Chandra Duggirala, maker of an experimental device for type two diabetes, is on the verge of giving up.

Duggirala’s company, Novobionics, raised a small amount of funding for a noninvasive technology that mimics the effects of gastric bypass surgery. The device tricks the gastro-intestinal tract into thinking it is full, which slows the rate of nutrient absorption, thereby easing suffering for diabetes patients.

Despite promising early results, the entrepreneur and physician at San Mateo Medical Center has struggled to procure a second funding round that would bring it to market.

“We’re living in a time of total uncertainty,” Duggirala explained. “When it comes to medical innovation, investors essentially have to pay the government to invest in tech, which is scaring them off.”

Is the FDA killing medical innovation?

“Uncertainty” is not a word that Silicon Valley’s investors — or their limited partners — like to hear, so Duggirala’s story is far from unique.

Medical device entrepreneurs and entrepreneurs have complained vociferously for years that funding is drying up. And a confluence of factors have made the situation steadily worse.

A 2.3 percent excise tax on medical devices enacted as part of the Affordable Care Act, the rising cost to get a device to market, and a lack of regulatory clarity from the Food and Drug Administration (FDA) are cause for concern.

The tax may not seem like much, but it’s on revenues, not profits — and since most medical device companies are far from profitability, that takes an especially deep bite. It’s still unclear which entrepreneurs will be required to pay the tax. For instance, will the government levy it on mobile medical devices — or smartphone apps — that are sometimes used in clinical settings, like this urine analysis app?

Other health-tech experts point to the current patent system that, as Practice Fusion’s senior policy strategist Lauren Fifield puts it, is “confusing and a real mess.” Because the Patent Office is slow to approve applications, inventors must work in secrecy to protect their ideas, sometimes for years. One entrepreneur might have a tremendously good idea for a device and be unaware that four other groups are working on a similar model.

A spokesperson from the FDA said the agency is aware of these concerns.

“We’re reaching out to venture capitalists and entrepreneurs to include them in our discussions and have used the feedback to develop smart regulations that balance patient safety and innovation,” an FDA spokesperson noted in an email interview, and provided a link to a new program where entrepreneurs work in concert with FDA employees.

(Note: It took the FDA took two weeks to assign a spokesperson, and cancelled interviews on multiple occasions, after VentureBeat requested comments — indirectly confirming criticisms about its glacial pace.)

The FDA may be partially responsible, but it points out that it’s not the only organization that has a role to play in bringing a new medical device to market. Entrepreneurs will also have to contend with institutional review boards, third party payers, and they have to front the cost of a clinical trial.

Venture funding is dwindling

Malay Gandhi, the chief strategy officer for digital health incubator Rock Health, estimates that medical device funding is down 13 percent year over year. He noted that class 3 medical devices are the most affected, as it’s taking longer than ever before to get these high-risk (and potentially high-reward) products to market.

Further research from PricewaterhouseCoopers and the National Venture Capital Association found that the $700 million in 84 deals that went to medical device companies in 2012 represented a 17 percent drop in dollars and an 11 percent decrease in the number of deals year over year.

Mike Carusi, medical device investor at ATV Capital

“We have been pushing the FDA on how difficult it is to get products approved,” said Michael Carusi, a general partner at ATV Capital who specializes in life sciences and medical devices.

Alongside many venture investors, Carusi believes that the uncertain approval process for new medical devices is stunting innovation and killing jobs. In 2011, the New York Times reported that Carusi donated $1,000 to a Minnesota congressman who lobbied Washington D.C. to support a bill that would make it easier to bring new medical products to market.

Carusi’s relationship with the FDA has fractured over the years. His firm has grown all too familiar with abrupt regulatory changes midway through an investment.

Most recently, a spate of new mitral repair devices hit the FDA speed bump, prompting Carusi to question the high bar for efficacy of early-stage devices that are far less invasive than the alternatives.

This follows one of his most high-profile investments, XTENT, which went public in 2007 during the glory days for medical devices. But the Sun Valley medical device manufacturer saw its path to market prolonged by two or three years due to new regulation. The company was later sold at a “massively discounted value,” Carusi recalled, and was eventually shut down.

Worse still, portfolio companies have been stunted by regulation from Washington D.C., only to see success elsewhere. Just a few months after the FDA voted against approving Emphasys Medical’s lead device to treat emphysema, the company’s assets were put up for sale. Silicon Valley-based Pulmonx would later acquire the technology and begin marketing it in Europe.

Carusi expects to see this potentially life-saving (or prolonging) device return to the U.S. market in five or six years.

The FDA is currently under pressure to determine which mobile medical applications fall under its purview — and will face higher taxes. The agency has yet to issue the final guidance it promised in 2011, and so many entrepreneurs are waiting on the sidelines.

“Developers are mystified by the rules in this highly regulated industry,” said Ben Chodor, the chief executive of mobile health app store Happtique, who we spoke with after he testified alongside a handful of medical experts in Congress.

”The gap between D.C. and Silicon Valley is 3,000 miles, but it feels like 20 years in terms of understanding,” said Fifield, echoing the sentiment felt by scores of health entrepreneurs.

Our pets have better access to new medical treatments

Class II medical devices, indicating only a mid-level risk, are the most common. Among the latest batch, a company known as Alivecor has punctuated the popular imagination.

Imagine being able to press your iPhone against your chest to measure a heart rate. This is the vision for Alivecor, which raised significant venture funding and secured FDA approval. In August 2011, Alivecor succeeded in closing an $13.5 million funding round led by Burrill & Company, along with Qualcomm, acting through its investment arm Qualcomm Ventures.

But Alivecor is beset by challenges in selling to U.S.-based physicians, which raises another potential hurdle. Distribution channels are saturated by large and established players, so getting behind the doors of hospital decision-makers can be difficult.

Rumors are flying in the industry that the company has had far better luck selling to veterinarians than cardiologists. One source joked that our pets are getting better treatment options and access to the most innovative medical devices.

Source: Businesswire

Vets are the early adopters of Alivecor’s low-budget heart-monitoring device.

“We didn’t expect to see so much success in the veterinary space,” Joel Light, Alivecor’s business development lead admitted. “But there is far less regulation, so we could get to market quickly.”

Alivecor is launching its low-cost electrocardiogram in the U.K. this month.

“Uncertainty has been a big challenge, and in the medical industry — we see a big gulf between a great idea and a profitable business,” said Light.

Likewise, the executive team behind Visualant, a company with a spectral matching technology, considered the health care industry, decided to take their technology elsewhere.

CEO Ron Erickson said it could potentially be used as an inexpensive medical diagnostic device, but the regulation and “time and money involved” caused them to focus on “more immediate market opportunities.” Visualant’s ChromaID product can “see” what the human eye cannot by discerning minute variations in color.

The innovative technology will not be used by doctors to treat disease. Instead, Visualant will be selling it to defense agencies and jewelers to certify gemstones.

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Should human genes be patented? The Supreme Court is weighing in today in a landmark case,  Association for Molecular Pathology v. Myriad Genetics, Inc., 12-398., that will have an enormous impact on the future of science, technology, and medicine.

At the center of the debate is Utah-based Myriad Genetics. Scientists at the biotech company discovered two genes — BRCA 1 and BRCA2 — that are associated with hereditary breast and ovarian cancer. Since then, it claims its tests have been used by more than one million women to determine if they have an increased risk of developing these cancers.

The company patented these discoveries — the “synthetic molecules we isolated and created in the lab to provide life-saving tests,” the company’s CEO explained in an op-ed in USAToday.

But Nobel Prize-winning geneticists argue that the patent will stifle research and medical diagnostic testing. Because of its patents, Myriad can prevent other researchers from testing, studying, or even looking at these genes, and it also holds the exclusive rights to any mutations along those genes, according to the American Civil Liberties Union (ACLU).

The U.S. patent system’s rules stipulate that you can’t patent a product of nature or a law of nature, even if research took years and proved costly. For this reason, Albert Einstein did not patent the law of relativity.

A parallel can be made with a rare East African plant, which has a variety of medicinal uses. It might be plausible to patent a drug that comes from the plant, but it would be unreasonable to patent the plant.

“Over the past 20 years, at least 41 percent of our genes have become the intellectual property of corporations,” genomics professors Christopher E. Mason and Jeffrey Rosenfeld argue on the ACLU’s blog. “These patent claims contradict an intuitive sense that our DNA is no less ours than our lungs or kidneys,” they continue. The ACLU also claims that the patent has allowed Myriad to charge patients exorbitant rates for its test.

Until recently, the medical profession largely shunned patents. A favorite quote that has been liberally used by Myriad’s opponents is from Dr. Jonas Salk, who invented the polio vaccine. Rather than file a patent on the vaccine, he reportedly said, “There is no patent … could you patent the sun?”

Dietrich Stephan led a research team that identify the genetic causes for Autism, ALS, Alzheimer’s disease, and more.

Human geneticist Dietrich Stephan says he’s been following this debate closely since 2006. Stephan is the cofounder of Navigenics, a genetics diagnostics company acquired by Life Technologies Corp. in 2012. Stephan agrees with the ACLU, and is concerned that patenting genes will be detrimental to patients.

“You should be able to give patients gene sequencing information that will benefit their health,” he said in an interview. “Patents may prevent that.”

According to Stephan, the likelihood of the Supreme Court siding with Myriad Genetics is low. Myriad will still own the brand and have the highest-precision test in the market. So even if three competitors emerged tomorrow, Myriad will still out-perform in sales.

“Even so — competition is a good thing,” he asid. Collaboration is another issue as many of these genes will be used together to form the basis of a test — “more and more it’s not a single gene that is diagnostic,” said Stephan.

Efrat Kasznik, an intellectual property lecturer at Stanford University, said the patent system offers inventors a limited monopoly (20 years from filing) in return for public disclosure for their innovation. But not every finding can be patented. Similarly to a mathematical equation, the Supreme Court may rule that our human genes can never be owned.

Dietrich Stephan will speak at HealthBeat, VentureBeat’s upcoming healthcare and innovation conference in San Francisco on May 20-21. 

Top image via Shutterstock 

This is a guest post by health executive Alicia Torres

Advancements in medicine and treatments have increased the life expectancy for baby boomers. Almost 87 million Americans, or one in four, will be 65 or older by 2050, according to the Organization for Economic Cooperation and Development.

Both these trends have many implications for hospitals and healthcare organizations. Over the next decade, the healthcare system will need to adapt to the influx of baby boomers, many of whom will have chronic diseases and need continued care. A recent study by the West Virginia University School of Medicine found that about 39 percent of baby boomers were obese, compared to about 29 percent of the previous generation, and approximately 16 percent had diabetes, compared to 12 percent of the previous generation.

The aging generation of baby boomers had been a concern for the healthcare industry for some years. Now, technology solutions are beginning to serve a vital role in creating the change needed to propel the healthcare industry to care for the influx of patients.

Healthcare technology today 

Technology implementation in healthcare today is mainly driven by government incentives. In 2009, the first electronic health record (EHR) mandates were enacted by the HITECH law and included financial incentives provided by the Health and Human Services Departments.

EHR implementation has taken off over the last few years, with nearly $10 billion in EHR incentives distributed as of December 2012. One of the core reasons hospitals and healthcare providers are adopting EHRs is to improve patient safety. While there are other benefits, such as saving time and cost, the objective of EHRs is to correctly identify patients through the continuum of care, ensuring procedures and check-ups are being recorded, as well as easing medical administration.

In order for that to happen, the EHR solutions need to fit seamlessly into the healthcare practice’s existing software solutions and infrastructure. Barcode technology creates a critical link between the patient and the clinician. If, for instance, a patient is unable to verbally identify himself or his medical problems, a clinician can scan a barcode wristband and have access to that patient’s EHR immediately, which can inform the course of action. The clinician spends less time tracking down patient records, and more time with the patient.

EHR and barcode technology implementation seamlessly links patients and clinicians; however, it is only the beginning for healthcare technology.

Connecting patients, clinicians and data

In an effort to provide the best care while adapting to the influx of baby boomers, hospitals and healthcare organizations are turning to connected health. Connected health is the idea of providing healthcare services remotely, through flexible, at home care. Managing chronic diseases, maintaining health and wellness, or ensuring patients are not readmitted following hospital treatment are all issues that connected health helps to solve. Additionally, with more patients being treated in their homes, we can decrease the amount patients admitted to hospitals.

Connected health can help solve the impending issue of the influx of baby boomers into the healthcare system, and technology is at the center of it, powering interoperability and linking patients to clinicians to their data.  By leveraging technology solutions, healthcare organizations can provide care to patients outside of the typical medical setting, consulting at home, over the phone or via video. In using technology while caring for a patient, clinicians have immediate access to the patient’s medical history, pulled from the hospital IT system, and can direct the course of treatment in real-time.

Connected health also allows clinicians to use mobile devices to deliver care or information to a patient on the spot. This is known as mobile health, or mHealth. By using tablets, mobile printers and other point-of-care solutions, clinicians can take specimen collections, issue medical or dietary information and print prescriptions. In tandem with these activities, clinicians record their course of action, medications administered, patient status and next steps. The collected information is priceless data for hospitals and healthcare organizations. In analyzing this data, new processes or improved efficiencies are discovered; all the while elevating the quality of care a patient receives.

What to expect in the future 

As connected health begins to take off, the Internet of Things (IoT) will play a larger role in healthcare information technology. Based on the definition shared in the survey “Building Value from Visibility: 2012 Enterprise Internet of Things Adoption Outlook,” 85 percent of organizations surveyed agree that Internet of Things solutions are made up of smart interconnected devices that provide more visibility into the organization’s operational events.

For healthcare, this means better visibility inside hospitals and healthcare organizations, as well as outside the typical medical setting and in the home. More importantly, IoT can provide more visibility into a patient’s status.

As seen at this year’s Consumer Electronics Show, broader IoT adoption is in full swing. In fact, 53 percent of organizations are planning to implement an IoT solution in the next 24 months, according to “Building Value from Visibility.” The healthcare industry has an even more aggressive adoption rate, with almost 60% of healthcare organizations planning to implement IoT solutions within the next two years. The gained benefits from IoT adoption that healthcare respondents noted include improved delivery process (72 percent), improved safety (66 percent), supply chain visibility (63 percent) and loss prevention (63 percent).

There are already startups developing IoT solutions for healthcare organizations specific to certain areas of inventory management and patient check-in. In the future, IoT has the ability to elevate healthcare even more, and specifically, connected health practices. Patient wristbands, medical equipment and beds encoded with sensors can track status in real-time and make hospital workflow processes more efficient. Health monitors, sensors and RFID technology at one’s home can transfer data to the hospital every minute. Hospitals and healthcare organizations will be able to consistently monitor and provide care, even if clinicians are not working with a patient in-person.

We have the opportunity to change the healthcare industry and evolve with the aging population. With the right solutions and infrastructure, technology can deliver on one of the healthcare industry’s biggest goals: providing the best care possible and creating a safe environment for patients.

Alicia Torres is the healthcare global practice leader for Zebra Technologies Corporation, a recognized global leader in technologies that extend real-time visibility into business operations. At Zebra, Alicia is responsible for expanding the global healthcare market with new and existing solutions for customers. 

Alicia has over 25 years of experience in the healthcare industry, with positions including a hospital financial executive, an internal strategy consultant for a large, public healthcare company and a successful entrepreneur. In 1997, she founded Rosebud Solutions, a healthcare software firm that offered five software programs to address various areas of operations within hospitals. Prior to founding Rosebud Solutions, Alicia was the director of the health economics group at Kinetic Concepts Inc., whose products provide wound healing therapies and technologies. Alicia earned a bachelor’s degree in business administration from the University of Texas at Pan. For more information please visit www.zebra.com.

photo credit: The Community Foundation of Herkimer & Oneida Cos. via photopin cc

As we reported yesterday, the U.S Food and Drug Administration (FDA) is under pressure to decide how to regulate thousands of new mobile medical applications. Congress has been in session for three days to hear from the experts in the health IT sector on topics like taxation, regulation, and consumer privacy.

Silicon Valley’s health IT investors and entrepreneurs currently operate under a set of FDA guidelines issued in 2011. At that time, the FDA stressed that it had not yet issued an “overarching software policy,” and it asked for the public’s input.

Two years later, developers and investors are still “waiting on the sidelines” for an official decision, said Ben Chodor, the CEO of health app store Happtique, who called me after testifying in House Energy and Commerce committee yesterday.

This delay may prove to be a hindrance for entrepreneurs. “Investors are clearly following the debate in D.C. about regulating mobile health apps, especially those that use attachments to transform a mobile phone into a medical device,” said Missy Krasner, the executive in residence at Morgenthaler Ventures.

For years, the FDA has had the final say on whether new medical devices are safe for clinical use. However, it is poorly equipped to react to the explosion of new mobile health applications.

A potential concern is that the FDA will step up its enforcement of health applications targeted at consumers.

“These laws were created before this new medical technology was imaginable and before it was understood, and this may hamper innovation,” said Lauren Fifield, a health policy adviser at Practice Fusion, a San Francisco based startup. ”The gap between DC and Silicon Valley is 3,000 miles, but it feels like 20 years in terms of understanding.”

Practice Fusion, an electronic health record (EHR) startup, is one of the fastest-growing players in the health IT space. It recently made its first major acquisition in the form of 100Plus, a medical apps maker, and is keeping a watchful eye on Congress. Fitfield’s said the FDA may make a short-sighted decision that could lead to unnecessary oversight in the health IT space.

What’s particularly problematic for the FDA is that some of these medical apps operate in a “gray area.” Would a device marketed to diabetic patients that connects a smartphone to a glucose meter need to be regulated? “To put it bluntly, that is the area that no one gets,” said Chodor.

Malay Gandhi, the chief strategy officer for health accelerator Rock Health [one class is pictured, above], is working on a guide to benefit its startups that operate under existing device regulations, and their best interpretation of draft guidance issued by the FDA in 2011.

“What is unclear how many of these companies—representing almost 40,000 apps—would fall under selective enforcement by the FDA,” he said.

Gandhi advised that the FDA provide a specific set of examples for apps that would need to be regulated. One example that congress is considering is a urine analysis app (it’s not clear whether the stick or the app is doing the diagnosis), which the FDA may need to approve before it launches in the App Store.

Most concerning of all is that while the FDA dithers, a small sliver of medical mobile apps used in clinical settings are slipping under its radar, which is a potential public health hazard.

“In short, FDA needs come up with their guidelines already — sooner rather than later,” said Chodor.

Top image via Rock Health 

Viewers were shocked – many questioned if something like this was possible in real life. In short: yes (although the part about the attacker being halfway across the world is questionable). For years, researchers have been exposing enormous vulnerabilities in Internet-connected implanted medical devices.

Millions of people rely on these brilliant technologies to stay alive. But as we put more electronic devices into our bodies, we must address the serious security challenges that come with them. We are familiar with the threat that cyber-crime poses to the computers around us, but we have not yet prepared for the threat it may pose to the computers inside of us.
Implanted devices have been around for decades, but only in the last decade have these devices become virtually accessible. While this access lets doctors collect valuable data, many of these devices were distributed without any type of encryption or defensive mechanisms in place. Unlike a regular electronic device that can be loaded with new firmware, medical devices are embedded inside the body and require surgery for “full” updates. One of the greatest constraints to adding additional security features is the very limited amount of battery power available.

Thankfully, to date there have been no recorded cases of a death or injury resulting from a cyber attack on the body. All demonstrations so far have been conducted for research purposes only. But if someone decides to use these methods for nefarious purposes, it may go undetected.

Marc Goodman, a global security expert and the track chair for Policy, Law and Ethics at Singularity University, explained just how difficult it is to detect these types of attacks.  ”Even if a case were to go to the coroner’s office for review, how many public medical examiners would be capable of conducting a complex computer forensics investigation?” he asks. Even more troubling, he points out, “The evidence of medical device tampering might not even be located on the body, where the coroner is accustomed to finding it, but rather might be thousands of kilometers away, across an ocean on a foreign computer server.”

Since knowledge of these vulnerabilities became public in 2008, we’ve seen rapid advancements in the types of successfully attempted hacking.

The equipment needed to hack a transmitter used to cost tens of thousands of dollars; last year a researcher hacked his insulin pump using an Arduino module that cost less than $20. Barnaby Jack, a security researcher at McAfee, demonstrated a system in April that could scan for and compromise insulin pumps that communicate wirelessly. With the push of a button on his laptop, he could have any pump within 300 feet dump its entire contents, without even needing to know the device ID numbers. At a different conference, Jack showed how he’d reverse-engineered a pacemaker and could deliver an 830-volt shock to a person’s device from 50 feet away – which he likened to an “anonymous assassination.”

We’ve also seen some fascinating advancements in the emerging field of security for medical devices. Researchers have created a “noise” shield that can block out certain attacks – but have strangely run into problems with telecommunication companies looking to protect their frequencies. There have been discussions of using ultrasound waves to determine the distance between a transmitter and medical device to prevent long-distance attacks. One team has developed biometric heartbeat sensors to allow devices within a body to communicate with each other, keeping out intruding devices and signals.

But these developments pale in comparison to the enormous difficulty of protecting against “medical cybercrime,” and the rest of the industry is falling badly behind.

Hospitals around the country have seen a dangerous rise of malware infections in computerized equipment. Many of these systems are running very old versions of Windows that are susceptible to viruses from years ago, and some manufacturers will not allow their equipment to be modified, even with security updates, partially due to regulatory restrictions.
A solution to this problem requires a rethinking of the legal protections, a loosening of equipment guidelines, and  increased disclosure to patients.

Government regulators have studied this issue and recommended that the FDA take these concerns into account when approving devices. This may be a helpful first step, but the government will not be able to keep up with the fast developments of cyber-crime. As the digital and physical world continue to meld, we are going to need an aggressive system of testing and updating these systems. The devices of yesterday were not created to protect against the threats of tomorrow.

Tarun Wadhwa is a research associate at Singularity University researching how advancing technologies can be used to solve public policy issues. Follow him on Twitter @twadhwa.

[Top image credit: Dario Sabljak/Shutterstock]

In a talk at the Black Hat security conference in Las Vegas, Jerome Radcliffe, a diabetic himself and a security researcher, showed how he figured out how to hack into insulin pumps for diabetics.

With diabetes, a patient can’t properly process sugar in his or her blood because the body can’t make enough insulin, which bonds with the sugar and turns it into fat. Patients have to inject themselves with synthetic insulin as many as several times a day to keep their blood sugar under control. If they have too little or too much sugar in their blood, the results can be incapacitating or even life threatening.

Insulin pumps use wireless sensors that detect blood sugar levels and then communicate the data to a screen on the insulin pump. The patient can monitor the readings and inject the insulin as needed. Radcliffe reverse-engineered the pumps and the wireless connectivity and figured out that the system was relatively unprotected. It was configured much more like a dumb device where the manufacturers assumed no one would try to hack it.

There was no encryption, since that requires more complicated processing and would make the battery for the device run out faster. The sensor has to run on a 1.5-volt watch battery for two years. Adding encryption also makes the device more expensive. Once Radcliffe, who has used insulin pumps for a while and has been a diabetic since he was 22, understood how the devices worked, it was relatively simple to figure out how to hack them.

“I can get full remote control” of someone else’s insulin pump, Radcliffe said. “If I were an evil hacker, I could issue commands to give insulin, without anyone else’s authority. This is scary. And I can manipulate the data so it happens in a stealth way.”

Radcliffe, who really wants to educate people on how to better protect medical devices, explained how he figured out how to hack insulin pumps, which rely on wireless connectivity and are therefore vulnerable to being intercepted and compromised.

Radcliffe tackled the problem of hacking the wireless sensors that collect blood sugar information and transmit it to the insulin pump. He had to figure out what kind of chips are used in the sensors. Since the devices emit wireless signals, the manufacturers have to submit designs to the Federal Communications Commission, which investigates whether the device emits anything harmful. Those filings contained valuable information on how the devices operated, Radcliffe said. The data-sheets for the chips also provided good information, and the patent for the $6,000 or so insulin pump was also useful.

Then Radcliffe went through the process of deciphering what the wireless transmissions meant. These transmissions are not encrypted, since the devices have to be really cheap. The transmissions are only 76 bits and they travel at more than 8,000 bits per second. To review the signal, Radcliffe captured the signal with a $10 radio frequency circuit board and then used an oscilloscope to analyze the bits.

He captured two 9-millisecond transmissions that were five minutes apart. But they came out looking like gibberish. He captured more transmissions. About 80 percent of the transmissions had some of the same bits. He reached out to Texas Instruments for help but didn’t have much luck. He told the TI people what he was doing and they decided not to help him.

That was as far as he got on deciphering the wireless signal from the sensor, since there was no documentation that really helped him there. He couldn’t understand what the signal said, but he didn’t need to do that. So he tried to jam the signals to see if he could stop the transmitter. With a quarter of a mile, he figured out he could indeed mess up the transmitter via a denial of service attack, or flooding it with false data.

The problem for manufacturers is that the wireless connection on the insulin pump is also not secure. He wrote a “scanner” program that could query for the device’s wireless signal and it pretty much gave itself away with no encryption to interfere with the scanning. If you can get the serial number of the specific device, you can use that to devise a transmission that issues an instruction to it. Radcliffe can control the pump from a distance. He did it on one device that he owns, not a series of devices, since it was his own personal research. He doesn’t know if some pumps are more secure. He isn’t disclosing the vendor yet, but he will work with the vendor to help create a solution.

Noting that he hacked his own device, Radcliffe added, “That’s another reason I am not disclosing all the technical details. I won’t give out details on how to kill me in the middle of a hacker conference. Lives are at stake here.”

Radcliffe figured out that if he reversed the format of the signal, he could then capture a transmission identification and then retransmit it with fake data. That would cause the insulin pump to inject too much or too little insulin into the person’s bloodstream, potentially killing the patient. The pump did nothing to inform the patient that its data had been altered.

Hacking medical devices isn’t a pretty subject. But it is perfectly possible and manufacturers of those devices shouldn’t ignore the possibility that it can be done. The problem of lack of security awareness among the manufacturers has been around for a while. In 2008, a security researcher at the Defcon security conference showed how he could turn off someone’s pacemaker.

Radcliffe says that next-generation pumps may use Bluetooth wireless radio, which has also been hacked in the past. Research is being done into whether the pumps and the sensors can be integrated so that humans don’t have to make their own assessments about how much insulin they need.

Radcliffe believes that the designs can be improved with more password protection, encryption and other security-minded design tips. Brad Smith, another security tech expert and a registered nurse, said that the problem of medical device hacking has been around for a long time. He said, “It’s just not his insulin pump. It’s also in other devices.”

Smith said the history of these devices is a “litany of disaster” when it comes to security.

“I’m hoping we can get together to do something about this,” Radcliffe said.

Launched in April 2008 by Oklahoma megachurch LifeChurch.tv, the free YouVersion has experienced wildfire growth, becoming the leading free Bible app in iTunes from 2008-2010 and achieving a 5-star app by 50,000+ people.

The company said its stats show that someone new is installing the app every 2.8 seconds, while 12 other people are opening the app during that same time period.

YouVersion measures the number of “unique devices that have installed” the app at 10 million. It said its median active user rate hovers around 3.2 million per month.

Bobby Gruenewald, who holds the title “innovation leader” for LifeChurch.tv, told VentureBeat that the nonprofit company sees usage and new installations of the app peaking on Sundays, with Nov. 14 one of the sharpest spikes in new installs that YouVersion has seen since its founding.

“A lot of people will just bring the app with them to their ministry services instead of an actual hard copy Bible,” said Gruenewald, “and people next to them will ask them what they are using and then go ahead and download it themselves, too.”

In late September, the free app was #10 in TopApps on the iPhone and a top 5 Reference app on the iPhone and iPad (#1 and #3 respectively).

The app is also available on Blackberry, Android, Palm, Windows 7 Phone and Symbian.

YouVersion currently offers more than 40 different versions in 20 different languages and allows users to read the Bible in its entirety, choose to excerpt specific passages based on search criteria or add one of the app’s “reading plans.”

YouVersion’s 23 different reading plans allow people to read the entire Bible over a year, or chronologically by book, and everything in between.

Using social media to spread word of the app has also been a popular tool for YouVersion, as people send information to their friends about passages or verses they particularly like.

The nonprofit survives solely on donations from its founding church and private parties, although all users of the app have the ability to donate directly to YouVersion via one of its in-app functions.

YouVersion also partners with Bible publishers who own the rights who to various Bible translations and make those translations available to the company via unique relationships for additional access like full downloads.

• Stent maker IDev Tech raises $25M (VentureWire)
• Xytis gets $15M for brain-injury drugs (VentureWire)
• Diagnostic maker Iris Biotech plans to go public, launch breast-cancer test (Edgar)
• RiverVest Venture Partners raises $75M life-science fund (release)
• Concentric Medical names Maria Sainz CEO (release)

[Note: I'm a little sad to announce that this will be my last life-science briefing at VentureBeat, although with luck, it won't be the end of my time here. Starting Monday, I'll be blogging regularly on the drug industry and healthcare over at BNET Industries, a new CNET venture, so drop by if you can. (Preparing for that move is the main reason non-briefing posts have been scarce recently.) I still hope to post here occasionally as well, since covering below-the-radar startups has been a blast, and I'm not ready to give it up quite yet.

It's been a great year -- my first VentureBeat post was on April 3, 2007 -- and I want to thank Matt for the opportunity to join you here, and all our regular readers and commenters for your time and your insights. As journalists, we're only as good as our sources and readers, and you guys have helped in countless ways to make me look much smarter than I really am. --D.P.H.]

Stent maker IDev Tech raises $25M – IDev Technologies, a Houston medical-device startup, raised $25 million in a third funding round, VentureWire reports. The company is developing a new type of stent for use in propping open the liver’s bile ducts .

The company’s existing investors, a group that includes Bay City Capital, Heron Capital, PTB Sciences and RiverVest Venture Partners, provided the funding. IDev had previously raised $24 million, according to VW.

Xytis gets $15M for brain-injury drugs – Irvine, Calif.-based Xytis, a biotech focused on disorders of the central nervous system, raised $15 million in an extension of its second funding round, VentureWire reports. Its backers included Atlas Venture, CDC Innovation, Sanderling Ventures and Ventech.

The company says it was founded in 2005 from the merger of Xytis Pharmaceuticals and Remergent. (Sounds more to me like Xytis swallowed Remergent, but they’re free to describe it however they’d like.) Its lead drug candidate, XY2405, blocks a cellular protein called the Bradykinin B2 receptor, a signaling molecule thought to promote inflammation.

Xytis is testing the drug as a potential treatment for traumatic brain injury; the molecule is currently in mid-stage, phase II trials. The company is also testing an antidepressant in early-stage trials.

Xytis raised half the money last August, then received the second $7.5 million in April, the company told VentureWire. It has previously raised $24.5 million in its current incarnation, and its “predecessor companies” pulled in $6.5 million.

Diagnostic maker Iris Biotech plans to go public, launch breast-cancer test – Santa Clara, Calif.-based Iris Biotechnologies, a developer of molecular diagnostic tests, is preparing to go public, VentureWire reports. The company plans a small offering on the OTC Bulletin Board — if I’m reading its latest SEC filing correctly, its existing shareholders will raise about $1.1 million, with no proceeds headed to the company  — and hopes to launch a breast-cancer test later this year.

Iris plans to use chips to measure gene activity in breast cancer, with the hope of predicting the odds that a surgically removed tumor will recur and, eventually, helping patients and doctors customize cancer treatment from an early stage. The company claims that it will be competitive with Genomic Health and Agendia, two companies with similar tests for predicting breast-cancer recurrence.

There’s something a little odd about Iris’ disclosures in the SEC forms, though. Iris doesn’t describe its technology, the genes it will test or how it settled on them in any detail, and spends almost as much time talking about its database of patient information and related computer technology as it does about its tests. While it may consider some or all of that information a trade secret — and disclosure requirements may well be looser for such a small offering — it’s still kind of unusual for a startup to ask outside investors to put up their money essentially on faith.

• IlluminOss Medical gets $11M for bone-fracture devices (peHUB)
• Contract researcher Crown Bioscience takes in funding (release)

IlluminOss Medical gets $11M for bone-fracture devices — East Providence, R.I.-based IlluminOss Medical, a medical-device startup, raised $11 million in a second funding round, peHUB reports. Backers included New Leaf Ventures and Foundation Medical Partners.

The company’s Web site is barely more than a stub that describes IlluminOss as a device company “pioneering new frontiers in orthopedic surgery.” peHUB offers the further tidbit that the company is developing a minimally invasive system for treating bone fractures.

We’ve previously covered Sonoma Orthopedics Products, a California firm with what may be a similar technology for treating fractures with an implant that supposedly speeds healing from inside the bone.

Contract researcher Crown Bioscience takes in funding – Crown Bioscience, a biology-services startup in Santa Clara, Calif., raised an undisclosed sum in a second funding round. Chemizon, a division of Optomagic, provided the cash.

Crown offers a variety of biology-based services, including protein characterization, drug-candidate discovery and assessment of anticancer drugs. In other words, it’s a contract-research organization, although it seems to have a wider range of offerings that many CROs do.

• Mirna Thera spins out of Asuragen with $3M (release)
• Stroke-therapy startup CoAxia raises $12M (release)
• Stealthy device maker Synvascular gets $6.5M (peHUB)
• AndroScience seeks $3.5M for anti-testosterone drugs (VentureWire)
• Austria’s ProtAffin takes in €1.1M grant (release)
• Singapore’s Moleac receives $3.5M for Chinese medicine (release)
• Alethia Bio gets C$2.4M for antibody drugs (release)
• Alba Thera names Bruce Peacock as CEO (release)
• SkinMedica names Mary Fisher as CEO (release)
  

Mirna Thera spins out of Asuragen with $3M – Mirna Therapeutics, a newly minted Austin, Tex., startup focused on “microRNA” (miRNA) drugs, spun out from its parent Asuragen with $3 million in seed capital. The new company is taking Asuragen’s miRNA intellectual property with it.

MicroRNAs, like small interfering RNAs (siRNAs, for those into the acronym soup here), are short stretches of nucleic acid that can silence the activity of particular genes. These miRNAs, however, are encoded in the human genome and appear to affect multiple genes at once by interfering with “master” regulatory genes. Several miRNAs have been linked to cancer, suggesting that measuring levels of miRNAs might yield early detection of tumors.

Asuragen will continue to explore miRNAs as possible diagnostic tools, while Mirna will look into developing particular miRNA molecules as cancer drugs. Mirna initially plans to target lung cancer, prostate cancer and acute myeloid leukemia. None of its drug candidates are ready for testing in humans yet.

Stroke-therapy startup CoAxia raises $12M –  Maple Grove, Minn.-based CoAxia, a device startup focused on treatment for clot-related strokes, raised $11.5 million as an extension of its third funding round. Its backers included existing investors Canaan Partners, Prism Venture Partners, Baird Venture Partners, Affinity Capital Management, Johnson and Johnson Development and SVB Capital Partners.

CoAxia is developing a catheter designed to increase the flow of oxygenated blood in the brains of stroke patients by restricting its flow to the lower extremities, thereby shunting additional blood into brain vessels that haven’t been blocked by a clot. The minimally invasive device is threaded into a central artery near the kidneys, where a doctor can inflate two balloons designed to block roughly 70 percent of the blood flow to the lower body. The device is currently in a late-stage clinical trial.

• Boston Scientific spinout TriVascular2 takes in $65M (release)
• Inhaled-drug startup Transave raises $35M (release)
• Triage Wireless gets $20M for vital-signs monitors (release)
• Tryton Medical receives $14M for “bifurcation” stents (release)
  
• Synthetic bio startup Codon Devices adds $11M (release)
• Tracon Pharma takes in $4.5M against cancer and eye disease (VentureWire)
• Antibody maker f-star swaps in equity stake by TVM (PDF release)
• Drug packager MonoSol Rx withdraws IPO (IPOhome)
• GE Healthcare acquires portable-ventilator maker VersaMed (release)

Boston Scientific spinout TriVascular2 takes in $65M – In 2005, Boston Scientific acquired a Santa Rosa, Calif., medical-device startup called TriVascular. Today, it spun it out once again.

The newly private startup raised $65 million in a “first” funding round from the likes of MPM Capital, New Enterprise Associates, Delphi Ventures and Kearny Venture Partners. Thirty million dollars of that sum went straight to Boston Scientific, which also retains the right to take a minority stake in the company.

TriVascular’s original CEO, Michael Chobotov, will resume that position at the new company, joined by two other TriVascular founders. It’s not, however, entirely clear what TriVascular will be doing. The company was originally focused on repair of abdominal aortic aneurysms, which are unusual swellings of blood vessels that can rupture unexpectedly, often fatally. Boston Scientific, however, shut down its aneurysm-repair business in 2006, so it’s not immediately obvious that the reborn TriVascular will jump right back in.

Inhaled-drug startup Transave raises $35M – Transave, a Monmouth, N.J., biotech working on inhaled drugs for lung disease, raised $35 million in a fourth funding round. Investors included Quaker BioVentures, Bessemer Venture Partners, TVM Capital, Prospect Venture Partners, Fidelity Biosciences, Forbion Capital Partners and Easton Capital.

The startup is working on inhalable drugs for cystic fibrosis — in particular, a long-lasting form of the antibiotic amikacin, which is currently in mid-stage, phase II human testing. Transave had previously raised $58 million in venture capital, including a “recently completed” $40 million round.

Triage Wireless gets $20M for vital-signs monitors – Triage Wireless, a San Diego medical-device maker, raised $20.3 million in a second funding round. Investors included Qualcomm Ventures, Sanderling Ventures, 3i Group and Intel Capital.

Triage is developing wireless vital-signs monitors for long-term or continuous use. Its first product is a blood-pressure sensor that doesn’t require the old familiar inflated cuff.

• Breathe Tech raises $15M for respiratory disease (release)
• Protein-drug maker Pieris takes in €25M (release)
• Apthera takes in $2.1M toward cancer vaccine (VentureWire)

Breathe Tech raises $15M for respiratory disease – Breathe Technologies, a Fremont, Calif., medical device maker, raised $15 million in a second round of funding. Investors included Kleiner Perkins Caufield & Byers, Synergy Partners International, Delphi Ventures and Life Science Angels.

Breathe is developing “compact” and “lightweight” respiratory systems for the hospital and home markets, and estimates that annual sales of the devices its equipment could enhance or replace amount to $2 billion. The Breathe ventilators could be used by patients with chronic obstructive pulmonary disease, cystic fibrosis, and other lung disorders.

Protein-drug maker Pieris takes in €25M – Pieris, a German biotech pursuing a new form of protein-based drug, raised €25 million ($38 million) in a second funding round. Investors included OrbiMed Advisors, Novo Nordisk, Global Life Science Ventures, Gilde Healthcare Partners and Forbion Capital Partners.

Pieris is the latest biotech to think it can improve on monoclonal antibodies as drug candidates by developing its own engineered protein structures. The startup calls its protein structures Anticalins — they’re derived from a class of human proteins called lipocalins — and says they’re smaller and simpler than monoclonals with similar power to selectively bind to particular molecular targets.

Pieris joins a number of other companies pursuing similar strategies, including Adnexus Therapeutics, which sold itself to Bristol-Myers Squibb for $430 million, and Molecular Partners, a Swiss biotech working on modular proteins it calls DARPins. Although these are all interesting ideas, none have yet proven themselves, and all have to address a potentially significant hurdle — the fact that none of these engineered proteins are likely to engage the immune system’s disease-fighting elements the way monoclonal antibodies often do.

Apthera takes in $2.1M toward cancer vaccine – Apthera, a Scottsdale, Ariz., biotech working on therapeutic cancer vaccines, raised $2.1 million of an expected $3.9 million second funding round, VentureWire reports. Investors included the University of Texas M.D. Anderson Cancer Center, Blackmont Capital, Land Ventures and individuals.

Apthera is developing a vaccine intended to stimulate an immune response against breast-cancer cells. The startup plans to start a late-stage, phase III trial of the vaccine in the fourth quarter of this year, and hopes to raise another $10 million later this year to finance the test.

• OptiMedica takes in $16M for eye-treatment lasers (release)
• Genome analyzer BioNanomatrix raises $5M (release)
• Heart diagnostic startup Aviir gets another $1.5M (VBLS exclusive)
• Pharmaca, integrative-pharmacy chain, draws $20M (release)
• LifeWatch, cardiac-monitoring device maker, withdraws IPO (IPOhome)
• Jerry DeVries, Steven Whitlock join PTV Sciences as venture partners (VentureWire)

OptiMedica takes in $16M for eye-treatment lasers – OptiMedica, a Santa Clara, Calif., medical-device maker, raised $16 million in a third funding round. Investors included Kleiner Perkins Caufield & Byers, Alloy Ventures and DAG Ventures.

The startup makes and sells an eye-treatment laser system called Pascal — the acronym stands for “pattern scan laser” — which is approved for treating of retinal diseases such as diabetic retinopathy and other conditions involving the abnormal growth of blood vessels that can leak and obscure vision. The laser works by “photocoagulation,” which simply means it burns and fuses tissue at the point of focus — sealing off blood vessels, for instance, healing tears in the retina or even reattaching a retina that’s come loose.

Genome analyzer BioNanomatrix raises $5M – This item is now a standalone post here.

Heart diagnostic startup Aviir gets another $1.5M – Palo Alto, Calif.-based Aviir, a biotech focused on heart diagnostics, raised an additional $1.5 million as a follow-on to its second funding round, the company’s chief operating officer, Avi Kulkarni, said. The money is an equity investment related to a still-undisclosed partnership with a large pharmaceutical company, he told me.

Aviir is still in stealth mode, as we noted last year when we first wrote about its use of Stanford technology for detection and monitoring of cardiovascular disease. Kulkarni did offer a few additional details, telling me, for instance, that the company’s name is actually an acronym that stands for “atherosclerotic venous inflammation and insulin resistance.”

That, plus the fact that Aviir is working on what Kulkarni said is a “multiple biomarker panel assay” for heart disease, suggests to me that the company plans on measuring the levels of various proteins, probably from blood, in order to get a more precise picture of stressors such as inflammation and insulin resistance that might lead to heart problems. (“Insulin resistance” is an interesting choice, since that’s the cause — or the effect, perhaps — of type 2 diabetes, which is also linked to heart trouble.)

Aviir raised $11.5 million of a planned $25 million round last September, it disclosed in an SEC form now available online (PDF link) via the California Department of Corporations. The remainder of that round will become available when the company hits unspecified milestones.

For a look at the sort of thing Aviir is probably working on, check out this 2007 paper from Physiological Genomics, in which a research team from Stanford and Aviir detail the use of inflammatory proteins known as chemokines to identify patients with atherosclerosis. On the more whimsical side, a self-described friend of the company’s founders describes what he knows about Aviir on his blog, and also posts a odd homemade video “commercial” that suggests the company will be predicting lifetime disease risks for infants.

• 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.

• Vantia Thera spins out of Ferring, raises £19M (PDF release)
• Third Eye gets $150K for intracranial-pressure monitor (release)
• Diabetes tester Oculir closes doors, returns capital (VentureWire)
• Catalyst Health Ventures raising $60M fund (VentureWire)

Vantia Thera spins out of Ferring, raises £19M – Vantia Therapeutics, a U.K. spinout of Ferring Pharmaceuticals, has launched and raised £19 million ($37.7 million) in a first funding round (PDF link). Investors included MVM Life Science Partners, SV Life Sciences and Novo A/S.

Vantia inherits a collection of traditional “small molecule” drugs from its parent, including two that are already in clinical trials. Both drug candidate target the hormone vasopressin, which among other things regulates the body’s retention of water. One candidate is being tested as a possible treatment for enlarged prostate, the other for painful menstruation.

Diabetes tester Oculir closes doors, returns capital – Oculir Inc., a San Diego startup that aimed to develop a non-invasive glucose-testing device for diabetics, has instead shut down, VentureWire reports. The startup, founded in 2003, was working on technology designed to measure blood-sugar levels using infrared light bounced off the white of the eye. Such testing currently requires diabetics to prick their fingers for a tiny blood sample, often several times a day.

Unfortunately, the technology proved too challenging for the company and its backers. “It turned into a research project, and our venture investors wanted to invest in development, not research,” CEO John Burd told the news service.

Oculir raised $7.3 million back in December 2005 from Onset Ventures, CHL Medical Partners, Canaan Partners, Three Arch Partners, Shepherd Ventures and Windamere Venture Partners. It now plans to return an undisclosed sum to its investors — a fairly clear sign that Oculir’s VCs demanded that the company wind down its operations.

Catalyst Health Ventures raising $60M fund – Catalyst Health Ventures, a Newton, Mass., VC firm, hopes to raise a $60 million second fund, VentureWire reported. The fund will invest in medical-device, diagnostics, instrument and drug-screening startups.

Catalyst had pulled in $3.5 million of a planned $25 million as of Feb. 14. The firm intends to focus on early-stage companies and is looking to invest in six or more startups, often with initial investments of $2 million to $3 million.

• Paris-based Stentys takes $18M for “bifurcated” stents (release)
• Blood analyzer IntelliDx raises $22M (PDF release)
• Cancer-test biotech Calderome changes name to VeraCyte (VentureWire)
• Predictive Biosciences names Peter Klemm as CEO (release)

Paris-based Stentys takes $18M for “bifurcated” stents – Stentys, a Paris-based medical device maker, raised $18 million in a second funding round. The company is developing “bifurcated” stents intended to prop open clogged arteries at blood-vessel junctions.

The startup said the funding will allow it to complete clinical trials of its stents and to win European regulatory approval for them. Stentys doesn’t seem to have given any indication whether or when it might seek approval in the U.S. or other markets as well.

Scottish Equity Partners and Sofinnova Partners provided the funding.

Blood analyzer IntelliDx raises $22M –It’s starting to look like Diabetes Week here at VentureBeat LifeScience.

IntelliDx (no Web site), a Boston Santa Clara, Calif., startup with a new type of blood-sugar analyzer for hospitalized diabetics, raised $21.5 million in a fourth funding round (PDF link). Investors included HLM Venture Partners, 3i Ventures, Giza Ventures, Ascend Ventures, Aurum Ventures, Sequel Venture Partners and Hunt BioVentures.

IntelliDx makes a chemical sensor-based blood analyzer for use in hospital intensive-care units. Much like the Luminous Medical spectroscopic blood-glucose analyzer we covered yesterday, the IntelliDx device aims to monitor blood sugar hourly in diabetic patients. The idea, again, is to keep a closer eye on hyperglycemia in a critical-care setting, since runaway blood glucose often increases the chance of complications and lengthier hospital stays.

Cancer-test biotech Calderome changes name to VeraCyte – Calderome, a stealthy cancer-test startup in South San Francisco, has changed its name to VeraCyte (no Web site), VentureWire reports. The new name presumably reflects the company’s focus on cell-based cancer diagnostics, as we described last week.

The VentureWire story goes on to reprise VeraCyte’s $12 million fundraising, which we also covered last week. VeraCyte has two employees, and recently extended job offers to three other individuals, the news service reported.

CORRECTED: The IntelliDx item initially located the company in Boston, not Santa Clara. The company’s release was datelined Boston because it originated with HLM Ventures. Apologies for the error.

• Luminous Medical raises $24M for automated glucose monitoring (release)
• Alimera Sciences gets $30M for eye-disease drug (release)
• Vaccine maker LigoCyte draws $28M (release)
• Heartbeat tracker CardioNet trims IPO, aims for listing today (IPOhome)
• Axial Biotech takes in $6M for spinal diagnostics (release)
• Insulin bioengineer enGene receives $6.4M (release)
• GlucoLight raises funding for, well, glucose monitoring (release)
• Germany’s InflaRx gets seed funding for sepsis work (release)
• Cell imager Amnis pulls in $3.5M (VentureWire)
• Korea Bone Bank gets funding for bone transplants (release)

Luminous Medical raises $24M for automated glucose monitoring – Carlsbad, Calif.-based Luminous Medical, a medical-device maker, raised $23.5 million in a second funding round. Investors included Adams Street Partners, RiverVest Venture Partners, Finistere Ventures, De Novo Ventures and Latterell Venture Partners.

Luminous is developing an automated blood-sugar sensor for diabetic patients being treated in hospital intensive-care units and operating rooms. According to the company, keeping a tight rein on blood-glucose levels, which can soar or crash unexpectedly in diabetics, helps prevent complications while shortening hospital stays and reducing the risk of death.

Measuring such tight control, however, typically requires manually checking blood-glucose levels every 30 to 60 minutes, the company says. The Luminous device, by contrast, uses infrared spectroscopy — a technique that identifies particular molecules by measuring which wavelengths of light they absorb — to measure glucose and other blood chemicals non-invasively.

The company licensed its technology from InLight Solutions of Albuquerque, N.M., which previously invested $60 million in the technology. The device has not been approved by the FDA.

Axial Biotech takes in $6M for spinal diagnostics – Axial Biotech, a Salt Lake City diagnostic-test maker, raised $6 million as part of its second funding round. Investors included Johnson & Johnson Development, vSpring Capital and Ohio Biotech Group.

Axial, founded in 2002 by a group of spinal surgeons and geneticists, is an odd hybrid of biotech and devices. The company aims to produce tests that will predict and measure the severity of spinal problems such as scoliosis, as well as unspecified “motion-preserving technologies” — presumably an alternative to the stigmatizing back braces that orthopedists have long inflicted on children with the condition.

Insulin bioengineer enGene receives $6.4M – Canada’s enGene, a Vancouver biotech looking for ways to jump-start natural insulin production in diabetics, raised $6.4 million in a first round of funding. Investors included Saad Investments, Masa Life Science Ventures and private investors.

EnGene has an audacious — which is to say, of course, also quite chancy — approach to diabetes, in which the immune system attacks and kills insulin-producing “beta cells” in the pancreas (type 1 diabetes) or the body grows desensitized to insulin and requires higher levels (type 2 diabetes). In either case, patients often require insulin shots to maintain blood-sugar levels necessary or proper metabolism.

EnGene proposes to engineer cells in the small intestine — known as “K cells” — to produce insulin themselves. The advantage of this technique lies in the fact that K cells, like beta cells, respond to sugar levels in the gut, although they normally secrete a separate molecule. Once bioengineered to produce insulin as well, these cells could help regulate blood sugar automatically much the way beta cells normally do.

Of course, gene therapy has, in general, been a great disappointment so far, so there’s no shortage of uncertainty associated with this sort of technique. EnGene has tested its technique in mice, but not yet in humans. The startup plans to seek a second round of funding in the second half.

Alimera Sciences gets $30M for eye-disease drug – Alimera Sciences, an Alpharetta, Ga., drug developer with a focus on eye disease, raised $30 million in a third funding round. The company will now take a majority stake in its drug for diabetic macular edema, a vision-degrading complication of diabetes, which Alimera is developing with its partner pSividia.

We’ve written before about Alimera, which is presumably still contemplating an IPO this fall. All five of the company’s existing VC backers participated in the round: BA Venture Partners, Domain Associates, Intersouth Partners, Polaris Venture Partners and Venrock Associates.

Vaccine maker LigoCyte draws $28M – LigoCyte Pharmaceuticals, a Bozeman, Mont., biotech focused on new vaccines against infectious disease, raised $28 million in a third funding round. Investors included Forward Ventures, JAFCO, Novartis Venture Fund, Fidelity Biosciences, MedImmune Ventures, Athenian Venture Partners and MC Life Sciences Ventures.

The company is developing new vaccines using “virus-like particles” — usually structural viral proteins, minus the replication machinery packed in DNA or RNA — against gastroenteritis, anthrax and flu. It is also working on antibody drugs against inflammatory disease.

Chestnut makes a device best described as a medical version of a plumber’s snake. Its Alligator retrieval device, which the FDA approved in 2005, is designed to remove “foreign bodies” such as blood clots from vessels in the body and brain via a clamp that’s inserted via catheter into a patient’s circulatory system. The company offers a flash demo of the device.

Investors in the round so far include Veron International of Hong Kong, ITX International Equity, Japan Asia Investment of Tokyo and individual investors.

Investors in the round included Split Rock Partners, Morgenthaler Partners and Domain Partners.

Those flaws, known as aneurysms, are thin-walled “bubbles” in blood vessels that can rupture on short notice, often fatally. The Nellix device and treatment apparently injects some form of goop into these aneurysms, filling and sealing them in order to prevent rupture.

Investors in the round included Essex Woodlands Health Ventures and Incept.

Implantable defibrillators administer shocks to the hearts of people who are at risk of cardiac arrest — a critical condition in which the heart simply stops beating. When the device senses a heart-rhythm disturbance, it shocks the heart back into action. A cardiologist at the University of Iowa Hospitals and Clinics describes the device in more detail.

Existing defibrillators must be implanted in an invasive procedure that requires a specialist — often an electrophysiologist — to guide lead wires into the heart through the veins. In addition to being challenging to insert, those leads can sometimes break, in rare occasions delivering fatal shocks to the heart.

Cameron’s simpler defibrillator apparently doesn’t require such leads, making it easier to implant — although exactly how it accomplishes that trick isn’t immediately clear. The trade publication In Vivo took a closer look at Cameron back in 2003, although the portion of its article available on the Web doesn’t explain how the Cameron device functions without leads.

Investors in the round so far include Three Arch Capital, Versant Ventures, Sorrento Ventures and Delphi Ventures. Cameron CEO Jay Warren didn’t return multiple phone calls and emails requesting comment; neither did VC investors at Three Arch and Versant.

• Aperio Tech raises $20M for digital pathology (release)
• TissueLink changes name, files for $86M IPO (Edgar)
• Specialty pharma Cydex files to raise $50M in IPO (Edgar)
• Hydra Biosciences takes in $34M for pain drugs (VentureWire)
• AVI BioPharma acquires Ercole Biotech for $9M (release)
• Juvaris Bio names Grant Pickering as CEO (release)
  

Aperio Tech raises $20M for digital pathology – Aperio Technologies, a Vista, Calif., developer of systems for digitizing and analyzing medical images, raised $20 million in a third funding round. With the new investment, Aperio has now raised a total of $53 million, including $11 million it pulled in from existing investors last May.

Investors in the latest round included HLM Venture Partners, Galen Partners, Advanced Technology Ventures, Acadia Woods Partners and BlackRock Alternative Advisors. The startup’s tools allow pathologists to scan microscope slides of biopsied tissue or other biomedical samples at high resolution, then view and analyze them for signs of disease.

Over the past six months, Aperio’s tools have received FDA approval for use in manual and automated analysis of tumor-biopsy samples intended to determine whether a patient should receive the breast cancer drug Herceptin.

TissueLink changes name, files for $86M IPO – The medical-device startup formerly known as TissueLink Medical, now renamed Salient Surgical Technologies, filed to raise $86.3 million in an IPO. That makes Salient either the sixth or seventh life-science company to brave the IPO waters this year — a number that’s now maintaining parity with the number of IPOs that have collapsed.

Salient makes surgical tools that use radio-frequency energy to seal up surgical cuts. Although it launched those devices roughly two years ago, the company’s losses have widened since then. Last year, Salient reported a net loss of $14.7 million on sales of $29.5 million.

We previously wrote about TissueLink’s last round of funding.

• Allegro pulls in $4M for lung-cancer molecular diagnostics (release)
• Ocular bandage developer I-Therapeutix raises $6M (Mass High Tech)
• NanoBio gets last of $30M for skin-infection drugs (release)
• Cayenne Medical raises $15M for sports medicine (release)
• Aridis Pharma seeks $10M for oral-form drugs and vaccines (VentureWire)
• Neurosurgical device maker Nfocus Neuro acquires StarFire Medical (release)

Allegro pulls in $4M for lung-cancer molecular diagnostics – Boston’s Allegro Diagnostics, a biotech developing molecular diagnostics for lung cancer, raised $4 million in a first funding round. Investors included Kodiak Venture Partners, Catalyst Health Ventures and Boston University.

Allegro is commercializing gene-expression tests based on technology developed by two BU researchers, Jerome Brody and Avrum Spira. The company’s Web site and release don’t describe its technology in further detail. Allegro says the funding will allow it to begin human testing of its diagnostic.

Ocular bandage developer I-Therapeutix raises $6M – I-Therapeutix, a Waltham, Mass., device maker focused on using hydrogels as “liquid bandages” for ocular surgeries, expects to close a $6 million second funding round this month, Mass High Tech reports. Investors included Versant Ventures, SV Life Sciences, Pinnacle Ventures and angel investors.

Founded in 2006, I-Therapeutix plans to begin clinical trials of its hydrogel sealant in cataract surgery in the second quarer of this year. The product, called I-Zip, will be compared to ordinary corneal bandages. Ultimately, the startup plans to develop the hydrogel as a mechanism for delivering drugs directly to the eye.

Aridis Pharma seeks $10M for oral-form drugs and vaccines – Aridis Pharmaceuticals, a San Jose, Calif., drug and vaccine developer, aims to raise up to $10 million in a first funding round, VentureWire reports. The company was founded in 2003 by former executives of Aviron, which was acquired by MedImmune in 2002.

Aridis is working to stabilize drugs and vaccines that would otherwise require injections so that they can be delivered via inhalation or swallowing. Its lead candidates include a rotavirus vaccine, an antibody for cystic fibrosis and a new type of antibiotic.

Neurosurgical device maker Nfocus Neuro acquires StarFire Medical – Nfocus Neuromedical, a Palo Alto, Calif., device maker focused on treating hemorrhagic stroke, acquired StarFire Medical, a developer of minimally invasive devices for treating problems in the blood vessels serving the brain. The companies didn’t divulge financial details.

StarFire makes and sells balloon catheters for treating brain-vessel fistulas and aneurysms, both blood-vessel defects that can lead to uncontrolled bleeding. Nfocus makes a different type of device for treating these defects, although it doesn’t appear to have disclosed much about its particular approach.

NanoBio gets last of $30M for skin-infection drugs – NanoBio, an Ann Arbor, Mich., biotech developing new anti-infective drugs, raised the final $10 million of a $30 million equity funding that appears to be the company’s first. Perseus provided the funding. NanoBio’s lead compounds address herpes cold sores and nail fungus.

• Precision Thera merger with “blank check” Oracle Healthcare collapses (release)
• Sleep Solutions takes in $21M for sleep-apnea diagnostics (release)
• Trevena takes in $24M for drugs targeting G-proteins (release)
• “Specialty biotech” PanGenetics gets €23M for antibody drugs (release)
• Cancer-drug maker Unibioscreen pulls in €5M (release)
• Danish contract manufacturer CMC Biologics raises new funding (PDF release)
• Healthcare investor EDF Ventures postpones fourth fund (VentureWire)
• Global TB-drug alliance names former Sanofi-Aventis exec Jerome Premmeurer as CEO (release)
• Liquidia Tech names Neal Fowler as CEO (release)

(NOTE: Sorry for the minimal posting yesterday — I was at the Health 2.0 conference with extremely limited Internet connectivity. Normal posting resumes today.)

Precision Thera merger with “blank check” Oracle Healthcare collapses – This item is now a standalone post here.

Sleep Solutions takes in $21M for sleep-apnea diagnostics – Sleep Solutions, a Pasadena, Md., developer of diagnostic devices for sleep apnea, raised $20.5 million in a new funding round. Investors included TPG Biotechnology, MedVenture Associates, Emergent Ventures and Lava Ventures.

Sleep Solutions has developed a home-use diagnostic device for identifying sleep apnea, which are breathing difficulties during sleep. Diagnosing apnea has traditionally required patients to spend the night in a sleep laboratory. Left untreated, apnea can increase the risk of more serious problems, including stroke and heart attack.

Trevena takes in $24M for drugs targeting G-proteins – Trevena (no Web site), a Berwyn, Penn., biotech focused on a new area of drug discovery, raised $24 million in a first funding round. Investors included Alta Partners, Healthcare Ventures, New Enterprise Associates and Polaris Venture Partners.

Like many biotechs, Trevena plans to develop drugs that attack a particular biological mechanism rather than any particular disease. In this case, the company is targeting a class of proteins known as G-protein coupled receptors, or GPCR, which according to the company are affected by close to 40 percent of all drugs on the market today. The company didn’t describe its plans in any detail.

EDF Ventures, an Ann Arbor, Mich., VC firm specializing in early-stage healthcare, has delayed a planned fourth fund, Healthcare investor EDF Ventures postpones fourth fund – VentureWire reports. The postponement is related to the departure last year of managing director Beau Lasky, who left for Steamboat Ventures.

The firm intends to begin talking to potential investors again in several months. EDF didn’t say how much it hopes to raise in the new fund; its third fund closed in 2005 with $55 million in commitments.

• InfraReDx takes $17M for arterial-plaque detection (VentureWire)
• Cancer-drug developer Serenex sells out to Pfizer for undisclosed sum (release)
• Life-sciences fund Longitude Capital raises $95M (VentureWire)
• Hospital consultant Intercede Health names Gray Miller as CEO (release)

InfraReDx takes $17M for arterial-plaque detection – InfraReDx, a Burlington, Mass., developer of diagnostic systems that detect arterial plaque, raised $17 million in a third funding round, VentureWire reports. Sanderling Ventures led the round, joined by new and previous individual investors.

InfraReDx previously planned to raise up to $40 million in order to support expected commercialization of its near-infrared device, which can identify buildups of arterial plaque that can rupture and lead to heart attacks (see our coverage). The test, however, requires a minimally invasive procedure in which the device is threaded into a patient’s circulatory system, making the InfraReDx device primarily useful for preventing second heart attacks in patients who are being treated for their first.

The company submitted its device for FDA approval in October, and is planning on a limited rollout if the device is cleared this quarter, as InfraReDx expects.

Cancer-drug developer Serenex sells out to Pfizer for undisclosed sum – Durham, N.C.-based Serenex, a biotech working on drugs that could be useful in cancer and other conditions, agreed to be acquired by Pfizer. The release is here. The companies didn’t disclose terms of the deal.

Serenex claimed to have a technology for developing drugs against a wide variety of cellular proteins, but in practice Pfizer appears to have been most interested in drugs that inhibit heat-shock protein 90, or Hsp90, a molecule that regulates other proteins crucial to cellular growth and survival. The startup’s lead compound, SNX-5422, is in early-stage, phase I testing against a variety of tumors.

Pfizer, of course, will also walk away with Serenex’s drug-discovery technology and a library of other drug candidates. Notably, however, Pfizer did not buy the startup’s leading experimental drug, SNX-1012, which is being tested against oral mucositis, a common side effect of chemotherapy. That, of course, leaves open the possibility that Serenex management — or someone else — will try to form a new company around that drug. This sort of strategy is increasingly popular; for my take on it, see here.

Life-sciences fund Longitude Capital raises $95M – Menlo Park, Calif.-based Longitude Partners, a spinout of Pequot Ventures, raised $95 million of an anticipated $325 million first fund, VentureWire reports. The fund will invest in biotech, medical-device and drug-development startups.

• RNAi developer PhaseRx gets $4M of a pledged $19M (Seattle Times)
• TyRx Pharma, drug-device combo maker, raises $25M (release)
• Agennix aims at $40M for cancer drugs (VentureWire)
• Starr Life Sciences goes after $1.6M for small-animal vital-signs scanner (VW)
• CardioNet sets IPO terms, aims to raise $96M (IPOhome)

RNAi developer PhaseRx gets $4M of a pledged $19M – Investor interest in RNA interference, an ancient cellular mechanism for silencing dangerous genes, continues apace. PhaseRx, a Seattle biotech, has raised $4 million of a pledged $19 million first funding round, the Seattle Times reports.

Investors included ARCH Venture Partners, 5AM Ventures and Versant Ventures. PhaseRx will draw down the rest of the cash as it achieves various milestones.

The company seems to have neither a Web site nor a press release, and the newspaper story isn’t particularly illuminating on the subject of what PhaseRx intends to do. This Seattle Post-Intelligencer article has more details, however; apparently PhaseRx plans to use some form of synthetic polymer to help RNAi molecules cross into cells. (It’s unclear whether the polymer would also help stabilize RNAi molecules, which are fragile and prone to disintegrate before reaching their targets.)

TyRx Pharma, drug-device combo maker, raises $25M – Monmouth Junction, N.J., medical device maker TyRx Pharma raised $25 million in a new financing round. Investors included Clarus Ventures and Pappas Ventures.

TyRx focuses on implantable polymer-mesh bags meshes that have been coated with drugs of some kind. Its first product, the succinctly named AIGISrx CRMD Anti-Bacterial Envelope contains two antibiotics and is intended as an enclosure for implantable defibrillators designed to prevent infection. (UPDATE: The AEGISrx is actually the company’s most recent product. It also sells the Pivit, a similar polymer-mesh pouch for hernia surgeries. Also, the current financing round is the company’s fifth, according to VentureWire.)

Agennix aims at $40M for cancer drugs – Houston’s Agennix, a biotech developing drugs for cancer and other conditions, hopes to raise $40 million in a late-stage round to fund clinical trials, VentureWire reports. The company hopes to close the round by mid-year. Agennix is developing a bioengineered version of a human protein called talactoferrin that plays an important role in regulating the immune system. Agennix plans to use the funding to fund two late-stage, phase III trials of the drug in lung cancer.

CardioNet sets IPO terms, aims to raise $96M – San Diego’s CardioNet, a maker of wireless cardiac-monitoring devices that hopes to buck the recent trend of IPO collapses, set terms of its proposed IPO and now hopes to raise as much as $95.8 million.

The overall IPO, however, would be much larger — as large as $182.2 million, in fact — because existing CardioNet investors plan to sell more shares than the company itself. While there’s certainly precedent for this sort of thing — Masimo, another Southern California diagnostic-equipment maker, raised nearly a quarter of a million dollars in its IPO last August, the vast majority of which went to selling shareholders, conditions now are far worse than they were six months ago.

CardioNet plans to price its shares between $22 and $24 apiece. Its IPO, it turns out, is part of a complex financial arrangement whereby its last round of funding — $110 million raised last spring — didn’t put a valuation on the company. Instead, those investors received a promise of common stock in the form of shares that convert on the eve of the IPO. The down side here is that if the IPO doesn’t go well, those investors may be hosed. See here for more details.

The device uses an extended-wear battery and is implanted in a non-surgical procedure in a doctor’s office. Every two to four months, a Lyric device must be extracted and replaced with a new device. InSound sells Lyric on a “subscription” model, in which patients buy a year’s worth of devices at a time. (That’s a company graphic of the device below.)

InSound just raised $11 million in an extension to its fifth round of funding, according to Dan Saccani, the company’s CFO. Investors in the round included De Novo Ventures, J&J Development and CMEA Ventures.

The Lyric was cleared by the FDA in late 2002, although InSound didn’t launch it until last year, Saccani told me. During that time, it underwent a name change — it was originally called the InSound XT — and additional engineering development. The Lyric is currently in limited release in the San Francisco Bay Area.

A five-year delay between approval and product launch is pretty unusual in my experience of the medical-device industry, although I’d be the first to admit I haven’t fully grasped all of its ins and outs. The XT received fast FDA approval because it’s not a surgical device, Saccani said, adding that continuing to develop a product following FDA approval “happens all the time” in the industry.

I’m apparently not the only one a bit baffled by this situation. This 2003 article in Ear, Nose and Throat Journal also describes the San Francisco Bay Area as “the first test market for the InSound XT in 2003.”

InSound doesn’t disclose the Lyric’s price, either — in a FAQ for patients on its Web site, the company replies to the sensible question of cost by blathering on about the revolutionary nature of the device and then suggests that patients “[t]alk with your ENT physician and audiologist to discuss pricing and payment options.” (ENTs are ear, nose and throat doctors.) Saccani explained that because the Lyric is only available on a limited basis, the company is keeping pricing information “close to the vest.”

• Adnavance pulls in C$3.7M for molecular diagnostics, names new CEO (release)
• “Personalized medicine” co. Proprius sells to Cypress Bio for up to $75M (release)
• Vaccinex raises $25M in wake of GSK deal for antibody drugs (VentureWire)
• Cianna Medical receives $9M for breast-cancer radiation treatment (release)
• Electron-microscope image provider NanoImaging takes in $1.5M (release)
• CrystalGenomics, ProQuest Investments create JV co. Palkion (release)
• Portico Systems, software maker for insurance plans, raises $7.7M (release)
• Stealthy biotech Affomic takes in $7M (peHUB)

Adnavance pulls in C$3.7M for molecular diagnostics, names new CEO – This item is now a standalone post here.

“Personalized medicine” co. Proprius sells to Cypress Bio for up to $75M – Proprius Pharmaceuticals, a San Diego diagnostics maker, sold itself to publicly traded Cypress Bioscience for up to $75 million in cash. The company’s release is here.

Cypress will pay $37.5 million up front, and another $37.5 million to Proprius shareholders as milestone payments. Proprius licenses and develops drugs and diagnostics for various forms or arthritis. Its most immediate product candidates include tests that aim to predict whether certain individuals will develop rheumatoid arthritis and that monitor patients’ response to methotrexate, a common treatment for RA.

Vaccinex raises $25M in wake of GSK deal for antibody drugs – Rochester, N.Y.-based Vaccinex, a developer of antibody drugs, raised $25 million in an add-on to its second funding round, VentureWire reports. Investors included Teva Pharmaceutical Industries, Pan Atlantic Bank and Trust and individual investors.

Earlier this month, Vaccinex and its partner EUSA Pharma licensed a Vaccinex antibody to GlaxoSmithKline for up to $44 million plus royalties. Vaccinex and EUSA will split any profits from GSK’s potential sales of the drug.

Cianna Medical receives $9M for breast-cancer radiation treatment – Cianna Medical, an Alisa Viejo, Calif., developer of devices for delivering local radiation in breast cancer, raised $9 million in a first funding round. Fog City Fund, Windamere Venture Partners and several private individuals provided the cash.

Cianna, which was spun out of BioLucent when it was acquired by Hologic last year, is working on new devices for brachytherapy, the general term for temporarily implanting radioactive material at the site of a tumor in order to provide localized radiation treatment. The Cianna device is designed to improve upon existing brachytherapy techniques in breast cancer.

Electron-microscope image provider NanoImaging takes in $1.5M – San Diego’s NanoImaging Services, a provider of imaging services involving transmission electron microscopy, raised $1.5 million in a funding round. Merck Capital Ventures led the round. The company specializes in the characterization of large biological molecules such as proteins, which are used in a variety of products such as vaccines and drugs.

CrystalGenomics, ProQuest Investments create new JV, Palkion – Today’s award for most baffling announcement comes courtesy of CrystalGenomics, an Emeryville, Calif.-based U.S. unit of the Korean drug-discovery company CG Pharmaceuticals, and ProQuest Investments, a New Jersey VC firm, who together have formed a joint venture they’re calling Palkion. Their release is here.

What is Palkion going to do? Beats me. Here’s what the release says:

Under this agreement, CrystalGenomics will receive up to $6 million in upfront and initial research funding from Palkion, in addition to development and sales milestone payments of potentially more than $200 million. CrystalGenomics will also initially own 50% of Palkion, Inc. ProQuest will capitalize Palkion with a Series A investment and also provide the management personnel for Palkion. CG will use its unique structure-based drug design capabilities to identify drug candidates while Palkion will oversee the clinical development of novel drug candidates.

So, let’s get this straight. CrystalGenomics and ProQuest form Palkion, in which they’ll hold equal stakes despite the fact that ProQuest seems to be putting all the capital and personnel into the venture. Palkion will then start handing the money to CrystalGenomics, which will continue trying to discover drugs while Palkion “oversees” the process of testing those drugs in people. All clear?

The best I can figure is that this is a roundabout way of putting a more “American” face on a basically Korean startup that — to judge from its Web site and, in fact, this press release — seems to have a certain amount of difficulty communicating clearly with a U.S. audience. That could certainly be a problem if its drugs make it into clinical trials, given how dialogue with the FDA becomes rather crucial at that stage. But that’s just my guess at this point.

Stealthy biotech Affomic takes in $7M – Affomic, a New Haven, Conn., biotech startup so stealthy that it can announce a funding without giving anyone a clue as to what it’s doing, raised $7 million in a first financing round, peHUB reports. Investors included Connecticut Innovations, Elm Street Ventures, and Four Seasons Ventures. It goes without saying that Affomic doesn’t have a Web site — in fact, the startup doesn’t even exist so far as Google is concerned.

HemCon was only founded in 2001, but hit it big almost immediately with a new type of bandage, based on chitin found in shrimp shells, that binds to even the most severe wounds. As the Iraq War loomed, the company won FDA approval for its bandage in just 48 hours, and claims that it is now carried by every member of the U.S. Army in Afghanistan and Iraq. I wrote about them for the WSJ back at the time; a copy of that article is here.

The companies didn’t release financial details — Alltracel apparently didn’t even put out a release, which is odd for a public company — but Thomson Financial reports that HemCon will pay £20.8 million ($40.9 million) in cash for Alltracel. HemCon claims that the combined companies will post 2008 revenues in excess of $100 million.

That’s a pretty staggering estimate, since it looks like Alltracel barely cleared €20 million ($29.7 million) in revenue last year, and suggests that military sales and the ongoing war in Iraq have been very, very good to HemCon. The company says it’s expanding into consumer markets as well, and plans to launch an over-the-counter version of its bandage called KytoStat later this year.

HemCon last raised $12 million in March 2007; its investors included Camden Partners Holdings and Torch Hill Partners, two private-equity firms in the Washington, D.C.-Baltimore axis. The company didn’t say how it will finance the Alltracel acquisition, although HemCon is presumably taking on debt, as it named Bank of America the lead institution in the financing.

The Portland Business Journal has more here.

• HemCon Medical acquires Alltracel Pharma (release)
• Transoma Medical, implantable wireless device maker, withdraws its IPO (Edgar)
• Oracle Healthcare cuts Precision Thera acquisition price by roughly 15 percent (release)
• MedBillManager adopts change:healthcare name, aims for March 3 relaunch release

Another slow news day, as yesterday we covered most of the fundings other sites are writing about today. I’ll update if anything else crops up. In the meantime, feel free to check out yesterday’s briefing or any other items here.

HemCon Medical acquires Alltracel Pharma – This item is now a standalone post here.

Transoma Medical, implantable wireless device maker, withdraws its IPO – Transoma Medical, a St. Paul, Minn., maker of implantable wireless diagnostic sensors, formally withdrew its $77.6 million IPO. Transoma postponed its IPO earlier this month; unsurprisingly, the company cited “unfavorable market conditions” as the reason for its withdrawal.

Transoma is one of several startups working on ways to monitor the vital signs of sick or at-risk patients in ways that don’t require invasive procedures or constant visits to the doctor’s office. The company’s devices, which received FDA approval last October, involve an implantable recorder that monitors a patient’s heartbeat and a handheld wireless device that records the data and regularly transmits it to a physician’s office via a home-installed base station.

The company has raised just over $25 million in three funding rounds since its founding in 1984, when it was known as Data Sciences International. Although Transoma generates close to $40 million a year from sales of its older diagnostic products, it is still burning cash at a rate of roughly $4.3 million every quarter. As of Sept. 30, 2007, Transoma held $26.1 million in cash, equivalents, and working capital, so its cash situation isn’t yet dire; if those trends hold, it will be down to about $17 million by the end of March. Don’t be surprised if Transoma hits the fundraising hustings again before long.

MedBillManager adopts new name as parent company change:healthcare aims for March 3 relaunch – MedBillManager, a site that helps people sort through complex medical expenses, will adopt a new name and Web site as it relaunches on March 3. Its parent company, Nashville, Tenn.-based change:healthcare, is consolidating its various Health 2.0 properties under its own name; these will now be available at www.changehealthcare.com.

The company announced the changes in an email; for a Web version, see here. A screenshot of the new site suggests that change:healthcare will now be emphasizing social networking as part of services for medical-bill management, finding and rating doctors, and comparing prices across various healthcare providers.

Oracle Healthcare cuts Precision Thera acquisition price by roughly 15 percent – Back in December, the “blank check” acquisition company Oracle Healthcare Acquisition agreed to buy the Pittsburgh diagnostic biotech Precision Therapeutics in a transaction that was virtually impossible to value at the time. Only later did the companies indicate that the acquisition would cost Oracle around $150 million (based on the issuance of 19 million Oracle shares at a price of $7.90 apiece detailed in this prospectus).

Not any more, apparently. The two companies just agreed to reduce a key variable in the calculation that establishes how many shares Oracle will issue to Precision’s owners, cutting the deal’s value by approximately 15 percent to roughly $127.5 million. The details, however, remain a bit murky: The deal’s participants haven’t done anyone a favor by describing the ratio at which Precision shares will convert to Oracle shares in a dense, wordy paragraph. Complex calculations like this should be set out in an equation with clearly defined variables, dammit.

In addition, the proposed amendment to the merger deal will cause founders of Oracle to forfeit shares of the special-purpose acquisition company, or SPAC, currently worth $14.8 million. It will also eliminate a “top-up” provision that would have handed Precision shareholders extra Oracle stock if the SPAC’s share price declined.

What does all this add up to? It sure looks like everyone involved in the deal is getting a haircut of some kind, although why this is happening now isn’t remotely clear. I’m certainly tempted to think that Precision is turning out less of a bargain Oracle thought, but at this point, it’s impossible to know for sure.

For more about SPACs, see our coverage here.

UPDATE: The merger is dead.