VentureBeat

TODAY’S HEADLINES:

• Stemline Therapeutics, cancer stem-cell startup, gets $13M (release)
• Eye-disease biotech Potentia Pharma raises $12M (release)
• Sample-prep toolmaker Arcxis aims for $8M to $10M (VentureWire)
• Synvascular names Drew Hoffman as CEO (VentureWire)
• ArtusLabs gets $2.6M for life-science software and services (release)
• Cancer-drug maker Inotek loses CEO, Genentech partnership (release)
• GTESS, health-plan IT startup, names James Bradley CEO (release)
• Antibiotic developer Tetraphase Pharma names Guy MacDonald CEO (release)

Stemline Therapeutics, cancer stem-cell startup, gets $13M – New York-based Stemline Therapeutics, a biotech focused on new cancer treatments, raised $12.5 million in a funding round. Healthcare funds managed by Pequot Capital Management provided the funding.

Stemline is one of several companies that hope to attack cancer by taking aim at cancer “stem cells,” which are thought to give rise to tumors the same way embryonic stem cells develop into the body’s 200+ types of tissue. One theory holds that conventional cancer chemotherapy often fails because while it can kill huge numbers of tumor cells, it tends to miss the stem cells that can migrate through the body and spark metastatic tumor growth.

Stemline already has one experimental drug against acute myeloid leukemia in early stage clinical trials, although it licensed that drug from the Texas A&M Health Science Center rather than discovering the molecule itself. The startup reports eight other drug candidates at an earlier stage of development.

Stemline has so far been overshadowed by the much flashier OncoMed, another cancer stem-cell startup that  last December struck a partnership with GlaxoSmithKline potentially worth $1.4 billion. It’s not clear, though, whether OncoMed has actually begun clinical trials of its leading drug candidate yet.

Eye-disease biotech Potentia Pharma raises $12M – Potentia Pharmaceuticals, a Louisville, Ky., biotech focused on eye diseases of the elderly, raised $12 million in an unspecified funding round. Backers include HealthCare Ventures and MASA Life Science Ventures.

Potentia hopes to treat a blinding disorder known as age-related macular degeneration by reducing inflammation. Specifically, the startup’s lead drug candidate, POT-4, inhibits the complement system, an arm of the body’s immune defenses that may be responsible for much of the damage associated with AMD.

Sample-prep toolmaker Arcxis aims for $8M to $10M – Pleasanton, Calif.-based Arcxis Biotechnologies, a maker of systems that prepare biological samples for analysis, hopes to raise $8 million to $10 million in a second funding round, VentureWire reports. The company raised $6.5 million in its first funding round, which took place in three installments from August 2006 through February 2008.

CORRECTION: An earlier version of this item incorrectly stated that Arcxis raised $11.1 million in February and wrongly attributed that fact to VentureWire. Arcxis CEO Howard Goldstein emailed me with the correct numbers.

Featured companies: CoMentis, ForHealth Technologies, Merrimack Pharmaceuticals, QuantomiX, Progenitor Cell Therapy, River Diagnostics, Topaz Pharmaceuticals

UPDATED: Expanded items on CoMentis, Topaz and ForHealth.

CoMentis gets $12M for eye, Alzheimer’s treatments — South San Francisco’s CoMentis, a biotech pursuing treatments for Alzheimer’s disease and macular degeneration, raised $12 million in a third funding round, VentureWire reports (subscription required). Wellington Management provided the funding.

The company’s lead drug candidate, ATG003, is an eye drop designed to treat age-related macular degeneration (AMD), a leading cause of blindness in the elderly. The drug inhibits a particular cell-surface “receptor” protein called nAChR that helps promote the growth of blood vessels. In AMD, abnormal vessels obscure vision by leading blood and fluid into the retina. Existing treatments for AMD — principally Genentech’s Lucentis and Avastin — also inhibit vessel growth, but must both be delivered by injection into the eye. ATG003 is in mid-stage human tests.

CoMentis is also developing an Alzheimer’s drug, CTS-21166, which inhibits beta secretase, a protein thought — but not proven — to play a key role in the development of the cognitive disorder. Beta secretase cuts another protein called amyloid precursor protein into pieces, one of which is commonly known as beta amyloid, a neurotoxic protein that clumps together in “plaques” around neurons in the brains of many Alzheimer’s patients.

Inhibit beta secretase, the theory goes, and you’ll cut off the production of beta amyloid and maybe alter the course of the disease. That drug is still in early-stage human testing.

Topaz Pharma takes in $20M for head-lice treatment — Philadelphia’s Topaz Pharmaceuticals, a company developing a new, naturally derived treatment for head lice in children, raised $20 million in a first funding round. Aisling Capital and Fidelity Biosciences provided the funding.

The head-lice treatment, which Topaz doesn’t seem to have named yet, employs an active ingredient derived from a naturally occurring soil organism that is toxic to head and body lice. The company also says it is working on treatments for acne and infection as well as childhood-disease vaccines.

ForHealth Tech gets $9M for automated pharmacy systems — Daytona Beach, Fla.-based ForHealth Technologies, a developer of automated systems for hospital pharmacies, raised $4 million in equity and an additional $5 million in debt. Equity investors included New Enterprise Associates, National Healthcare Services, Red River Ventures, and Chisholm Private Capital. Square 1 Bank provided the debt.

OTHER HEADLINES OF NOTE:

• Progenitor Cell Therapy faces possible acquisition by StemCells (release)
• River Diagnostics raises €1.5M for microorganism tests (release)
• Microscope maker QuantomiX acquired by El-Mul(release)
• Merrimack Pharma pulls in $35M for cancer, autoimmune therapies (VW)
• Frontier Scientific acquires Echelon Bioscences (release)

Featured companies: AstraZeneca, Atlantis Components, Cara Therapeutics, CardioMems, Corium International, New Ortho Polymers, Osprey Pharmaceuticals, Othera Pharmaceuticals, StrataGent Life Sciences

Corium acquires Stratagent, raises $25.1M for “transdermal” drugs — Corium International, a Menlo Park, Calif., biotech focused on drugs that can be delivered through the skin, said it will acquire StrataGent Life Sciences of San Jose, Calif., for an undisclosed sum. At the same time, Corium raised $25.1 million in a third funding round, and said it has commitments for another $15.2 million within the next 24 months.

StrataGent, whose origins lie in work performed at Stanford, has focused on “needle-free” drug delivery using a microjet system in a microprocessor-controlled device resembling an electronic patch. (See our previous coverage here.) The company raised a $16 million round in May, although the company never received more than $6.7 million of that. Corium has a much broader focus that incorporates a variety of technologies for delivering drugs via the skin or mucosal surfaces such as the nasal passages or mouth.

Although ostensibly a straightforward merger, StrataGent CEO Robert Thomas will run the merged company, while Ron Eastman of Essex Woodlands Health Ventures — a previous StrataGent investor — will assume the job of chairman. StrataGent will relocate to Corium’s Menlo Park address. Investors in the latest round include Essex, Quantum Technology Partners, Aphelion Capital and an unnamed “strategic investor.”

CardioMems raises $23.3M for implantable heart sensors — Atlanta’s CardioMems, a medical-device company at work on a new generation of implantable heart sensors, raised $23.3 million in a still-open fifth funding round, VentureWire reports (subscription required). Investors in the round included “most” of the participants in the company’s previous round, a group that includes Arcapita Ventures, Easton Capital Partners, Boston Millennia Partners, Foundation Medical Partners, Medtronic Inc. and Johnson & Johnson Development Corp.

CardioMems is still looking for new investors. Its first product is a wireless sensor that can measure the pressure inside an aneurysm — a weakened section of an arterial wall that’s susceptible to rupture — during surgery intended to repair it.

Othera Pharma arranges $7M debt facility for an eye treatment — Exton, Pa.-based Othera Pharmaceuticals, a specialty pharmaceutical company at work on a new treatments for glaucoma and macular degeneration, arranged a $7 million debt facility with Oxford Financial, a subsidiary of Japan’s Sumitomo. The funding will help Othera advance its lead drug candidate in exsting mid-stage clinical trials.

Cara Thera receives $4M, moves to Connecticut from New York — Cara Therapeutics, a biotech formerly based in Tarrytown, N.Y., has received $4 million in facilities funding from Connecticut Innovations to help fund its move to Shelton, Conn. Cara, which is developing new pain and inflammation treatments, plans to use the money to build laboratory space in its new headquarters.

Connecticut Innovations is a quasi-public economic development agency. In a separate investment, the agency provided $250,000 in seed funding to New Ortho Polymers, a maker of orthodontic appliances.

EffRx raises convertible debt for osteoporosis — EffRx, a Tequesta, Fla., company that repackages old drugs in new formulations, raised an undisclosed some from a convertible debt offering, VentureWire reports. The funding will allow the company to push an “effervescent” version — think of Alka-Seltzer — of the osteoporosis drug Fosamax to the market. The investors weren’t disclosed.

Osprey Pharmaceuticals names new CEO — Osprey Pharmaceuticals, a Montreal biotech that’s consolidating its headquarters operations in San Francisco, named Jack Anthony as CEO. Anthony, currently an Osprey vice president, will remain in San Francisco. Osprey is developing new drugs for kidney disease.

AstraZeneca unit buys dental-implant maker for $71M — AstraZeneca’s medical-technology subsidiary, Astra Tech, agreed to acquire Cambridge, Mass.-based Atlantis Components for $71 million. Atlantis makes customized “abutments,” which are tiny components designed to stabilize dental implants. The company had previously raised about $26.3 million in four funding rounds, VentureWire reports.

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.

When news that the brand-new startup Ophthotech had raised a $36 million first round broke on Monday, it was clear that the venture amounted to a kind of do-over for officials of the late, unlamented Eyetech Pharmaceuticals. Eyetech, you might recall, burst onto the scene with a rocket-science aptamer-based blindness drug called Macugen and a flashy $157 million IPO, then proceeded to get its head handed to it by even better rocket science from Genentech, and eventually sold itself ignominiously to OSI Pharmaceuticals for a lower share price than its IPO (a deal that apparently worked out even less well for OSI).

I didn’t write any of this at the time, however, and in the meantime several others have made a number of interesting observations about Ophthotech’s emergence, not to mention noting some eerie historical parallels. Fred Cohen at Pharma’s Cutting Edge offered this acerbic interpretation:

OSI is now divesting its eye business. As part of the divestiture, OSI has licensed its apatemer targeting PDGF (a related angiogenic peptide) to newly formed Ophthotech. Ophthotech has also licensed development and marketing rights to Archemix’s aptamer targeting the C5 component of complement (an inflammation factor). As you’ll read, Ophthotech is staffed largely by former Eyetech execs. It’s a chance for them to do it all over again. Perhaps this time around they will not sell out the early public-market investors by dumping the firm below its IPO price, while reserving a tidy sum for themselves.

But to really head through the looking glass, you have to turn to the In Vivo blog, where Chris Morrison writes:

SV Life Sciences, HBM BioVentures, and Novo AS have just funded an ophthlamology start-up with a $36 million Series A that will pay for the acquisition of two interesting drug candidates. Didn’t that happen last year? It sure did, in May 2006. The company was Lux BioSciences.

OK, how about this: David Guyer, MD, and Samir Patel, MD, have teamed up as founders of an ophthalmology specialist based on in-licensed aptamer drugs and hope to make headway in the tricky macular degeneration space. SV (then Schroder Ventures Life Sciences) was an early investor. No, no, no, that was way back in 2000. Eyetech, right? Absolutely.

Guyer is now chairman of Ophthotech and Patel is CEO. Morrison goes on to note that Ophthotech has licensed an aptamer against platelet-derived growth factor from none other than OSI, which, of course, originally acquired it from… Eyetech. A second deal brought in more aptamers from Archemix (see our coverage), which bought Gilead Sciences’ aptamer technology in 2001, gaining control of everything but… the aptamer that Gilead licensed to Eyetech, which became Macugen.

Morrison rightly wonders why all the technology and money now flowing into Ophthotech didn’t go to Lux BioSciences instead. The answer, he suggests, may simply be that Big Pharma’s hunger for biotech — and its tendency to pay top dollar — has convinced VCs that they’re better off spreading their eggs among as many baskets as possible.

Or, as Morrison puts it:

Oddly enough, only a few years ago, it would have been a sure thing to keep all these assets under one corporate roof, because the VCs would have been hoping for an IPO exit, and investors like to see multiple clinical projects at IPO hopefuls. Now that M&A is the preferred exit, the assets are siloed. For now.

(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 as much as $100 million in an IPO. As of March 31, the company had an accumulated deficit of $112.6 million. Earlier this year, it submitted its Verigene molecular-diagnostic system to the FDA for approval; Nanosphere intends to market the device to hospital laboratories that currently aren’t equipped to perform such tests in-house.

SurModics snaps up diagnostic-supply company BioFX for up to $22.7M — SurModics, an Eden Prairie, Minn., developer of drug formulations and other biological supplies, agreed to acquire BioFX Laboratories of Owings Mills, Md., for $11.3 million in cash and milestone payments worth up to $11.4 million. The release is here. The acquisition is the second for SurModics this month; it bought out Brookwood Laboraties on Aug. 2 (our coverage is here).

UPDATE (2:37pm PT): Added items on Glide Pharma, Reliant Pharmaceuticals, Nanosphere, and SurModics/BioFX Laboratories.

UPDATE REDUX: Over at Pharma’s Cutting Edge, Fred Cohen notes what I didn’t have time to, which is that Ophthotech essentially amounts to a do-over for the architects of Eyetech’s failure. Check it out.