VentureBeat

TODAY’S HEADLINES

• Cantimer takes in $2M for dehydration diagnostics (VentureWire)
• Recodagen launches, takes aim at cancer (release)
• Juniper Diagnostics spins out of ChemSensing (VentureWire)

Cantimer takes in $2M for dehydration diagnostics –The mystery of Menlo Park, Calif.-based Cantimer has resolved a bit. We wrote about this stealthy company back in December and reached the conclusion that the company was developing a particular type of nanosensor intended to identify water levels in human tissue.

Now VentureWire reports that Cantimer is doing just that, using a polymer-based sensor for measuring dehydration in saliva. The company plans to market the device in sports medicine and pediatric and elderly care as well as to hospitals and emergency rooms.

The startup also just raised $2 million in a first funding round. AWT Private Investments and angel investors provided the cash.

Recodagen launches, takes aim at cancer – Recodagen (no Web site), a newly launched Seattle biotech working on new cancer drugs, raised an undisclosed sum in a first funding round. The sum falls in the $2 million to $5 million range, according to John Cook’s blog.

Investors included Alexandria Real Estate Equities, Amgen Ventures, ARCH Venture Partners, OVP Venture Partners and WRF Capital.

Recodagen was incubated by Seattle’s Accelerator. The company’s technology originated at Washington State University.

Juniper Diagnostics spins out of ChemSensing with new funding– ChemSensing, a Champaign, Ill., developer of sensor arrays, is spinning out Juniper Diagnostics to commercialize its technology for detecting bacteria via breath, VentureWire reports. The new startup will launch with a multi-million-dollar funding round provided by Mariner Equity Management and ChemSensing.

Juniper’s technology involves panels of reactive dyes that change color in response to chemical exposure — in this case, to gases emitted by certain classes of bacteria in the breath of patients with tuberculosis or pneumonia. The company expects that FDA approval of the device may take 18 months to two years.

Tucked unobtrusively away in corners and out-of-the-way places, sensors record the world around us — tracking air quality, electricity usage, temperature and other variables. The modern world needs such measurements, but installing and maintaining the sensors is costly.

GainSpan is a Sunnyvale, Calif. company that says it can help cut costs by using wireless sensors that tie into the same 802.11 WiFi radio bands that ordinary computers use, which reduces the number and complexity of the sensors needed. Also, having cheaper, more easily deployed sensors could help raise efficiency through more intelligent monitoring.

For example, if sensors are placed throughout a large industrial building they can monitor temperature more effectively, allowing selective use of heating and cooling systems.

Wireless sensors have been around for over a decade, but they’ve used costly non-standard wireless communication protocols for reasons of battery life. GainSpan says it has tackled the battery problem, extending the life of its WiFi sensors to a standard five to ten years.

If GainSpan can sell businesses and governments on using its sensors, they can be used both for the above scenario and dozens of other purposes, like tracking the movements of miners underground or monitoring the structural integrity of bridges.

There are, however, some challenges to GainSpan’s plan, including signal interference from too many devices. For more on the technical ins and outs, take a look at this paper by University of Virginia researchers. There are also competitors, including Ember and SquidBee, making WiFi sensors using the open-source ZigBee standard.

Opus Capital led the $20 million second round, while existing investors Intel Capital, New Venture Partners, OVP Venture Partners and Sigma Partners also participated. GainSpan’s total funding, with its $10.5 million first round, now stands at $30.5 million.

Like the self-powered “kinetic” watches many people now wear, M2E Power’s batteries include a micro-generator that continuously recharges battery power as the user moves around.

Aiming at soldiers carrying mobile devices in the field, M2E says it can lower the battery weight they need to carry, saying soldiers often have to carry 10-30 pounds more due to battery-powered equipment.

Where most kinetic watches use the motion of a mechanical arm to wind, M2E’s technology uses magnets in a wire coil. The movement of a magnet in the electromagnetic field created by the coil provides the charge.

Similar technology has been in use for years, most recently finding its way into so-called “shake” flashlights that need to be shaken back and forth before they light up. M2E’s innovation is an improving the generating architecture to generate more power and attaching the resulting mini-generator to a battery.

While it was conceived during a U.S. Department of Energy project and for now focused on military applications, M2E batteries should also find their way into consumer uses. One could power, for instance, a BlackBerry or digital camera.

Later, when scaled upward in size, they could become part of commercial electrical generators, working off wave or wind power.

The Boise, Idaho company previously took an undisclosed round of seed funding. Its $8 million round was led by OVP Venture Partners, with participation from @Ventures and Highway 12 Ventures.

Featured companies: Allozyne, Arteriocyte Medical Systems, Arthrosurface, Bay City Capital, EnteroMedics, OncoVista, Novotech, Power Medical Interventions, Reliant Technologies

UPDATED: Expanded items on Allozyne, Reliant Tech, Power Medical and Bay City Capital.
UPDATE REDUX: Added item on EnteroMedics IPO.

Seattle’s Allozyne draws $30M for new interferon — Allozyne, a Seattle biotech focused on tweaking existing protein-based drugs to improve their properties, raised $30 million in a second round of financing. Investors included MPM Capital, OVP Venture Partners, Amgen Ventures, ARCH Venture Partners and Alexandria Real Estate Equities.

Allozyne’s twist on improving protein-based drugs — i.e., most biotech drugs — is to substitute “non-natural” amino acids into the proteins themselves. (Recall that a protein is essentially just a long chain of amino acids.) By swapping out natural amino acids with synthetic versions at key points in the protein, Allozyne hopes to improve the effectiveness and safety of protein drugs. The company’s description of it’s approach is here.

The company’s first drug candidate is a modified version of interferon beta, which is currently used to treat multiple sclerosis. The funding will support the first early-stage human trials of the drug, and will also “accelerate” development of a second candidate.

In addition, Allozyne will prepare to exit Accelerator, a Seattle biotech incubator connected with the Institute for Systems Biology. We previously wrote about Accelerator here.

Med-device maker Reliant Tech sets IPO terms, aims for $86M take — Not to be confused with Reliant Pharmaceuticals, which set its IPO terms yesterday, Mountain View, Calif.-based Reliant Technologies set its price range today and now hopes to raise up to $86.5 million in an offering of as many as 5.4 million shares. Reliant hopes to price those shares between $14 and $16 apiece.

Reliant makes medical lasers for “skin rejuvenation” treatments. Our previous coverage of the company is here.

Power Medical IPO falls short, raises up to $49M for robotic-surgery systems — Power Medical Interventions, a Langhorne, Pa., maker of computer- and power-assisted surgery tools, fell short of its IPO hopes and now stands to raise no more than $49 million from its offering. Its latest SEC filing is here.

The company priced its shares at $11 apiece, well under the $12 to $14 range it previously established. (Our coverage is here.) Power Medical could sell as many as 4.4 million shares in the offering.

The result is a sharp disappointment for Power Medical, which had originally hoped to raise as much as $100 million in its offering. The company’s lackluster start contrasts with the soaring welcome spinal-implant maker TranS1 received earlier this month (our coverage here). If it’s any consolation, though, Power Medical shares staged an early recovery, rising 60 cents, or 5.5 percent, to $11.60 in early trading today.

Bay City Capital closes $500M life-science fund — The San Francisco-based VC firm Bay City Capital, which focuses on life-science investments, closed a $500 million fifth fund, VentureWire reports (subscription required). The fund is significantly larger than its predecessor, which closed at $350 million in 2004.

Bay City intends to back 15 to 20 biotech, medical-device and diagnostics companies with the fund, which suggests it will tend to favor later-stage deals — now a long-standing VC trend. The firm told VentureWire that it will invest at all stages, including “seed-stage bets on start-ups launched in-house and structured investments in publicly traded companies.”

EnteroMedics sets IPO terms, looks for $92M to support obesity-control implants — St. Paul, Minn.-based EnteroMedics, a device company developing a neuromodulation implant designed to regulate appetite, set its IPO terms and now aims to offer up to 5.75 million shares at a price of $14 to $16 apiece. The offering could value the company at as much as $261 million while raising up to $92 million.

EnteroMedics is one of several companies angling to introduce new obesity treatments that don’t rely on drugs or invasive surgery. Although its technology is still being tested to assess its effectiveness, EnteroMedics has launched a spiffy new Web site with lots of pictures and animations to illustrate how it believes its implant will work. For our previous coverage of the company, see here and here.

OTHER HEADLINES OF NOTE:

• Arteriocyte Medical Systems spins out, gets $10M for med devices(release)
• Arthrosurface raising $5M for knee implants (VW)
• Contract researcher Novotech raises $8M for expansion(release)
• OncoVista goes public via reverse merger (release)

Featured companies: CG Therapeutics, Complete Genomics, ConforMIS, Flexible Medical Systems, LeMaitre Vascular, MAP Pharmaceuticals, ParaPro, Vascular Architects, Zars Pharma

(UPDATED on 10/1/07: See below.)

[NOTE: Posting has been slow recently for personal reasons. I'll be doing my best to catch up today.]

Complete Genomics raises funding for high-speed sequencing — Complete Genomics, a Mountain View, Calif., developer of high-speed genome sequencing technology, said it raised an undisclosed sum in a second funding round, VentureWire reports (subscription required). The company said the funding was significantly larger than its $6 million first round last year, but declined to say by how much. Investors included OVP Venture Partners and Enterprise Partners Venture Capital.

Complete Genomics is one of several companies aiming to bring down the cost of genome sequencing in order to, among other things, eventually make it possible for individuals to base medical and lifestyle decisions on their individual genetic profiles. The company, founded in 2005, hasn’t disclosed many details about its technological approach, although its Web site vaguely describes it as “a novel combination of high-density DNA nanoarrays, sequencing-by-hybridization and combinatorial probe-ligation chemistry, and high-performance computing techniques.”

The high-speed sequencing market has been in a state of flux recently. Cambridge, Mass.-based Helicos Biosciences, went public in May. Solexa, a U.K.-based sequencer that later moved to the U.S., also went public in 2005 via a reverse merger and then was acquired earlier this year by Illumina. 454 Life Sciences was acquired by Roche earlier this year. VentureWire also lists Pacific Biosciences as a recent venture-backed sequencing company.

UPDATE: Complete Genomics announced an interesting new joint venture with BioNanomatrix of Philadelphia ten days after this funding; see our coverage here.

MAP Pharma prices IPO, looks to raise $92M — Mountain View, Calif.-based MAP Pharmaceuticals said it plans to price its initial-offering shares at $14 to $16 apiece, a range that could potentially raise $92 million. That’s up from the $86 million take MAP estimated in June (see our coverage at the time).

MAP makes reformulated versions of existing drugs for delivery via inhalers. Its lead candidate is a new inhaled version of budesonide, a corticosteroid used to treat pediatric asthma.

Implant maker ConforMIS ponders new funding, possible IPO — ConforMIS, a Lexington, Mass., medical-device company, is raising a “mezzanine” round of financing while it plans for an IPO within two years, VentureWire reports. The company, which makes personalized knee implants, raised a $10 million “debt facility” in August (see our coverage in the second item here).

LeMaitre acquires Vascular Architects for $2.8M — LeMaitre Vascular, a publicly traded maker of devices and implants for vascular surgery based in Burlington, Mass., acquired venture-backed Vascular Architects of San Jose, Calif., for $2.8 million in cash. Vascular Architects makes devices for the removal of plaque deposits that can clog arteries and cause life-threatening blood clots. The company had previously raised more than $42 million in equity and $5 million in debt, according to VentureWire.

Lice-drug maker ParaPro gets $2.1M grant — ParaPro, a Carmel, Ind., specialty pharmaceutical company developing a topical cream for treating head lice, received a $2.1 million grant from Indiana’s 21st Century Research and Technology Fund. The company said the funding will finance late-stage trials of its lice treatment, which it calls Spinosad.

CG Therapeutics names Christopher Henney chairman, seeks funding — Chris Henney, who co-founded three of Seattle’s most successful biotechs — Immunex, Icos and Dendreon — is now also the new chairman (PDF link) of CG Therapeutics, a new cancer-vaccine company in Seattle. The company said Henney will play a key role in lining up corporate partners and seeking new funding. CG Therapeutics is currently working on a first funding round intended to support mid-stage trials of its cancer vaccine in lung and colon cancer.

Zars Pharma delays IPO — Salt Lake City’s Zars Pharma, a developer of topical drugs, postponed its IPO until next week. Zars priced its IPO at $14 to $16 a share in August, and was slated to hit the market this week. See our previous coverage here and in the third item here.

At that, Zars is in far better shape than Cumberland Pharmaceuticals, which has been expected to go public on a day-to-day basis since mid-August. We last wrote about Cumberland here.

Flexible Medical Systems raises $1.2M for remote diagnostics — Rockville, Md.-based Flexible Medical Systems, a device and diagnostics maker focused on non-invasive devices that continuously monitor vital signs, raised $1.2 million in a seed financing. “Accredited investors” provided the funding.

FMS is developing diagnostic monitors that continuously draw “interstitial fluid” through the skin without a needle or other punctures. This fluid can theoretically be used to monitor protein levels in blood, although it’s also worth noting that other attempts to do this sort of thing — especially continuous blood-sugar monitoring for diabetics — have had a mixed history.

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Coda Genomics, a Laguna Hills, Calif., biotechnology company founded in 2005, concentrates on a thorny but little-realized challenge in biotechnology: Genetic engineering is easy. Protein manufacture is hard.

The biotech industry was founded on the science of recombinant DNA, which is essentially the trick of taking a gene from one species (such as a human) and inserting it into the genome of another (say, the microbe E. coli). Since many genes are essentially templates for producing proteins, this has been a handy technique for making, or “expressing,” vast quantities of natural human proteins such as insulin by harnessing the production facilities already found inside cells.

Inserted genes, however, don’t always behave as expected. Among other things, their protein-production engines can stutter and sometimes stop when incompatible genetic signals encoded in the transplanted genes clash with the host cell’s own internal machinery. Coda aims to ameliorate such problems by smoothing out the effect of one particular set of crossed signals that control when and for how long cells “pause” the protein-producing activity of individual genes.

The company doesn’t go into a lot of detail as to how it accomplishes this, but it lists an impressive array of blue-chip customers including Genentech, Eli Lilly and Invitrogen, all of whom are keenly interested in ways to improve the manufacture of recombinant proteins as drugs or diagnostics. Coda also sells kits that allow customers to “optimize” synthetic genes — that is, stretches of artificially assembled DNA designed to produce particular proteins — to improve their output once inserted into host cells.

Now, however, it appears that Coda has higher ambitions. The company today announced that it raised $7 million in a third funding round, and hinted that the proceeds will allow it to shop for a drug candidate of its own. (The company’s release calls this “obtain[ing] new high value intellectual property positions, including a therapeutic development candidate.”) I doubt it’s going too far out on a limb to suppose that Coda plans to acquire a cast-off or otherwise “failed” protein drug that’s proven difficult to manufacture in order to make it more cost-effectively.

If so, it’s certainly hard to blame them; the lottery mentality of biotech investors — VCs most certainly included — tends to reward companies that pursue their own drugs while punishing those that might otherwise concentrate on offering useful but unexciting services to other drug manufacturers. I’m not convinced this is the most efficient use of the industry’s resources, but given how little economic logic actually underpins biotechnology in the first place, it seems pretty much par for the course.

There’s more detail on Coda’s early history in this March 2006 VentureWire story (subscription required). OVP Venture Partners led the round, joined by Monitor Ventures, Tech Coast Angels, and Life Science Angels.

NanoString, a Seattle nanotech company working on tiny tags that it says will allow it to identify and count individual molecules in a solution, has raised $8.5 million in a second funding round, VentureWire reports (subscription required). Draper Fisher Jurvetson and OVP Venture Partners each invested $4 million, with individual investors making up the remainder, NanoString CFO Wayne Burn told VentureWire.

NanoString is developing tags of tiny fluorescent beads that can latch onto particular nucleic acid or protein molecules, effectively “bar-coding” them in a way that can be read by a sophisticated optical scanner. By arranging differently colored beads in various order, it’s possible for the company to create a vast number of individual tags that can identify particular molecule types. The company first plans to target products for genetic analysis, and later will expand into identification and analysis of proteins and other molecules for medical diagnostics, bioterrorism-detection applications, and agriculture.

Formed in 2003, the company is a spinout from the Institute of Systems Biology.