VentureBeat

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.

Featured companies: Advanced Bio-Surfaces, Ambit Biosciences, EnteroMedics, Molecular Vision, Skyline Ventures

UPDATED: Expanded items on Skyline Ventures, Ambit, and Molecular Vision, and moved EnteroMedics to a new item here.

Skyline Ventures raises $350M life-sciences fund — Skyline Ventures, a Palo Alto, Calif., VC firm, closed a $350 million fund for healthcare and life-sciences investments. The fund is Skyline’s fifth.

Skyline is unquestionably coming off a hot streak. As it notes in its release, three of its portfolio companies were acquired this year — Avidia, by Amgen; NimbleGen, by Roche; and NovaCardia, by Merck (the links point to our coverage). Four of its portfolio companies — Hansen Medical, Sirtris Pharmaceuticals, Map Pharmaceuticals and Targanta Pharmaceuticals — went public, of which two were big hits: Hansen is up 142 percent and Sirtris 70 percent. (Map is up 13 percent and Targanta is still down 7.5 percent.)

Skyline said it will continue to invest in a mix of early, mid- and later stage companies. The firm is targeting about 15 investments of about $15 million to $35 million per startup.

Cancer-drug maker Ambit Biosciences draws $49M — San Diego’s Ambit Biosciences, a biotech focused on new cancer drugs, raised $49.3 million in a fourth funding round. The company’s drugs block a class of signaling proteins called kinases, a technique that has yielded at least one major cancer drug — Gleevec, used to treat a form of leukemia.

Ambit’s leading drug candidate, a drug for a different form of leukemia, just got off the ground in April, so it will still be some time before anyone knows if its “discovery engine” for kinase inhibitors is yielding good drugs. That hasn’t deterred a number of biotech/pharma VC arms from investing in the latest round, including MedImmune Ventures, Roche Venture Fund and NovaQuest (an arm of Quintiles). Other investors include Apposite Capital, OrbiMed Advisors, Radius Ventures, Horizon Technology Finance, Perseus-Soros Biopharmaceutical Fund, Forward Ventures, Avalon Ventures, GIMV, Jov-CMDF, and Genechem.

EnteroMedics, obesity-device maker, almost halves IPO price target — This item has been expanded and moved here.

U.K.’s Molecular Vision acquired by Acrongenomics — Molecular Vision, a London developer of credit-card sized diagnostic devices, was acquired by Acrongenomics of Geneva for an undisclosed sum. Acrongenomics appears to be a grab-bag company that acquires promising life-science technologies and then brings them to market. The release is here.

Acrongenomics previously held a joint development agreement with Molecular Vision. Our previous coverage of Molecular Vision is here.

OTHER HEADLINES OF NOTE:

• Advanced Bio-Surfaces names David Lorenzi as new CEO (release)
• Novis Pharmaceuticals appoints Thomas E. Burke III as CEO (release)

Featured companies: Asteres, HemaQuest Pharmaceuticals, Nanosphere, Novalar Pharmaceuticals, Tranzyme Pharma

(UPDATED: Expanded items for Nanosphere, HemaQuest and Transzyme. Moved Novalar to a separate item here.)

Diagnostic maker Nanosphere prices IPO at low end of range, raises up to $113M — Nanosphere, a Northbrook, Ill., biotech focused on nanotech-derived diagnostics, priced its IPO at $14 a share, at the low end of its estimated range. The company, which could sell as many as eight million shares, stands to raise up to $112.7 million in the offering, which values the company at as much as $309.4 million.

Nanosphere is focused on molecular diagnostics that gauge the likelihood of problems such as blood clots or a patient’s likely response to a particular medication. Our previous coverage of the company is here and here.

HemaQuest draws $20M to fight blood disease — Newton, Mass.-based HemaQuest Pharmaceuticals (no Web site), a biotech focused on new drugs for blood disorders such as sickle-cell anemia, raised $20 million in a first funding round. Investors included De Novo Ventures, Forward Ventures and Lilly Ventures.

The company said the funds will support clinical trials of its first drug candidate, an oral treatment for sickle-cell anemia and beta thalassemia. Both diseases involve disorders of hemoglobin, the oxygen-carrying molecule found in red blood cells. HemaQuest said it intends to submit plans for a human test of its drug candidate, which it didn’t identify, by the end of this year.

Novalar raises $30M for dental-numbness reverser — See the full story here.

Tranzyme Pharma pulls in $20M for GI drugs — Tranzyme Pharma, a Research Triangle Park, N.C., biotech developing new drugs for gastrointestinal and metabolic disorders, raised $20 million in a third funding round. Investors included H.I.G. Ventures, Thomas, McNerney & Partners, Quaker BioVentures, and BDC Venture Capital.

Tranzyme’s lead drug candidate aims to treat severe gastroparesis, a condition in which food stops moving through the stomach, and ileus, a form of obstruction in the bowel. That drug, designated TZP-101, recently began mid-stage human trials in both conditions.

OTHER HEADLINES OF NOTE:

• Self-dispensing drug machine maker Asteres pulls in $8M (VentureWire, sub req’d)

Featured companies: Imalux, Sagent Pharmaceuticals, Sequel Pharmaceuticals, Sinexus, TranS1, U.S. Spinal Technologies

Sagent Pharmaceuticals draws in $53M for injectable generics — Sagent Pharmaceuticals, proving that there’s still life in the apparently lucrative but boring specialty-pharmaceuticals business, raised $53 million in a first funding round. Vivo Ventures led the round for the Schaumburg, Ill., company.

Like other specialty pharmas, Sagent essentially picks up abandoned or cast-off drugs from other companies and tries to make them work in new ways. The company plans to take its first product to market in the fourth quarter, VentureWire reports (subscription required).

From VentureWire:

Schaumburg, Ill.-based Sagent focuses on the development of injectable treatments. The company’s core strength is generic pharmaceuticals, Yu said, and it has a broad-based focus on injectable treatments for a variety of indications. Sagent currently has more than 200 products in development, and plans to launch its first injectable treatment, which has already been approved by the Food and Drug Administration, in the fourth quarter. For the commercialization, Sagent plans to draw on the 20 business partnerships the company has worked to establish, Pauli said.

NovaCardia spinoff Sequel Pharma draws on $20M for heart drug — Fresh from the sale of NovaCardia to Merck (see our coverage here), officials of that heart-drug company founded a second startup, San Diego’s aptly named Sequel Pharmaceuticals, and raised $20 million in a first funding round. Investors included Domain Associates, Forward Ventures, InterWest Partners, Montreux Equity Partners, and Skyline Ventures.

Sequel owns the rights to one of NovaCardia’s former drugs, which it intends to develop as a treatment for atrial fibrillation, a problem characterized by uncoordinated pumping and electrical activity in the heart’s upper chambers that can put people at risk of blood clots and strokes. The company also plans to develop novel drugs for its pipeline.

U.S. Spinal Tech to seek $20 million — Boca Raton, Fla.-based U.S. Spinal Technologies said it plans to solicit $20 million in third-round funding, VentureWire reports. The company has begun speaking to investors but hasn’t yet received any money.

So far, the company has raised $9 million, 40 percent of that from angels and the remainder from other individuals. U.S. Spine makes several spinal implants that are already on the market, but a flagship device designed to replace the “pedicle screws” that serve as anchor points for rods in spinal fusion is stilll under development.

Sinexus raises $3.5M for sinusitis devices — Palo Alto, Calif.-based Sinexus raised $3.5 million in a first funding round, PE Hub reports, citing a regulatory filing. Investors included Kleiner Perkins Caufield & Buyers and U.S. Venture Partners. The medical-device company is focused on treating chronic inflammation of the nasal passages.

As it turns out, Sinexus also received seed funding in 2003 from Durect, a company that makes drug-delivery technologies. According to this 10-K filed with the SEC, Durect and an unnamed venture-capital firm each loaned Sinexus $150,000; Durect repurchased the obligation from Sinexus in February 2006.

Medical imager Imalux pulls in $5.1M — Cleveland’s Imalux, a developer of optical-tomography imaging systems, raised $5.1 million in a third funding round. The proceeds include the conversion of $2.5 million in bridge financing. Early Stage Partners, ElectroSonics Medical, Reservoir Venture Partners, Symark, and more than twenty other prior and new investors participated in the round.

Spinal-device maker TranS1 sets IPO range, aims to raise up to $88.6M — Wilmington, N.C.-based TranS1, a developer of minimally invasive spinal-fusion devices, said it plans to price its IPO shares between $12 and $14 apiece, yielding a maximum possible take of $88.6 million. See our earlier coverage of TranS1’s IPO here.

(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.

San Diego’s TargeGen, a biotechnology targeting disease treatments related to abnormal blood-vessel growth, raised $40 million in a fourth funding round. New investors included Innovis Investments, VantagePoint Venture Partners and CTI Life Sciences Fund, joined by existing investors Forward Ventures, Enterprise Partners, Chicago Growth Partners.

TargeGen’s potential disease targets range from eye diseases such as age-related macular degeneration (AMD) to cancer to heart disease. Its leading drug candidate, TG100801, completed an early-stage phase I trial in AMD-related vision loss in February, but said only that the drug appeared safe and “well tolerated.”

(Note: This item has been copied over to the Life Sciences page from its original location on the VentureBeat main page. To view it in its original context, with comments, click here.)

Venture investors’ interest in early-stage biotech companies may finally be starting to revive, nearly six years after the collapse of a biotech-stock bubble quashed appetites for the industry’s riskiest but often most innovative companies.

Biotech fundraising is certainly booming. The industry newsletter BioCentury (no link available) recently reported that biotechnology pulled in nearly $2 billion in venture capital during the first quarter, topping the previous record of more than $1.7 billion in the fourth quarter of 2000. A recent survey by law firm Fenwick & West* revealed that 79 percent of Bay Area biotechs saw their valuations rise during 2006, compared to 65 percent in 2005. Those rising valuations follow years in which the dreaded “down round” — a funding event that lowers the dollar value of a company — had become commonplace.

The bigger question, however, has been whether VCs would also renew their interest in early-stage biotechs — companies so young it could them a decade or more to push a new drug or related product through development and the regulatory approval process. Once making up the bulk of biotechnology in the first place, early-stage companies fell out of of favor after the 2000 biotech-stock bubble collapsed. Battered VCs shifted their attention to more mature companies that offered quicker “exits” — that is, profits on the venture investments — via initial offerings or acquisitions. Some in the industry worried that innovative but risky drug development and technologies might languish as a result.

Although it’s still early, venture funding for early-stage companies may be starting to pick up. Last month, for instance, a genetics and molecular-imaging startup called Numira Bioscience raised $2.5 million in first-round funding, $2 million of that from vSpring Capital. A few days later, Affinium Pharmaceuticals, a proteomics company-turned-antibiotic developer, raised $18 million as part of its restructuring and drew in Forward Ventures as a new investor.

Since enthusiasm for biotech tends to wax and wane periodically, VCs such as Phillipe Chambon of New Leaf Venture Partners say the resurgence of interest in early-stage companies reflects “the pendulum swinging back in the opposite direction.” One main reason: Cash-rich Big Pharma companies are desperate to bolster their own drug-development efforts by acquiring biotechs. (Even established biotechs like MedImmune are feeling the pressure to put themselves up for sale.) Since the pharmas are increasingly willing to buy even less mature biotechs, venture capitalists see early exits growing more likely, which in turn makes them more comfortable about funding the industry’s youngest companies.

At least, so goes the theory.

(*Disclosure: Fenwick & West is a sponsor of VentureBeat)