

OTHER HEADLINES OF NOTE:

• Medical-IT co. Harmony Info raises $28M, acquires Synergy Software (release)
• Vitreo Retinal Tech adds $3M to round for eye drugs (PE Hub)
• ImmuneWorks gets $300K for lung-disease drugs (release)
• Bledsoe Brace sells majority stake to Essex Woodlands (PE Hub)
• Quantum Genomics acquires Eurobiobiz (release)
• Renal CarePartners acquires two dialysis providers (VentureWire, sub req’d)
• Pasteuria Bioscience names David Duncan new CEO (release)

LS9, a Silicon Valley startup that hopes its technology may one day help replace petroleum, has taken $15 million more in funding.

The San Carlos, Calif. company uses synthetic biology to modify microorganisms in order to produce high-energy fuels, including to power cars (see our previous coverage).

According to the company’s own projections, it is two to three years from commercializing and selling a synthetic fuel. LS9 recently recruited president Robert Walsh, who brings several decades of supply-line experience from Royal Dutch Shell.

Despite the huge potential returns from producing synthetic fuels, the number of startups in the field is limited by the small pool of knowledgeable experts in synthetic biology. One pioneer is Craig Venter, who recently added to his own human genome project fame by announcing he is capable of creating life. His own company, Synthetic Genomics, is a competitor to LS9.

Other companies competing in the area include Amyris Biotechnologies and Codexis. Each startup is betting on its own proprietary methods to replace petroleum-based fuels.

LS9’s most recent $15 million in funding was led by Lightspeed Venture Partners. Flagship Ventures and Khosla Ventures, the company’s original backer, also participated. The company has so far taken a total of about $20 million.

(UPDATED at 6:40pm PT: See below.)

Featured companies: Nereus Phramaceuticals, KFx Medical, NeuroMed Pharmaceuticals, Adnexus Therapeutics, Masimo, Biofisica, Aegera Therapeutics, LymphoSign, InfuScience, Palmetto Infusion Services

Nereus Pharma raises $45M for ocean-derived cancer drugs — San Diego’s Nereus Pharmaceuticals, a biotech that searches for cancer drugs in marine microbes, raised $45 million in a follow-on to its fourth funding round.

The company features an all-star lineup of investors, which includes BankInvest, Roche Venture Fund, Astellas Venture Management, Boston Life Science Venture Corporation, Taiwan Global Biofund, Eminent Venture Capital, HBM BioVentures, Alta Partners, Forward Ventures, Advent International, GIMV, InterWest Partners and Pacific Venture Group.

From the press release:

The proceeds from the financing will be drawn down in two tranches and used to complete Phase I and begin Phase II clinical trials for Nereus’ two drug candidates. The first compound, NPI-2358, is being evaluated for the treatment of solid tumors and lymphomas in Phase I clinical trials. It is a potent, selective tumor vascular disrupting agent (VDA), a class of compounds that represents a novel approach to disrupting the intrinsic tumor blood flow, which leads to tumor cell death. NPI-2358 has favorable preclinical characteristics, such as a longer duration of action on tumor blood flow, activity against multi-drug resistant tumor cell lines and a favorable preclinical toxicology profile. The compound is one of 200 analogues that were produced after finding activity and novel chemistry from a marine fungal extract.

Nereus’ proteasome inhibitor NPI-0052 is in Phase I trials for solid tumors, lymphomas and multiple myeloma. Preclinical studies indicate that this next generation compound may be superior to Velcade(R), with broader target inhibition, faster onset of action, higher potency, oral and intravenous availability, and activity against myeloma cells resistant to Velcade(R) (bortezomib, Millennium), Thalomid(R) (thalidomide, Celgene Corporation), Revlimid(R) (lenalidomide, Celgene Corporation) and steroid therapy. NPI-0052 was derived from a marine-obligate gram-positive actinomycete (Salinispora tropica).

Rotator-cuff specialist KFx Medical raises $10M — San Diego’s KFx Medical, a Carlsbad, Calif., developer of minimally invasive repair systems for rotator-cuff injuries, raised $10 million in a second funding round. Investors included Alloy Ventures, Charter Life Sciences, Arboretum Ventures, Montreux Equity Partners, and MB Venture Partners.

It’s pretty difficult for a non-surgeon to figure out exactly how KFx’s system works better than current medical practice, but if you’re interested in a look, check it out here.

NeuroMed Pharma drops Merck work on pain drug, raises $36M — Vancouver-based NeuroMed Pharmaceuticals, a biotech focused on new pain meds, discontinued Merck-funded work on an experimental pain drug called MK-6721. The Merck collaboration, valued at as much as $475 million, will continue.

Separately, NeuroMed has raised $36 million toward a fifth funding round, VentureWire reports (subscription required). That round isn’t yet complete, and the investors haven’t been disclosed. The funding is designed to pay for completing late-stage human trials of a separate pain drug the company recently licensed from a J&J subsidiary.

Adnexus raises $15.5M against cancer — Adnexus Therapeutics, a Waltham, Mass., biotech developing a new class of drugs against cancer and other diseases, raised $15.5 million in a third funding round. Investors included HBM BioVentures (Cayman), Atlas Venture, Flagship Ventures, Polaris Venture Partners and Venrock. The company intends to use the proceeds to further clinical development of its lead candidate, Angiocept, which is currently in early-stage trials in cancer.

Masimo IPO raises $233 million, jumps 23% on first day — Irvine, Calif.-based Masimo, a major developer of non-invasive patient monitors, priced its IPO in the middle of its predicted range of $16 to $18 per share, raising as much as $232.9 million — just shy of the quarter-million-dollar mark we discussed here. Since the offering involved a hefty chunk of shares sold by existing shareholders, however, the company can only pocket up to $55.9 million of the proceeds. Investors received the offering warmly, pushing the stock up to $20.90 yesterday, a rise of 23 percent.

Biofisica raises $2M in venture debt for wound healing — Atlanta’s Biofisica, a medical-device maker focused on wound healing, raised $2 million in debt financing from Leader Ventures. The company makes an electrical-stimulation device designed to speed the healing of wounds, and currently sells it in the United Kingdom.

Aegera acquires LymphoSign, uniting two Canadian oncology biotechs — Aegera Therapeutics, a Montreal biotech focused on cancer, acquired Toronto’s LymphoSign, another cancer-specialized biotech, for undisclosed terms. Several shareholders also made additional investments in Aegera’s previously announced third funding round.

InfuScience acquires Palmetto Infusion Services — InfuScience, a Chicago provider of drug-infusion therapy, acquired Palmetto Infusion Services of Beaufort, S.C., for an undisclosed sum.

UPDATE (6:40pm PT): Added KFx Medical item.

Aveo Pharmaceuticals, a Cambridge, Mass. cancer-drug company, raised $53 million in a fourth round of funding from a coalition of mostly blue-chip life-science investors.

New investors included Biogen Idec, Bessemer Venture Partners, Merlin BioMed Group, Mitsubishi UFJ Financial Group and Vatera Holdings, an investment vehicle owned by Kos Pharmaceuticals founder Michael Jaharis. Schering-Plough also provided a $10 million equity investment as part of a collaboration agreement.

The round also included new funding from existing investors Highland Capital Partners, Venrock Associates, MPM Capital, Prospect Ventures, Flagship Ventures, Oxford Bioscience Partners, Greylock Partners, Lotus Biosciences and GE Capital.

Founded in 2002 by a pair of Harvard cancer researchers, Aveo claims to model tumor biology in sophisticated ways that allow it to identify more effective cancer drugs. Its lead candidate, AV-412, takes aim at epidermal growth-factor receptor, or EGFR, the same cancer-growth protein targeted by current drugs such as Erbitux, Tarceva and Iressa. Aveo says its models show that AV-412 is more potent than other EGFR drugs and appears to be active against tumors that are resistant to Tarceva or Iressa. AV-412 was in-licensed from Mitsubishi Pharma, and is currently in early-stage human testing.

Aveo, formerly known as GenPath Pharmaceuticals, has previously raised roughly $65 million. See the company’s release here.

Solar panel maker SunPower has agreed to acquire solar intaller PowerLight for about $332.5 million, creating a solar giant.

The purchase will bolster the wave of investments in solar; it proves there’s a way to make profits. PowerLight had received about $20 million in backing from investors, including Bay Area Equity Fund and New Energies AG.

They are the two largest solar players in the valley, and complement each others business. SunPower, of San Jose, makes efficient panels, but needs to distribute them to installer-contractors. Berkeley’s PowerLight, a leading installer, will help grease that process. See Merc story by Sarah Tribble.

The deal includes $265 million immediately, and the $67.5 million balance to be paid in two to four years.

Mascoma, a start-up that is trying to become the first commercial developer of cellulosic ethanol — something some environmentalists see as the Shangri La of alternative fuel — will announce tomorrow it has raised $30 million more in venture funding.

Funding for the Cambridge, Mass. company was led by General Catalyst Partners, and included Kleiner Perkins Caufield & Byers, Vantage Point Venture Partners, Atlas Venture, and Pinnacle Ventures. Existing investors Khosla Ventures and Flagship Ventures participated.

Khsola Ventures’ Vinod Khosla and Kleiner’s John Doerr between them spent millions to support the Calif. Prop. 87 “oil tax,” which would have funded alternative energy research. It was defeated last week, so this funding suggests they remain undeterred.

Currently, ethanol is made from corn, and is relatively expensive to produce, and remains more expensive than gasoline. But scientists say ethanol can be made much more cheaply by breaking down and converting cellulosic material (grass, wood, agricultural and forestry wastes) into ethanol. Several efforts have experimented with cellulosic production but none have become commercial ventures yet — and experts say it will be a couple of years yet before cellulosic production is ready for primetime. Once ready, it may be blended with, or even displace gasoline entirely.

Google, the giant search engine in Mountain View, is about to surpass Cisco to become the valley’s most valuable company.

It has passed IBM to become the third most valuable technology company, behind Cisco and Microsoft. Google’s stock is above $475 per share, bringing its total market worth ($475 x total number of shares) to $145 billion, surpassing the total value of IBM at 139.5 billion. Now it is breathing down the neck of Cisco, which has a value of $147.5 billion.

And you thought last week’s Googleplex solar power announcement was big? — Google just announced a 1.6 MW solar system it is building for the Googleplex. That makes it the largest corporate installation in the U.S. Now we learn Google really wants to install 10MW, to make the company “carbon neutral.” There’s a good summary of Google’s other goals via a leaked internal memo at the Google-watching blog called Google Blogoscoped.

But….Google is dropping its hiring standards — In the U.S., everyone graduates from college with a so-called GPA. A 4.0 is perfect. A 3.0 is pretty good. The rap on Google is that has required a 3.0 GPA for its applicants, as part of a notorious and excruciating set of high hiring standards. Until now. Google has dropped the requirement for sales people, according to John Battelle — apparently because it can’t find enough smart ones. Hmm, is Google saying something about sales people, or about the job market right now? Or that it’s just getting too big? We’ve pinged the Google press team to see what they say about this.