VentureBeat

RockYou, the fast-growing online widget company — that lets you post images and slideshows in social networks and other web sites — has apparently hit a major juncture in its decision to raise funding or not. And I’m wondering if it may have decided to go a different route.

The company, which is in a cut-throat competition with Slide, needs to raise cash — or sell. It isn’t profitable, and needs to keep up with Slide, which raised $50 million at a valuation of $500 million in January — a humongous financing that was considered a coup, considering how little cash the company is generating and the anemic economy (not great for advertising revenue).

We’ve learned from several independent sources that, as of about two weeks ago, RockYou had attracted some interest from investors at a valuation of $400 million, including from venture capital firm Interwest Partners. That valuation level matches the RockYou’s initial plans, which leaked out two months ago, of wanting to raise money at a $400 million valuation. But at that level, RockYou still lacked a “lead” investor, or one willing to make a sizable investment and round up enough other investors for a total of between $50 million and $70 million in funding. What’s more, the offer, we’re hearing, carried some additional terms that weren’t very attractive to the company. Two other investors offered a $200 million valuation with more favorable terms. So the goal - again, this was two weeks ago — was to hold out for a public market investor that might lead the round at the higher valuation.

However, here’s the twist: I got in touch with the company yesterday, and initially was told that the reports I’m hearing are “old” and “inaccurate.” The company suggested it had taken a change in direction, and indicated that some sort of announcement is close. In a second call yesterday, I reached co-founder Lance Tokuda directly. He wouldn’t comment on the fund-raising effort, said reiterated the fundraising news I’d heard is now inaccurate.

It supposedly could go after some debt financing, a la Facebook, but that is dangerous, because it assumes future cash flow.

Or could it mean that the company has decided to heed the advice we’ve heard it was getting from some of its investors? That is, consider a sale instead. Why not try to sell for $200 million or so, a level where each co-founder would make tens of millions, and still return a profit to its main investors — Sequoia, Partech and Lightspeed? If RockYou really did raise money at a $400 million value, this would put immense pressure on it to reach a $800 million valuation before selling (to give investors a solid profit), which would be extremely difficult to do. If they were to fail, never get revenue, and sentiment turns sour, they’d risk losing everything.

So this comes down to a really tough call, and it will show what sort of guy co-founder Lance Tokuda is. I’ve heard he is incredibly ambitious, determined to beat Slide. On the other hand, he’s human too, and his “cautious” gene has got to forcing him to consider the sale option.

SignalDemand, a startup that delivers software-as-a-service to help manufacturers set their prices, has raised a hefty $20 million second round of funding.

Chief executive Michael Neal says the money will go toward international expansion and to continue SignalDemand’s “march across verticals.” The company focuses on “disassembly” markets — namely, companies who take raw materials and disassemble them into products like beef and lumber. Until they’re approached by SignalDemand , most of these companies rely on Microsoft Excel, which can hurt your responsiveness when you’re involved in often-volatile commodities markets, Neal says.

“We’re arming manufacturers with the same tools Wall Street has had for some time,” he says.

The San Francisco startup delivers heavy-duty computing that would have been impossible, or at least much less efficient, before the SaaS business model, because its staff is constantly feeding new data into the system, as well as refining the calculations.

SignalDemand’s growth strategy has been focused on adding markets one-at-a-time, rather than opportunistically going after any customer who might be interested, Neal says. Next on his list — chemicals and pulp and paper.

Neal and his co-founder, Stanford Prof. Hau Lee, previously found success by starting DemandTec, which provided services similar to SignalDemand’s, but to retailers, not manufacturers. DemandTec went public last year, offering 6 million shares at $11 pear share. Neal says both companies are part of the vision he and Lee share of optimizing demand “all the way from the consumer to raw materials.”

The new funding was led by Interwest Partners. Bruce Cleveland of Interwest, whose experience includes being one of the original executives at Siebel Systems, is joining SignalDemand’s board. Previous investors Hummer Winblad Venture Partners, General Catalyst Partners and Catamount Ventures also participated.

TODAY’S HEADLINES:

• Antibody-discovery startup Adimab raises new funding (release)
• Lung-device maker Spiration gets $19M (release)
• Sample-prep startup Protein Discovery pulls in $10M (release)
• Inogen takes in $13M for portable oxygen device (VentureWire)
• Healthcare IT concern Medaptus raises $11M for expansion (VentureWire)
• Contract lab Synexis raises $14M (peHUB)
• Medical-device VC firm BioStar Ventures takes in $24M of $80M fund (peHUB)
• Halsa Pharma gets $250K for “natural” obesity-control treatment (release)
• Diagnostics provider Lab21 acquires NPTech (peHUB)
• Galil Medical names Martin Emerson CEO (release)

Antibody-discovery startup Adimab raises new funding – Lebanon, N.H.-based Adimab, a biotech working on new ways to discover antibody drugs, has raised a second round of funding. The company didn’t disclose the size of the round.

Adimab, which raised $6 million last July, is one of several startups looking to design new antibody drugs in bioengineered yeast cells, as we wrote at the time. (Alder Biopharmaceuticals, which raised $40 million in January, is another.) The technique promises to be much faster — and freer of patent restrictions — than current methods. When Adimab completes its current manufacturing facility in the second quarter, it claims it will be able to produce a panel of human antibodies against a particular target in just 90 days, instead of the year or more traditional methods can require.

Investors included Polaris Venture Partners and SV Life Sciences, who also invested in the company’s first round.

Lung-device maker Spiration gets $19M – Spiration, a Redmond, Wash., medical-device startup, raised $18.5 million in a seventh funding round. Investors included Versant Ventures, Olympus Medical Systems, New Enterprise Associates, New Leaf Venture Partners, InterWest Partners, Investor Growth Capital and Three Arch Partners.

Spiration has now raised a total of $97 million. It is developing a set of one-way valves for emphysema that can be implanted in the lung’s airways via a minimally invasive procedure. These valves are designed to shunt air away from diseased portions of the lung and redirect it to healthier areas. The company said the funding would support commercialization of its device in Europe and to complete studies for regulatory approval in the U.S.

Other startups working on similar technology include Emphasys Medical, Pulmonx and Broncus Technologies.

Sample-prep startup Protein Discovery pulls in $10M – Knoxville, Tenn.-based Protein Discovery, a biotech with new laboratory technology for protein identification, raised $10 million in a third funding round. Investors included Santé Ventures, Memphis Biomed Ventures, the Southern Appalachian Fund, and the Nashville Capital Network.

The startup is developing technology that aims to “simplify” the process of preparing biological samples for protein analysis. The details are probably too much for anyone who’s not a lab technician themselves, but feel free to check out the company’s explanation if you dare.)

Inogen takes in $13M for portable oxygen device – Inogen, a Goleta, Calif., medical-device maker, raised $12.6 million in its fifth funding round, VentureWire reports. Investors included Accuitive Medical Ventures, Arboretum Ventures, Avalon Ventures, Novo A/S, Numenor Ventures and Versant Ventures.

The company makes and sells portable oxygen-delivery systems for patients suffering from a lung problem called chronic obstructive pulmonary disease. The product has been on the market for several years, and Inogen says it believes it might take several more before it’s in a position to be acquired or to go public.

TODAY’S HEADLINES:

• Trius Therapeutics raises $30M for new antibiotics (release)
• Genomas gets $1.2M grant for genomic side-effect tests (release)
• Provasculon receives $500K, enters Biogen Idec incubator (VentureWire)
• Animal diagnostics firm Quadraspec aims for $5M round (VentureWire)
• MPM Capital names two executive partners (release)
  

Trius Therapeutics raises $30M for new antibiotics – Trius Therapeutics, a San Diego startup developing new treatments for antibiotic-resistant infections, raised $30 million in a second funding round. Investors included Kleiner, Perkins, Caufield & Byers, FinTech Global Capital, Sofinnova Ventures, Versant Ventures, Interwest Partners and Prism VentureWorks.

Trius said the funding will allow it to push its new treatment, an oxazolidinone antibiotic it calls TR-701, into late-stage human tests. The drug, which is intended for drug-resistant staphylococcus and similar infections, is currently in early-stage, phase I trials. Unlike many other new antibiotics, which must usually be taken intravenously, the Trius drug can be taken as a pill.

Genomas gets $1.2M grant for genomic side-effect tests – Genomas, a Hartford, Conn., personalized-medicine startup, received a $1.2 million small business-innovation grant from the NIH. The grant will fund genetic work aimed at identifying people who are most likely to suffer painful side effects from cholesterol-lowering statin drugs.

Statins — particularly Pfizer’s Lipitor, the best-selling drug on the market today — have built up a formidable reputation based on studies that showed they could prevent fatal heart attacks. More recently, however, critics of the drugs have pointed out that stopping one heart attack requires close to 100 people to take the drugs regularly, putting new attention on statin side effects, which can range from painful muscle aches and weakness to memory loss. The Genomas test is intended to reveal whether an individual patient is likely to experience those nerve and muscle effects, known technically as statin-induced neuromyopathy.

TODAY’S HEADLINES:

• Q Thera takes in $15M for neural stem-cell treatments (release)
• Stroke clotbuster Concentric Medical withdraws IPO (IPOhome)
• Avera recaps with $9M to relaunch human tests of GI drug (VentureWire)
• Tissue repairer Nerites raises $5.7M (release)
• Semafore Pharma aims for $7.5M to launch new cancer-drug trials (VentureWire)
• Triage Wireless gets $6.7M for “cuffless” blood-pressure monitors (peHUB)
• MAKO Surgicals prices IPO, falls in first day of trading (WSJ)
• ImmunoCellular acquires assets of Molecular Antibody Technology (release)

Q Thera takes in $15M for neural stem-cell treatments – Q Therapeutics, a Salt Lake City biotech working on neural stem-cell treatments for neurological conditions, has received the first portion of a $15 million second funding round. Investors in the round included vSpring Capital, Invitrogen, Epic Ventures, Toucan Capital, University of Utah Research Foundation, Salt Lake Life Science Angels and Q management.

Q is taking aim at diseases such as multiple sclerosis and cerebral palsy that result when the protective myelin sheath that protects nerve fibers and the spinal cord deteriorates, often for little-understood reasons. The company is developing neural stem cells that can produce new glial cells, which in theory should be able to regenerate the damaged myelin. (Irritatingly enough, the company insists on calling its product “Q cells.”) The company aims to begin clinical trials in transeverse myelitis, a paralyzing form of MS, next year.

Stroke clotbuster Concentric Medical withdraws IPO – Concentric Medical, a Mountain View, Calif., developer of medical devices for removing stroke-causing blood clots, withdrew its proposed IPO. The company becomes the eighth life-science startup to abandon an IPO this year.

Concentric, of course, cited “unfavorable market conditions” as the reason for its withdrawal. The device maker, which is still unprofitable, reported working capital and cash and short-term investments of $20.3 million at the end of June and has been burning cash at a rate of about $7 million a year, so it’s not necessarily in dire straits. Concentric, in fact, today announced it had arranged a $15 million line of credit with Horizon Technology Finance, giving it an additional cushion.

The company makes and sells a catheter-based device that can be snaked through a patient’s blood vessels to the brain in order to physically “grab” and remove stroke-causing blood clots. Although Concentric won approval for the device in 2004, sales have grown more modestly — in part, perhaps, because Concentric hasn’t undertaken the clinical studies necessary to demonstrate the usefulness of its technique compared to other treatments, and has no plans to do so. (The company listed this point as a risk factor in its SEC filings.) What’s more, the Concentric device can sometimes damage blood vessels in the brain; in one of two studies, almost ten percent of patients suffered a cranial hemorrhage.

Our previous coverage of the company is here.

Avera recaps with $9M to relaunch human tests of GI drug – Avera Pharmaceuticals, a San Diego specialty pharma developing drugs against a variety of conditions, recapitalized with a $9 million “first” funding round, VentureWire reports. Such a recap usually amounts to a restart for a company, which in this case was prompted by a halted clinical trial of a drug for irritable bowel syndrome and overactive bladder.

Investors in the recap included all participants in the company’s previous funding round: Aisling Capital, SV Life Sciences, Aberdare Ventures, BioAsia Investments, H.I.G. Ventures, Montreux Equity Partners, Bay City Capital, BTG PLC, Frazier Healthcare Ventures, InterWest Partners, St. Paul Venture Capital and Windamere Venture Partners. The company declined to provide a valuation to VentureWire, but it’s almost certainly suffered a “down round,” or it wouldn’t be recapitalizing.

Avera shut down mid-stage trials of its drug, known as AV608, last year after animal testing turned up potential toxicity issues. The company has since redesigned the drug to eliminate a compound it called a “non-active metabolite,” and hopes to resume studies later this year. Avera had raised more than $72 million prior to the recap.

Investments in clean-burning combustion engines are picking up, as VCs bet that batteries and exotic fuels like hydrogen won’t be the end of the story for powering automobiles.

The latest is Achates Power, a San Diego, Calif. startup working on a clean diesel. Although details are thin, the company’s website promises to create “new benchmarks in fuel economy and power density.”

Constructing a new type of engine is a risky bet, relying not only on the ability of a small team of engineers to quickly work out all the kinks, but also on a market that has changed little in decades to adopt a totally new type of equipment.

However, diesel engines have a number of advantages over spark-ignition engines, the kind typically used in American passenger vehicles. Those include a greater efficiency, more torque and lower emissions of some gases, including CO2.

A design that tackled the remaining problems — including higher weight and the toxic soot diesel engines tend to produce — would have a shot at capturing a vast market. Khosla Ventures also recently bet on a diesel motor maker called EcoMotors, which has many of the same aims as Achates.

The investment in Achates was reported by VentureWire (subscription required). Besides Sequoia Capital, investing firms included Rockport Capital Partners, Interwest Partners and Madrone Capital Partners.

TODAY’S HEADLINES:

• CyberHeart pumps in $9M for cardiac-arrhythmia treatment (release)
• Incubator ForSight launches third device company with $6M funding (release)
• Primera Biosystems raises $21M for molecular diagnostics (release)
• Biogen Idec, PDL BioPharma take stakes in Ophthotech (release)
• Technitrol acquires medical-device component maker Sonion for $385M (release)
• DLJ Merchant Banking takes control of dentristy-product maker Den-Mat (release)
• SV Life Sciences appoints Hamish Cameron as venture partner (release)

CyberHeart pumps in $9M for cardiac-arrhythmia treatment – CyberHeart, a Menlo Park, Calif., startup developing a non-invasive treatment for heart arrhythmias, raised $9 million in a first funding round. Investors included Emergent Medical Ventures, United Investments, Venture Select and Mitsubishi.

Arrythmias, which are irregular heartbeats often caused by a malfunction in the heart’s electrical-signaling system, are often treated via a catheter-based procedure that burns away tissue where the unusual rhythms originate. CyberHeart is working on hardware and software modifications for the CyberKnife system, a robotic radiosurgery device produced by Accuray, in order to extend its use in heart applications. In other words, CyberHeart’s adaptations will, if all goes well, allow doctors to perform the same sort of procedure non-invasively with the CyberKnife, an external radiation device that is supposed to deliver high-energy beams with submillimeter accuracy.

Incubator ForSight launches third device company with $6M funding – ForSight Labs, a medical-device incubator in Menlo Park, Calif., founded its third company, ForSight VISION3 and announced that it had raised $6 million in a first funding round. Investors included Morgenthaler Ventures, Split Rock Partners and Versant Ventures — all of whom, coincidentally, back ForSight as well.

ForSight hasn’t disclosed anything about the technology or approach that the new company will take, and in fact often remains secretive about its incubated companies for quite some time. In fact, the incubator sold its second company to QLT for $42 million plus milestone payments last October — a time the startup was known only as ForSight NewCo II.

Primera Biosystems raises $21M for molecular diagnostics – Mansfield, Mass.-based Primera Biosystems, a biotech developing molecular diagnostics, raised $21 million in a second funding round. Investors included Abingworth, Interwest Partners, Malaysian Technology Development Corporation, MPM Capital, Burrill & Co. and the Invus Group.

Primera’s gene-analysis system, which it calls STAR (short for “scalable transcription analysis routine”), is designed to read the activity of up to 100 genes at once with much greater sensitivity and precision than existing microarray technologies permit. The company plans to use the funding to complete development of its system, design future diagnostic tests in cancer and infectious disease, and produce test kits for clinical research.

TODAY’S HEADLINES:

• Follica pulls out $5.5M for hair loss (release)
• WuXi PharmaTech to acquire AppTec Lab for $151 million (release)
• U.S. Venture Partners names Laurence Lasky a venture partner (PDF release)
• Burrill & Co. promotes several life-science VCs (release)
• SV Life Sciences promotes Darren Black to partner (release)

Follica pulls out $5.5M for hair loss – Boston’s Follica, a biotech that aims to reverse hormone-related hair loss, raised $5.5 million in a first funding round. Investors included Interwest Partners and PureTech Ventures.

Follica was founded by a team of researchers from Harvard, UCSF and the University of Pennsylvania to commercialize a research finding reported last May. In that study, scientists found that rats could generate new hair follicles after suffering open skin wounds, a discovery that suggested the regenerative powers of skin cells may be much greater than previously believed when it comes to hair regrowth. (This Scientific American piece summarizes the finding.)

The startup hasn’t said exactly what approach it intends to take — heck, its Web site is still hosted on Puretech Ventures’ site — but presumably its scientists are looking into isolating the growth factors that encourage some skin cells to revert into follicular cells and incorporating them into some sort of topical salve or gel. It’s also not clear whether anyone trying this sort of product might have to abrade or otherwise injury their skin first, a requirement that might dampen enthusiasm for miracle hair regrowth. At the very least, it should give new meaning to the phrase, “It’s painful to be beautiful.”

WuXi PharmaTech to acquire AppTec Lab for $151 million – China’s WuXi PharmaTech, a publicly traded contract-research organization, agreed to acquire AppTec Laboratory Services of St. Paul, Minn., for roughly $163 million. The release is here.

The purchase price includes $151 million in cash plus the assumption of AppTech debt of roughly $11.7 million. AppTec does outsourced research, testing and manufacturing for life-sciences companies around the world.

TODAY’S HEADLINES:

• Gene-silencing developer Santaris raises €20M (PDF release)
• Consumer-driven healthcare manager RedBrick Health prescribed $15M (release)
• Cardiac Dimensions takes in $36M for heart-valve device (release)
• TcLand Expressions gets €8.2M for biomarkers (PDF release)
• TheraQuest Bio gets $3M for pain drugs (release)
• Brain-software maker NeuroTrax visualizes $1.5M (VentureWire)
• ActivBiotics selling off assets after clot-busting drug failure (release)
• Nanostart buys stake in Singapore’s Curiox, a drug-discovery tech firm (release)
• Respiratory biotech Altair Thera gets additional funding (VentureWire)
• Specialty pharma Prometheus Labs files for $100M IPO (Edgar)
• Sirtris co-founder David Sinclair joins Lux Capital as venture partner (PDF release)

Gene-silencing developer Santaris raises €20M — Denmark’s Santaris Pharma, a developer of gene-silencing drugs, raised €20 million ($30 million) (PDF) in a third financing round. Investors included Gilde Healthcare Partners, BankInvest, Novo, LD, Forbion Capital Partners, Global Life Science Venture, Sunstone Capital, Seventure, Omega, Innovation Capital and members of the Company’s board and management. Gilde contributed €7.5 million to the round.

Santaris is pursuing an “antisense” strategy for turning off particular disease-related genes using synthetic strands of nucleic acid, which bind to and deactivate the messenger RNA molecules that are crucial to gene activity. (Technically, the mRNA plays a key role in the manufacture of a gene’s protein or proteins, which in disease states are often either malformed or overproduced. The drug molecule is a complement to the mRNA’s nucleic-acid sequence, which in DNA chemistry makes it an “antisense” molecule.)

Whereas biotechs working on antisense drugs have traditionally used strands of DNA — often chemically modified to improve their durability and cell-penetrating abilities — to block gene activity, Santaris has produced what it claims is a unique RNA analogue that it calls a “locked nucleic acid.” (The company goes into detail here.) The Santaris molecule, which combines LNA and DNA, is supposed to bind RNA in three dimensions, presumably boosting its binding ability and therefore potency.

Santaris is first targeting chronic lymphocytic leukemia, and says its drug candidate has already demonstrated initial safety and efficacy in an early-stage human test. The company has several other candidates in preclinical development, as well as two other molecules it licensed to Enzon Pharmaceuticals, one of which has also begun human testing against cancer.

For a more detailed look at antisense, see our coverage of Excaliard Pharmaceuticals, a biotech that licensed a slew of technology from antisense pioneer Isis Pharmaceuticals, here.

Consumer-driven healthcare manager RedBrick Health prescribed $15M — RedBrick Health, a Minneapolis healthcare company promoting “consumer-oriented” plans that shift much of the financial responsibility for medical care to individuals, raised $15 million in a second funding round. Investors included Fidelity Ventures, Highland Capital Partners and Versant Ventures.

RedBrick aims to help companies set up consumer-directed healthcare plans, which are also known as “defined contribution” schemes in that they limit the financial exposure of employers, who simply make regular contributions to employee “health savings accounts.” These plans, obviously, put the financial onus on individuals, who pay for their own medical care out of these accounts, in contrast to traditional “defined benefit” plans in which individuals pay premiums for comprehensive health coverage. In theory, these consumer-oriented plans should hold down healthcare costs by making individuals more “responsible” users of medical care; in practice, sick patients are often in a terrible position to be good medical “consumers,” and the plans have have proven generally unpopular to boot.

That hasn’t slowed RedBrick or its backers. The company will use the funding to continue expanding its efforts to sell and manage consumer-directed healthcare plans, which RedBrick somewhat misleadingly insists on calling “consumer-owned” healthcare. (Such plans usually couple health-savings accounts with a high-deductible insurance plan.) The company recently announced deals with several new client companies, although none are exactly what you’d call high profile firms — their ranks include the Ridgeview Medical Center in the Minneapolis-St. Paul area, which is switching its employees to a RedBrick-supported plan, and Welch Allyn, a medical-device manufacturer in Skaneateles Falls, N.Y., which is doing likewise.

Cardiac Dimensions takes in $36M for heart-valve device – Cardiac Dimensions, a Kirkland, Wash., developer of heart-valve devices, raised $35.5 million in a fourth financing round. Investors included Johnson & Johnson Development, Lumira Capital, Mitsubishi UFJ Capital, West River Capital, Montgomery & Co., Frazier Healthcare Ventures, Interwest Partners, MPM Capital, and Polaris Venture Partners.

Cardiac Dimensions is working on an implantable device designed to reshape the heart’s mitral valve, which in heart-failure patients sometimes weakens and allows blood to swish backward through the heart’s chambers. We’ve covered several other startups working on mitral-valve devices, including Evalve and Cardiosolutions.

1. Invidi gets $25 million from WPP, the world’s second largest ad conglomerate
2. Amazon building out its webs services
3. Atheros Communications buys micro GPS company
4. Google may be looking at wireless spectrum in the UK
5. Tiny Pictures, a mobile photo-sharing company, adds international language support

Invidi gets $25 million from WPP, the world’s second largest ad conglomerate — Most people think of Google and Yahoo as the new online advertising giants. But WPP is moving aggressively to upgrade its ad technology. It’s most recent move is to invest in Invidi, a company that targets ads to TV set-top boxes of individuals depending on their age, gender, location, income and ethnicity. It gathers the data by analyzing remote control, ratings, and program guide information along with census data. The Princeton, NJ startup earlier got capital from EnerTech Capital, InterWest Partners and Menlo Ventures, all of which returned to invest in this latest round. More details here.

Amazon building out its webs services — It has released SimpleDB, which provides database functions for young companies, without the need for a database administrator.

Atheros Communications buys micro GPS company — Atheros, the Santa Clara, Calif., maker of wireless chips, said it will buy u-Nav Microelectronics, a company that boasts the smallest and lowest power Global Positioning System (GPS) chip, including the one used in the Casio wristwatch for runners. The price is $54 million. More details here.

Google may be looking at wireless spectrum in the UK — That’s the gist of this CNET article, at least. The British telecommunications regulator OfCom will auction off a wide range of wireless radio spectrum within the next couple years, including the 700MHz band. However, A federal law prohibits Google from commenting on its plans outside of the US, as the company has committed to bid on spectrum in the US. The US Federal Communications Commission will auction off the 700MHz spectrum in January, which Google could use to offer its own mobile phone and mobile internet services. The company says it may reveal more of its international plans after the US auction is complete.

Tiny Pictures, a mobile photo-sharing company adds international language support — The San Francisco company’s service, known as Radar, lets you share and comment on photos from a mobile device and from the web. It already has 70 percent of its 630,000 total users outside of the US (previous coverage). Now, it is adding French, German, Italian, Spanish and Portuguese WAP versions of its site, hoping to encourage existing users in many countries to add their friends. Chinese and Japanese versions are soon to follow, the company says.

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: 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

In a highly risky strategy of piggy-backing on other carriers’ networks, Kajeet has raised $36.8 million in a second round of financing to offer cellphone services to tweens and teens.

It offers a dashboard for parents to control when the phone can and can not be used, along with wallpaper, games, ringtones, applications and more.

The Bethesda, Maryland company is brushing aside the grim evidence provided by string of disasters at other companies trying something similar. Amp’d Mobile was the most high-profile recent case of a so-called MVNO (or Mobile Virtual Network Operator) for youth that saw its business fall part because of high costs. Firefly, a venture-backed company that served teens and younger kids with a phone, also struggled. It was forced to restart again when its original investors bailed on the company.

Founded in 2003, but launching nationally six months ago, Kajeet is a pay-as-you-go service. The company charges 35 cents a day, 10 cents a minute and 5 cents per text message. The phones are available at Best Buy, Limited Too and Longs Drugs Stores and at the company’s Web site. It is not saying anything about its sales traction so far.

It operates on the Sprint PCS network.

Draper Fisher Jurvetson Growth Fund (DFJ Growth Fund) led the financing. Existing investors, including Bessemer Venture Partners, Fidelity Ventures, Gabriel Venture Partners and InterWest Partners, also participated in this financing.

Here are the reasons that Firefly faced, but only some of them will haunt Kajeet:

The premise that kids need specialty phones is flawed. They only get a phone for a year or two until they want the real thing. So there’s a very short lifecycle, and correspondingly weak lifetime revenue — given the cost of acquisition. Kids tend to break phones quickly or lose them, at which point the parents are not too happy. Third, the carriers tend to add a cheap but good phone for kids for say, only $10 a month. Firefly managed to get traffic in the carrier store, but then suddenly salespeople in the stores started switched customers over to the carriers’ own cheaper phone. So then the only sales model is to sell through stories or its own site, which is what Kajeet is doing.

However, Kajeet isn’t selling special phones, like Firefly. It is using normal phones, said Daniel Neal, chief executive and founder, in an interview, and so its model is vastly different from Kajeet’s, he says. The company is targeting the “sweet spot” of 11 to 14 year olds, he said.

And Neal reminds us that the MVNO record isn’t all bad. TracFone and Virgin Mobile are examples of MVNO services that have done well in the US, he said.

Kajeet previously raised a $27 million first round.

(UPDATED: See below.)

Featured companies: FoldRx Pharmaceuticals, Ophthotech, Pevion Biotech, Restoration Robotics, Glide Pharma, Reliant Pharmaceuticals, Nanosphere, SurModics, BioFX Laboratories

FoldRx Pharma to receive $22M against cystic fibrosis — Cambridge, Mass.-based FoldRx Pharmaceuticals, a biotech focused on diseases that result from misfolded proteins, will get $22 million over the next five years from an affiliate of the Cystic Fibrosis Foundation to further its work against the genetic lung disease. The money will be paid as FoldRx meets various developmental milestones, including pushing two experimental drugs into early-stage human trials. The company’s current drug candidates, however, don’t target cystic fibrosis, and instead aim to take on a particular class of diseases known as amyloidosis and Parkinson’s disease.

The Boston Globe and the WSJ Health Blog have more.

Newly formed Ophthotech raises $36M against eye disease — Ophthotech, a newly formed Princeton, N.J., biotech with a focus on eye disease, raised a whopping $36 million in a first funding round. The company, founded by a bevy of former Eyetech Pharmaceuticals officials, is going to follow directly in the former company’s footsteps by taking aim at age-related macular degeneration with aptamers licensed from Archemix (which we wrote about here).

Investors in the round included SV Life Sciences, HBM BioVentures and Novo A/S. (See update below.)

Pevion Biotech gets $29M for vaccines — Pevion Biotech, a Bern, Switzerland-based vaccine developer, raised $29 million (CHF35 million) in a first funding round. Investors included BZ Bank Aktiengesellschaft, BB Biotech Ventures II, CC Private Equity Partners and Bachem Holding. The company is conducting clinical trials of vaccines against malaria, breast cancer and hepatitis C.

Hair-transplant automator Restoration Robotics raises $25M — Restoration Robotics, a Mountain View, Calif., developer of robotic surgery systems for hair transplants, raised $25 million in a second round of funding, PE Hub reports. The company’s Web site is a stub and the linked article doesn’t contain much information, but an April VentureWire store republished at Alta Partners’ site gets to the root of the matter:

Sutter Hill Ventures and Alloy Ventures, for example, have invested in the first and second rounds raised in 2005 and 2006, respectively, by Restoration Robotics Inc., which is testing a robotic device that performs hair transplants. Transplant-surgery outcomes vary according to the surgeon’s skill. Restoration’s robot — which is surgeon-controlled — produces uniform results in half the time, says CEO Jim McCollum. Investors hope this pushes hair transplants into the mainstream. Today, “people think of late-night commercials when they think of hair restoration,” says Sutter Hill Managing Director Jeffrey W. Bird.

Investors in the round include InterWest Partners, Alloy Ventures and Sutter Hill Ventures.

Glide Pharma raises $4.6M for needle-free drugs — U.K. specialty pharma Glide Pharma raised $4.6 million (£2.3 million). Investors included Oxford Technology 4 VCT and Oxford Capital Partners. The company is developing drugs that can be delivered via its own needle-free injection system. We’ve written about other startups pursuing similar technology, including StrataGent Life Sciences and Macroflux.

Reliant Pharma refiles for a $400M IPO — Reliant Pharmaceuticals, a Liberty Corner, N.J., specialty pharma that withdrew a planned $300 million IPO in 2005, is going to try again, only with more at stake. The company filed to raise as much as $400 million in an offering, despite the fact that it is on track to lose more than $100 million this year, which would be the third time in four years it has done so.

In the first six months of this year, Reliant reported a net loss to common shareholders of $56.4 million on revenue of $230 million. That net loss would have been only $21.8 million but for preferred-share dividends of $34.6 million in the half. Reliant sells a variety of unrelated second-hand drugs for cardiovascular problems.

Interestingly enough, Reliant made its last charge at the public markets with the famed Ernest Mario at the helm. Mario jumped from Reliant just last week, and is now CEO of the little-known Capnia (see our coverage here).

Nanosphere aims for outsized $100M IPO — Nanosphere, a Northbrook, Ill., developer of nucleic-acid and protein detection and diagnostic systems, filed to raise