VentureBeat

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:

• Surgical-device maker Aragon Surgical receives $25M (release)
• Tacere Therapeutics strikes RNAi deal with Pfizer for up to $145M (release)
• Benvenue Medical raises $15M for spine-repair devices (release)
• Genome-association co. Genizon BioSciences draws C$31M (release)
• Contract research organization Inclinix pulls in $10M (release)
• EPocrates, healthcare IT developer, gets strategic investment from Goldman Sachs (release)
• ZyGem closes first funding round (release)
• Onset Ventures names John Ryan partner (release)
• Retired Scripps immunologist Richard Ulevitch joins 5AM Ventures (release)
• SV Life Sciences promotes Darren Black to partner (release)
• Medical-software maker SafeMed appoints Richard Noffsinger CEO (release)
• Artromick, healthcare IT developer, names Williams Shields CEO (release)
• Stem-cell biotech BioE seeks $3.5M (VentureWire, sub req’d)
• Inovise raises $3.4M for heart diagnostics (VW)
• Fairway Medical pockets $1M for medical devices, aims for $10M (VW)
• Cancer-drug biotech Genspera pulls in $650K, looks for $5M more (VW)
• E-trolZ looks for $400K for electrophysiology devices (VW)

Tacere Therapeutics strikes RNAi deal with Pfizer for up to $145M — San Jose, Calif.-based Tacere Pharmaceuticals, a biotech developing new drugs based on the gene-silencing technique known as RNA interference, struck a partnership deal with Pfizer that could be worth up to $145 million. The company’s release is here.

The deal involves Tacere’s leading drug candidate for hepatitis C. Known as TT-033, the drug consists of short stretches of RNA designed to trigger cellular mechanisms that shut down the activity of specific genes — an exciting but so far still unproven approach. In this case, TT-033 aims to shut down three separate parts of the hepatitis C genome, theoretically not only inactivating the virus, but also preventing the development of resistant viral strains.

Tacere is already co-developing TT-033 with Oncolys BioPharma of Japan, and in fact has deep Japanese roots, as the company also received its founding capital from Hokkaido Venture Capital of Sapporo, Japan. (Our coverage of the Oncolys deal is here.) The Pfizer deal appears to be complementary to Tacere’s previous agreement, as the Big Pharma will receive worldwide rights to TT-033 excluding Asian nations. Pfizer will fund all future development of the drug, and will make milestone payments to Tacere as development proceeds. TT-033 has not yet entered human testing.

Surgical-device maker Aragon Surgical receives $25M — Aragon Surgical, a Palo Alto, Calif., developer of surgical instruments, raised $25 million in a second funding round. Investors included Bay City Capital, Integral Capital Partners, Delphi Ventures and Onset Ventures.

Founded in 2005, Aragon develops tools and instruments intended to speed surgical procedures and to improve their safety. The company is working on two major classes of devices — “electrosurgical” instruments, which use electric current to stop bleeding, remove growths and cut tissue, and tools that improve the speed and safety of minimally invasive surgeries known as laparoscopies. Last September, Aragon launched its first product, the LapCap, which guides a needle used to inflate a patient’s abdomen with gas in order to reduce the risk of inaccurate placement and injury.

Benvenue Medical raises $15M for spine-repair devices — Mountain View, Calif.-based Benvenue Medical, a developer of minimally invasive devices for spine surgery, raised $15 million in a second funding round. Investors included Three Arch Partners, Versant Ventures and De Novo Ventures.

Benvenue is developing spinal implants designed for the treatment of spinal compression fractures and degenerative disk disease via spinal fusion. The company’s Web site is a stub, and it doesn’t seem to have described its technology in much detail yet.

Stem-cell biotech BioE seeks $3.5M — St. Paul, Minn.-based BioE, a provider of stem-cell products for the drug and biotech industries, hopes to raise $3.5 million in a first funding round, VentureWire reports (subscription required). The company has so far raised $30 million from angel investors, and disclosed its plans in a regulatory filing. The funds will allow the company to commercialize lines of “multi-lineage” progenitor stem cells and a system for processing and freezing of umbilical-cord blood stem cells.

Inovise raises $3.4M for heart diagnostics — Inovise Medical, a Portland, Ore., developer of cardiac diagnostics, raised $3.4 million in convertible notes, VentureWire reports, citing a regulatory filing. The company is in the midst of fundraising for a sixth financing round. Inovise makes a non-invasive cardiac monitoring system called Audicor that records and analyzes sounds emitted by a beating heart.

Fairway Medical pockets $1M for medical devices, aims for $10M — Fairway Medical Technologies, a Houston incubator that develops a variety of medical devices, raised $1 million from angel investors and is looking to draw another $5 million to $10 million in a first institutional round later this year, VentureWire reports. Founded in 1992, Fairway Medical in-licenses medical devices and ushers them through the development process.

Cancer-drug biotech Genspera pulls in $650K, looks for $5M more — Santa Monica, Calif.-based Genspera, a biotech focused on cancer drugs, raised $650,000 in a seed round and aims to close another $5 million in funding later this quarter, VentureWire reports. The company plans to list its shares on the Nasdaq over-the-counter bulletin board following the financing. Genspera is working on cancer drugs using technology licensed from Johns Hopkins University.

E-trolZ looks for $400K for electrophysiology devices — North Andover, Mass.-based E-trolZ, a developer of electrophysiology measurement devices, raised $400,000 in a follow-on to its first $1.2 million funding round, VentureWire reports. The company is developing components that measure various physiological signals and which can be integrated into other medical devices.

Featured companies: Algorithme Pharma, Bacchus Vascular, Botaneco, Cubist Pharmaceuticals, Ikonisys, Healthcare Management Systems, Illumigen Biosciences, Kilmer Capital Partners, Medical Specialties Distributors, Metastatix, Microphage, Orthosoft, Thomas McNerney & Partners, TranS1, TriReme Medical, Wren Medical, Zimmer

UPDATE: Expanded TriReme Medical, Ikonisys and TranS1 items.

UPDATE REDUX: Added MicroPhage item.

Stent-maker TriReme Medical sails off with $15.6M — Pleasanton, Calif.-based TriReme Medical, a device maker developing a new type of artery-opening stent for blood-vessel junctions, raised $15.6 million in a third funding round. (The company doesn’t appear to have a Web site.) Investors included Three Arch Partners and Adams Street Partners.

TriReme claims that its new stent is easier to use and can be placed more accurately than similar stents now on the market. The product is still undergoing clinical studies.

Ikonisys draws $30M for cancer and prenatal diagnostics — New Haven, Conn.-based Ikonisys, which now makes and sells a cell-based diagnostic for cancer and prenatal testing, raised $30 million in a fifth funding round. Investors included Goldman, Sachs, Trevi Health Ventures, Palisade Capital, Everfin, Lakeview Capital Management, New Science Ventures, Promark Holdings, Saint Simeon - e Investimentos, and WHI Group.

Ikonisys makes an automated microscope-based test that analyzes cells from blood and other bodily fluids. The system can chunk through up to 175 microscope slides in one go, providing an initial diagnosis for each one based on a computer analysis of stained cell samples. The company has received FDA approval to market the test for detection of bladder cancer and to scan for prenatal chromosomal defects.

TranS1 IPO exceeds estimated range, raises $95M for spinal-fusion devices — The Wilmington, N.C., maker of minimally invasive devices for spinal fusion priced its IPO shares at $15 apiece, above its expected range of $12 to $14, raising as much as $95 million on the sale of up to 6.3 million shares. The offering values the company at $281.6 million. Our previous coverage of the firm is here and here.

In early trading Wednesday, TranS1 shares were up 60 percent to $24. That’s more confirmation — as if we needed it — that life-science investors seem excited about everything except biotech.

Infection-diagnostic co. MicroPhage raises $1.6M — Antibiotic-resistant staphylococcus infections are on the rise, boosting the need for ways to detect the bugs at an early stage so as to prevent their spread and treat patients most effectively. MicroPhage, a Longmont, Colo., biotech at work on a diagnostic test of this sort, raised $1.6 million in a second tranch of its first funding round. Private investors provided the funding.

MicroPhage isn’t alone in this market, of course. We wrote earlier about OpGen and AdvanDX — see our coverage here and here — which hope to speed detection of these “superbugs” (technically known as MRSA, for methicillin-resistant staphylococcus aureus) using new genome-based tests. MicroPhage, however, takes an ingenious and decidedly low-tech approach: Its tests are designed to detect MRSA by infecting the staph germs with bacteria-specific viruses called bacteriophage. These viruses multiply so rapidly that they should be detectable by simple antibody tests within one to four hours, a solution the company bills as simple and inexpensive compared to its high-tech counterparts.

OTHER HEADLINES OF NOTE:

• Botaneco takes in $2.4M for dermatology emulsions, split from SemBioSys Genetics (release)
• Marval Bio raises $1M for less toxic contrast dye for CT scans (VentureWire, sub req’d)
• 7 Health Ventures raises $70M for Israeli medical-device startups (VentureWire)
• Zimmer completes acquisition of OrthoSoft for $51.4M (Fort Wayne Journal-Gazette)
• Cubist buys “exclusive option” to acquire anti-infective developer Illumigen (release)
• Medical Specialties Distributors acquires infusion-product distributor Wren Medical (PE Hub)
• Kilmer takes majority stake in contract researcher Algorithme Pharma (PE Hub)
• Healthcare IT firm Healthcare Management raises funds, recapitalizes (release)
• Clotbuster-device co. Bacchus Vascular names Scott Cramer CEO (release)
• Chemokine specialist Metastatix names Carol Gallagher as CEO (release)
• Thomas, McNerney & Partners names Eric Aguiar partner, Jason Brown as associate (release)

An implantable and odd-looking microtelescope from a Saratoga, Calif., device maker could be one of the next big things in treating a common form of blindness — assuming that patients are willing to endure arduous surgery in order to obtain their new bionic eyes.

Age-related macular degeneration — a progressive loss of sight related to physical changes in the central retina, also called the macula — is the leading cause of blindness among elderly Americans, now affecting more than 1.75 million people, and potentially almost three million by 2020 (PDF link). Until recently, AMD patients had little choice but to accept the steady loss of vision as their macula deteriorated.

Over the past few years, biotech companies have made some headway against the “wet” form of AMD, in which abnormal vessels in the retina leak blood and fluid that distorts vision. In particular, two drugs from Genentech, Lucentis and Avastin, appear to block the growth of those blood vessels and, for the first time, appear to improve vision in many AMD patients. (Avastin, however, isn’t approved for AMD, although at these doses it is roughly a hundred times cheaper than Lucentis. Genentech is, of course, doing all it can to keep patients on Lucentis.) Now that those drugs have been proven to work, new experimental treatments for wet AMD are everywhere — see, for instance, our coverage here, here, here, here, here, here, and here.

Not everyone responds to the existing drugs, however, and they don’t work at all in people with the “dry” form of AMD (a group that accounts for close to 90 percent of all AMD patients). Which is where a transplanted Israeli medical-device firm called VisionCare Ophthalmic Technologies and its implantable microtelescope come in.

Both forms of AMD typically first degrade “central vision” — essentially, your ability to see whatever you’ve focused your eyes on. While many AMD patients retain some peripheral vision, losing central vision in both eyes makes it all but impossible to drive, read or perform many other daily activities. That characteristic of the disease, however, is what drove Isaac Lipshitz and Yossi Gross to found VisionCare in the mid-1990s, with the goal of developing an implantable device that might restore vision even without addressing the underlying cause of AMD.

Lipshitz designed a tiny but powerful telescope that acts like a telephoto lens, essentially enlarging images by a factor of three. That, in turn, “spreads” central vision across a wider swathe of the retina, allowing healthy retinal cells to interpret images that previously would have been restricted to their damaged macular counterparts (see graphic below).

The only catch, of course, is that you have to have this microtelescope implanted in your eye, which is not a particularly easy procedure. Surgeons must essentially lift up the cornea by one edge in order to wedge the four-millimeter-long telescope underneath it. A recent study in the Archives of Ophthalmology outlined two years of surgical experience with the device, noting that the procedure frequently damaged the endothelial cells that line the outer surface of the eyeball, and in a few cases required a complete corneal transplant.

Those risks, however, may well be worth it for patients who otherwise risk permanently losing much of their sight. In a year-long clinical trial involving 217 patients who had the device implanted in one eye, 90 percent of the subjects gained the ability to see an additional two lines on an eye chart. After a year, two-thirds of the volunteers experienced a doubling in their visual acuity (equivalent to a three-line gain on the eye chart), and 25 percent gained five lines of vision. Those patients recently completed a two-year followup, and VisionCare — now headquartered in Saratoga — expects the FDA to approve the implant by the end of this year.

VisionCare had raised roughly $46 million as of Jan. 2005, according to this VentureWire story (subscription required). The company is backed by Boston Scientific and a variety of VC firms, including Onset Ventures, Pitango Venture Capital, Three Arch Partners and Infinity Venture Capital.

For more background, see this recent Scientific American article, this item at MedGadget, and this historical piece published by the nonprofit Israel21C.

Featured companies: Tenaxis Medical, Aspen MedTech, Biolex Therapeutics

Tenaxis closes up $5M for surgical sealants — Mountain View, Calif.-based Tenaxis Medical, a developer of glues and sealants for closing surgical incisions, raised $5 million in a second funding round, VentureWire reports (subscription required). Individual investors, including several limited partners in Magic Venture Capital, provided the funding.

Tenaxis began clinical trials of its first experimental product, a sealant for blood vessels, last month. The company plans to use the proceeds from the current funding to begin trials in Europe.

Aspen MedTech, a medical-device “incubator,” raises $1M — Three Arch Partners and Prospect Venture Partners co-led a $1 million funding round for Aspen MedTech, a Bellevue, Wash., shell company designed to incubate an as-yet undetermined medical-device startup, VentureWire reports. The one-shot incubator will be subsumed into the company it eventually gestates, unlike typical “evergreen” incubators designed to create several companies.

From the VentureWire story:

Aspen will consider technologies in a variety of large markets, including cardiovascular disease, orthopedics and women’s health. Aesthetics, a hot market, is also a possibility, though [Aspen general manager Daniel] Hawkins said the bar is high because competition there is already intense.

Biolex files for $70M IPO — Biolex Therapeutics, a Pittsboro, N.C. biotech focused on manufacturing complex proteins and optimized monoclonal antibodies in an aquatic-plant system, filed to raise up to $70 million in an IPO.

Biolex has three drug candidates, two of which appear to be new forms of existing biotech drugs — a time-release form of interferon alfa for treating hepatitis C and an antibody drug for use against non-Hodgkin’s lymphoma. Biolex has also developed a new clot-busting drug based on genetically engineered plasmin, a natural substance in the body that dissolves fibrin, a protein that holds clots together. Only the interferon has entered clinical trials.

Like most biotechs, Biolex has accumulated a large aggregate net loss, here amounting to $88.6 million as of March 31. Its annual burn rate — which I generally equate to operating losses — has risen steadily to $18.5 million in 2006 from $10.3 million in 2004.

Biolex acknowledges something in its risk-factor disclosure that I had been wondering about. The company states that “No product manufactured using a plant-based production system, including our LEX System, has received regulatory approval,” which is kind of interesting. There are a number of efforts afoot to produce protein-based biotech drugs in new types of genetically engineered cells, including yeast. Traditionally, such cells would produce proteins that lacked essential human features, such as particular arrangements of sugar molecules, which rendered them unsuitable as medicines.

Satiety, a Palo Alto, Calif., device maker focused on obesity, raised $30 million in a fourth round of funding. Skyline Ventures led the round, joined by HLM Venture Partners, Pinnacle Ventures, Venrock, Three Arch Partners, Morgenthaler Ventures and Thomas Fogarty.

Satiety is developing a minimally invasive device for stomach-reduction surgery consisting of a stapling tool that can be passed down the throat into the stomach. The company was founded in 2001.

Arete Therapeutics, a Hayward, Calif., developer of biotech cardiovascular treatments, raised a $35 million extension to its first round of funding. Founded in 2003, the company is working on “small molecule” drugs that target a metabolism-related chain of biochemical cellular signals that involves arachidonic acid. (If that isn’t enough to make your head hurt, the company has a detailed explanation here.) Drugs that interfere with that pathway could be useful in treating high blood pressure and inflammation; the company plans to move its first candidate into human testing later this year, according to VentureWire (subscription required).

Frazier Healthcare Investors and Alta Partners led the round, joined by Three Arch Partners, Burrill & Co. and Altitude Life Science Ventures. The company had previously raised $16 million in its first round in 2005, for a total so far of $51 million.

The company’s release is here (PDF).

(CORRECTED: See below.)

Seattle-based NeuroVista, a developer of devices for the treatment of epilepsy, raised $33.8 million in a second-round funding and left behind its former name, BioNeuronics.

The company, founded in 2002 by whiz kid Daniel DiLorenzo, has been quiet about its technology and commercial direction. In April, however, DiLorenzo received a patent for a “neurological control system” using “closed-loop intracranial stimulation” for the “optimal control of neurological disease.” In other words, given NeuroVista’s public interest in epilepsy, it sounds very much like it’s working on implantable neuromodulation devices that could monitor and perhaps counteract the early signs of an oncoming seizure. (Hat tips: VentureWire and Neurotech Business Report).

VentureWire also reports that one other venture-backed company, NeuroPace, and two established device makers, Medtronic and Houston-based Cyberonics, may also be researching epilepsy devices.

Here’s NeuroVista’s vaguely worded announcement. The round was led by Advanced Technology Partners and Delphi Ventures, who were joined by Three Arch Partners, Sprout Group and Foundation Medical Partners.

CORRECTION: An earlier version of this item stated that Dan DiLorenzo “co-founded” NeuroVista. He’s informed us that he was the sole founder, and I’ve corrected the item to reflect that.

Pegasus Biologics, an Irvine, Calif., maker of flexible-but-strong tissue substitutes designed to speed muscle-tendon repair or wound healing, raised $20 million in a third round of funding.

Despite the word “biologics” in its name — a term that is often synonymous with protein-based biotechnology drugs — Pegasus isn’t a drug company. Nor is it strictly a medical-device maker. Instead, the company has devised “bioimplants” made from equine pericardium — horse heart, in other words — that surgeons can use to help stitch together damaged tendons or other wounds. (Technically speaking, a “biologic” is any product derived from living organisms, and so covers everything from protein drugs pumped out by genetically engineered bacteria to actual human or animal tissue. It’s just that you don’t tend to see as much of the latter as the former.)

Currently, Pegasus sells one type of bioimplant for tendon and ligament repair, and a second for use in wound healing, particularly in diabetic ulcers. Each consists of a cell-free collagen matrix intended to provide a “scaffold” for the regrowth of surrounding tissues. The company is also currently developing a bioimplant for repair of the dura mater, the outermost membrane surrounding the brain and spinal cord, and another intended for use in reconstruction of the anterior cruciate ligament, or ACL, an easily injured ligament in the knee. Generally speaking, Pegasus considers its bioimplants an attractive alternative to other animal-derived biologic tissue or to human tissues, whether patient-derived or procured from cadavers.

Onset Ventures led the funding round, joined by fellow new investor Affinity Capital Management and existing investors Three Arch Partners and Frazier Healthcare Ventures. Pegasus previously raised $10 million in a mid-2005 second round.

Leslie Bottorff, an Onset general partner, will join the Pegasus board, as will Gary Restani, president of medical-robotics company Hansen Medical. Onset normally invests in earlier-stage companies, but Bottorff told me that Pegasus was attractive because it was sitting on a “largely untapped” market for surgical-repair bioimplants. Bottorff said that competing animal-tissue products are generally stiffer and more difficult for surgeons to work with, and that human tissue always carries the risk of transmitting disease or producing an inflammatory immune reaction.

Bottorff said the current financing should carry Pegasus to profitability, after which it might be a good candidate for an initial offering or potential acquisition.