VentureBeat

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.

No one likes going to the dentist, and that lingering novocaine numbness usually just makes matters worse. But would you be willing to pay more — possibly a lot more — out-of-pocket for a shot that restores feeling to your face more quickly?

San Diego’s Novalar Pharmaceuticals is betting that you will. The specialty-pharmaceutical firm has been testing a drug it calls NV-101, which it says can cut in half the time it takes people to recover from local anesthetic. NV-101 has been through two late-stage clinical trials, and could be approved for use following non-surgical dental procedures such as cavity fillings as early as April.

Novalar’s approach is something of a departure for the field of specialty pharmaceuticals, which is crowded with deadly boring companies earnestly looking to tweak old or cast-off drugs just enough to justify charging high prices for them. NV-101 is still an old drug — in fact, it’s a reformulated version of phentolamine, an old generic drug previously used to treat hypertension. Phentolamine causes blood vessels to expand, increasing blood flow and lowering blood pressure.

In this case, however, the drug is definitely being put to a novel use, if not exactly a life-threatening one. The theory is that NV-101, administered locally following a dental procedure, essentially helps the body “wash away” remaining traces of the local anesthetic. Novalar CEO Donna Janson envisions dentists offering NV-101 as an option to patients who fear that hours of numbness will impact their ability to smile, drink, or even hold in their drool. (No lie — the company tested exactly these sorts of “functional impairments” in one of its clinical trials.)

Of course, dental insurance is unlikely to cover the drug, at least at first, so NV-101 will probably undoubtedly emerge as a new “convenience” option for patients willing and able to pay for it. Janson, in fact, cheerfully acknowledges that many dentists will have a profit incentive to use the drug.

“Patient satisfaction is number one” for many dentists, she says, noting the proliferation of spa-like dental clinics and the popularity of cosmetic dentistry (which also happens to be quite lucrative for its practitioners). Although the company hasn’t yet set a price for NV-101, Janson says it will be “modest” in comparison to the cost of many procedures, giving dentists the opportunity to “upsell” the drug. “There will be a financial hook,” Janson says. According to the company’s market research, dentists will typically charge patients twice what the drug costs them.

One risk of this strategy, of course, is the possibility that some enterprising dentists might find a way to use generic phentolamine instead of NV-101, potentially boosting their profit even further. Janson says that’s unlikely, mostly because Novalar will sell NV-101 in the same cartridges used to deliver lidocaine or other local anesthetics, making it particularly convenient to use. Dentists wanting to use the generic drug would have to calculate the right dose and use a standard syringe, which might alarm patients and could lead to complications.

Novalar’s backers are certainly fans of its strategy. Earlier today, the company announced that it had raised $30 million in a fourth funding round. Investors included New Enterprise Associates, Domain Associates, SR One and Montreux Equity Partners.

(And just in case anyone didn’t get the reference, that top-left photo features the seemingly murderous dentist played by Steve Martin in the film Novocaine.)

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.

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Asthmatx, a Mountain View, Calif., developer of a bronchial device for asthma treatment, raised $50 million by selling a 15% stake to Olympus Medical Systems, a unit of Japan’s camera and precision-device maker Olympus.

Last October, Asthmatx withdrew an IPO at the last minute, citing a desire to pursue “alternative strategic options” — that is, better offers. And it seems to have found one; Dan Primack at PE Wire figures that Asthmatx’s current $280 million pre-money valuation is close to twice what it would have been in the planned IPO.

Asthmatx makes an experimental device that uses heat to thin smooth-muscle tissue in the airways of asthmatic patients, with the aim of inhibiting the muscular contractions typical of an asthma attack. (The company gently refers to this process as “delivering controlled thermal energy” to the airway’s smooth muscle.) Known formally as bronchial thermoplasty, the technique involves a catheter and a small heatable wire “basket” that a physician can extend into the airways of the lungs. Patients are sedated during the procedure, but don’t have to be hospitalized.

In March, a team of doctors funded by Asthmatx reported in the New England Journal of Medicine that bronchial thermoplasty with the company’s Alair device appeared to reduce the frequency of asthmatic attacks compared to a control group. That study, however, is difficult to interpret, as a significant number of patients dropped out during a “washout” period in which they had to give up their asthma medications for two weeks prior to the onset of treatment. The researchers also cautioned that thermoplasty “may increase the potential for a strong placebo effect,” which of course would make it difficult to know how much the treatment actually helped patients.

Asthmatx had previously raised $42.5 million in venture funding from a number of backers, including Polaris Venture Partners, Menlo Ventures, Vanguard Ventures, HBM BioCapital, MedVenture Associates, Boston Scientific and Montreux Equity Partners. A release of sorts on the funding is here; VentureWire has more here (subscription required).

Palo Alto, Calif.-based Pulmonx raised $20 million in a second-round funding, VentureWire reports (subscription required).

The startup is one of several device makers hoping to pioneer new medical techniques in the field of “interventional pulmonology.” Much like interventional cardiology, in which non-surgeons perform procedures such as angioplasty and stenting to open blocked arteries, interventional pulmonology aims to give lung specialists new tools to treat lung problems such as emphysema in their offices. Patients, of course, could benefit from quicker recovery times and avoiding hospitals as well, at least if the procedures are proven to be equal or superior to existing techniques.

According to VentureWire:

Richard M. Ferrari, managing director of De Novo, said that these companies, like Pulmonx, are looking to replace the current mode of treatment: lung volume reduction surgery. “It’s an incredibly invasive procedure,” he said. “So the concept of having an office-based procedure is irresistible.”

Pulmonx’s technology involves the insertion of a one-way valve, shutting off diseased portions of the lung. Ferrari said that the technique is part of a growing field of interventional pulmonology, which, like the more established field of interventional cardiology, uses catheter-based treatments for diseases.

Pulmonx has been in trials outside of the U.S., Ferrari said, and plans to begin human implantations in the U.S. later this year or early next year. “The $20 million will take them well into their clinical trials,” he said.

The round was led by De Novo Ventures. Others involved in the round include new investor Latterell Venture Partners and existing investors Montreux Equity Partners and MedVenture Associates.