VentureBeat

TODAY’S HEADLINES:

• BrainCells raises $30M for neuroregeneration drugs (release)
• EKR Therapeutics takes in $50M plus $95M in debt for pain, heart drugs (release)
• Wright Medical acquires Berkeley’s Inbone Tech for $24M (release)
• Argolyn Bioscience names Nixon Ellis as CEO (release)

BrainCells raises $30M for neuroregeneration drugs – San Diego’s BrainCells, a startup focused on drugs intended to stimulate the growth of new neurons, raised $30 million in a second funding round. Investors included MedImmune Ventures, Bay City Capital, Oxford Bioscience Partners, Technology Partners, Pappas Ventures and Neuro Ventures.

BrainCells set out several years ago to discover drugs that stimulate neuron growth, following pioneering discoveries at the Salk Institute that revealed mechanisms by which the brain itself regrows its primary cells under certain circumstances. The startup, which raised $17.7 million in a 2004 first round, has been screening experimental compounds against neural stem cells to identify ones that had the previously overlooked property of promoting the growth of new brain cells.

The company’s lead drug candidate, BCI-540, which it licensed from Mitsubishi Pharma, will soon be mid-stage, phase II trials as a potential treatment for depression and anxiety disorder. (Mitsubishi had previously tested as a possible Alzheimer’s therapy, so it’s already been taken by 700 patients and is considered safe.) A follow-up compound, also licensed from a Japanese company — Taisho Pharmaceutical — remains in animal testing at the moment.

EKR Therapeutics takes in $50M plus $95M in debt for pain, heart drugs – Cedar Knolls, N.J., specialty pharma EKR Therapeutics raised $50 million in a fourth funding round that also included $95 million in debt. Investors in the equity round included MPM Capital, LLR Partners, Quaker BioVentures, the Garden State Life Sciences Venture Fund, NewSpring Capital and ESP Equity Partners. GE Healthcare Financial Services provided the debt financing.

EKR, like most specialty pharmas, acquires or licenses cast-off drugs from other companies, usually in hopes of finding new uses for them. Although the release doesn’t say so specifically, this funding will likely cover the company’s recent purchase of several drugs from the rapidly disintegrating PDL BioPharma; last month, EKR said it had raised an undisclosed amount of funding for that deal, in which it agreed to pay $85 million up front and another $85 million in potential milestone payments.

The company also has the distinction of using that deal to “re-acquire” several drugs that an earlier incarnation known as ESP Pharmaceuticals handed to PDL in a 2005 acquisition, an interesting turn of events we covered here.

Featured companies: Entelos, Firstsource Solutions, Helixis, Iconix Biosciences, MedAssist Holding, Songbird Hearing

Entelos pays up to $39M for Iconix Biosciences — In a rare all-Bay Area biotech transaction, Foster City, Calif.’s Entelos agreed to acquire Iconix Biosciences for up to $39.1 million in stock. The deal consists of an up-front payment of $14.1 million in Entelos shares and a potential “earn out payment” of $25 million if certain financial milestones are met. The acquisition is scheduled to close tomorrow.

Entelos develops computer models of disease intended to assist in the identification of drug candidates and early analysis of their effectiveness. Iconix, meanwhile, has focused on building “toxicogenomic” reference information, which details the genetic profiles that are most likely to lead to toxic side effects when a particular drug is used. Entelos president James Karis said in a statement that the combination will create “a new paradigm for discovering and developing drugs” by making it possible to also predict whether certain drug candidates may cause toxic side effects.

Iconix had raised a total of more than $50 million prior to the acquisition, according to VentureWire (subscription required). Its investors included Abingworth Management, Institutional Venture Partners, Kleiner Perkins Caufield and Byers, and MDS Pharma Services.

Newly formed Helixis raises $10M for diagnostics — Helixis, a Carlsbad, Calif., developer of “low cost, fast and accurate” molecular diagnostics, raised $10 million in a first funding round. The funding was provided by Domain Associates and Okapi Venture Capital.

Helixis makes some grand but fairly vague claims in its announcement. The company has licensed technology from Caltech, but doesn’t say what it is, and claims that it will “radically reduce” the cost, size and power requirements of existing diagnostic technology. This appears to be a reference to existing diagnostics that require large and expensive equipment such as PCR machines for analysis. All in all, this sounds like a worthy effort — if diagnostic tests remain expensive, that will greatly limit their usefulness in pharmacogenomics and personalized medicine — but the company will need to be clearer about what it’s actually up to before I can get too excited about it.

Montreux Equity Partners raises fourth fund — Montreux Equity Partners, a life-sciences focused VC firm in Menlo Park, Calif., is raising a fourth fund, VentureWire reports. The news service cited the Santa Barbara County Employees’ Retirement System, which has approved a $5 million investment in the new fund. Montreux reportedly declined to comment on the new fund’s expected size, although two preceding funds raised a total of $170 million. Montreux invests primarily in biotech and medical-device companies.

Shaky Songbird Hearing reportedly raises $4M in recapitalization — VentureWire reports that Songbird Hearing, a New Brunswick, N.J., maker of disposable hearing devices, has raised $4 million in a recapitalization funding. The news service names NewSpring Capital and the Provco Group as investors in the round.

The company apparently has a long and somewhat shaky history. VentureWire says this is Songbird’s second recapitalization — essentially a restructuring of a company’s debt and equity relationships — and that it had previously raised $120 million since its founding in 1997. There’s also the fact that Songbird’s supposed Web site currently features a “coming soon” page for the “Planet Sun Tanning Salon” in Manahawkin, N.J. (You can see Songbird’s cached page here.)

In any case, the VentureWire story says the fresh capital will pay for a redesign of the companies products and for day-to-day operations.

MedAssist Holding, a hospital-finance consultant, sold to Indian outsourcing firm for $330M — The private-equity firm RoundTable Healthcare Partners agreed to sell MedAssist Holding to an affiliate of Mumbai-based Firstsource Solutions for $330 million in cash. MedAssist helps hospitals clean up their financial operations, a task the company calls “outsourced revenue-cycle management services.” Firstsource is a major Indian outsourcing firm that handles a variety of “back-end” business operations for its customers.

(UPDATED at 5:55pm PT: See below.)

Featured companies: Sierra Surgical Technologies, HerbalScience Nutraceuticals, Topigen Pharmaceuticals, EKR Therapeutics, Molecular Partners, Celsense, Glucose Sensing Technologies, Falcon Genomics, Waters, Calorimetry Sciences, Parion Sciences, Gilead Sciences, Isto Technologies, Fluidnet, NABsys

Sierra Surgical raises $7.1M — Palo Alto, Calif.-based Sierra Surgical Technologies, a developer of female sterilization technology, raised $7.1 million in a first funding round, PE Hub reports, citing a regulatory filing. Alta Partners and De Novo Ventures provided the funding.

Singapore’s HerbalScience raises $28M for natural extracts — HerbalScience Nutraceuticals, a Singapore-based natural-extracts company with offices in Naples, Fla., raised $28 million from the private-equity firms Aisling Capital and Weston Presidio, VentureWire reports (subscription required). The investment purchased a 25 percent stake in HerbalSciences, which makes purified extracts from various natural substances, valuing the company at $112 million.

Topigen Pharma pulls in $25M against lung disease — Montreal’s Topigen Pharmaceuticals, a biotech developing inhalable drugs to treat asthma and other lung diseases, raised $25 million (C$26 million) in a third funding round. Investors included NovaQuest, MMV Financial, BDC Venture Capital, Desjardins Venture Capital, Caisse de Dépot et Placement du Québec (Caisse), T2C2/BIO 2000 and Lothian Partners 27 (sarl) SICAR.

The funding will “accelerate” mid-stage human trials for Topigen’s leading drug candidates, a small-molecule treatment for chronic obstructive pulmonary disease and an RNA inhibitor for asthma.

EKR receives over $13M, licenses opiod drug — EKR Therapeutics, a Cedar Knolls, N.J., specialty pharmaceutical company, raised more than $13 million in a private placement. Investors included Quaker BioVentures, NewSpring Capital, and ESP Equity Partners. EKR also acquired rights to DepoDur, an extended-release opioid, from Pacira Pharmaceuticals.

Switzerland’s Molecular Partners gets $15.6M for novel binding proteins — Zurich-based Molecular Partners, a biotech developing drugs based on a new class of binding proteins, raised $15.6 million (CHF18.5 million) in a first funding round. Investors included Index Ventures, BB Biotech Ventures, Johnson & Johnson Development Corp. and Endeavour.

Molecular Partners is focused on developing therapeutics proteins it calls “DARPins,” which the company says offer the same ability to stick selectively to other molecules as monoclonal antibodies, but with greater stability and ease of manufacturing. DARPins are based on the notion of “repeat proteins,” which as the name suggests are modular proteins that contain repeated elements — something like posts spaced at regular intervals along a barbed-wire fence. (See the image at left.) The protein itself ends up looking something like a string that’s been knotted at regular intervals, only much more complicated.

Repeat proteins are found in almost all species, and in nature serve to bind other proteins in order to facilitate protein-protein reactions. By shuffling the modular elements in these proteins, they can be engineered to stick to specific molecules such as cell-surface proteins, potentially making them useful as drugs. The company has a more detailed description here.

Although Molecular Partners likes to play up the advantages of DARPins (the acronym stands for “designed ankyrin repeat proteins”) over antibodies — here, for instance — there are a few disadvantages the company doesn’t mention. As large molecules, DARPins most likely won’t get inside cells, limiting their potential as drugs to interactions with free-floating and cell-surface proteins. (Monoclonal antibodies have the same limitation.) Potentially more important, however, is the fact that the effectiveness of many antibody-based drugs results from their ability to stimulate a particular immune response, not just to stick to the appropriate target. DARPins, which aren’t immune-system molecules the way antibodies are, seem unlikely to do the same.

Pittsburgh-area biotechs, device makers get $350K — The Pittsburgh Life Sciences Greenhouse, a public-private life-sciences investment partnership, invested $350,000 in three Pittsburgh-area life-science startups. Falcon Genomics, a developer of chip-based cancer-detection diagnostics, received $150,000. Another $100,000 went to Celsense, which uses an MRI tracing agent to image transplanted cells. The final $100,000 was invested in Glucose Sensing Technologies, which is developing a catheter-based glucose sensor for continuous blood-sugar monitoring in intensive-care units.

Waters acquires Calorimetry Sciences — Milford, Mass.-based Waters, a laboratory-instrument maker, acquired Calorimetry Sciences of Linden, Utah. Terms of the deal weren’t announced. Calorimetry Sciences, which makes high-performance devices intended to measure the heat produced or absorbed by chemical reactions, will be merged into Waters’ TA Instruments division.

Fedora Commons wins $4.9M grant for open collaboration software — Fedora Commons, a non-profit organization devoted to open-source technologies for creating and sharing digital content, received a $4.9 million grant from the Gordon and Betty Moore Foundation. From the release:

With this funding, Fedora Commons will foster an open community to support the development and deployment of open source software, which facilitates open collaboration and open access to scholarly, scientific, cultural, and educational materials in digital form. The software platform developed by Fedora Commons with Gordon and Betty Moore Foundation funding will support a networked model of intellectual activity, whereby scientists, scholars, teachers, and students will use the Internet to collaboratively create new ideas, and build on, annotate, and refine the ideas of their colleagues worldwide. With its roots in the Fedora open-source repository system, developed since 2001 with support from the Andrew W. Mellon Foundation, the new software will continue to focus on the integrity and longevity of the intellectual products that underlie this new form of knowledge work. The result will be an open source software platform that both enables collaborative models of information creation and sharing, and provides sustainable repositories to secure the digital materials that constitute our intellectual, scientific, and cultural history.

Parion licenses lung-disease drug to Gilead for up to $146M — Parion Sciences, a Durham, N.C., biotech focused on diseases of the mucous membranes, struck a licensing and co-development deal with Gilead Sciences for its drug P-680 worth up to $146 million. The drug, an epithelial sodium-channel inhibitor, could potentially be useful in a variety of lung diseases, including cystic fibrosis. The companies will also work to identify other similar drug candidates.

Isto Tech raises $8.8M, prepares to launch synthetic bone grafts — St. Louis’ Isto Technologies, a developer of cell-based cartilage and bone regeneration technology, raised $8.8 million in a fifth funding round as it prepares for its first product launch, VentureWire reports. Investors included Ascension Health Ventures, Alafi Capital, Life Sciences Partners, Mid-America Transplant Services and private individuals. Isto’s leading product, InQu, is a synthetic biomaterial intended to help tissues heal and bones to regenerate; Isto expects FDA approval later this year.

Fluidnet rises from ashes, raises $6.4M for IV pumps — Portsmouth, N.H.-based Fluidnet, a “reincarnation” of its bankrupt predecessor FluidSense, raised $6.4 million in a first funding round to launch a new intravenous-infusion pump next year, VentureWire reports. Cardinal Partners and Rockport Venture Partners provided the funding.

NABsys raises $750K for high-speed genome sequencing — NABsys, a Providence, R.I., startup focused on high-speed gene-sequencing technologies, raised $750,000 in seed funding, VentureWire reports. Slater Technology Fund and individual investors provided the funding, which closely follows a $1.3 million grant from the National Institutes of Health.

UPDATE (10:55am PT): Added items on Molecular Partners and the Pittsburgh Life-Sciences Greenhouse investments.

UPDATE REDUX (5:55 pm PT): Added items on Waters/Calorimetry Sciences, Fedora Commons, Isto Technologies, Fluidnet, NABsys.