VentureBeat

Featured companies: Atritech, Avalon Partners, Ensemble Discovery, Hyperion Therapeutics, LifeBond, ReShape Medical, SafeStitch, Trophos, UltraShape

Hyperion Therapeutics raises $40M against GI and kidney disease — Hyperion Therapeutics, a South San Francisco, Calif., specialty pharmaceutical company, raised $40 million in a second funding round. Investors included Sofinnova Ventures, Highland Capital Partners, New Enterprise Associates and WRF Capital.

Hyperion, which buys the rights to test and market drug candidates from other companies, said the proceeds will allow it to complete a licensing agreement with Medicis Pharmaceutical’s Ucyclyd subsidiary, build out its management team and advance its clinical trials. The company’s two leading candidates address a genetic disease called urea cycle disorder, in which toxic ammonia builds up in the blood stream, and hepatic encephalopathy, a neurological complication of cirrhosis.

Atritech raises $22M for clot-prevention device — Plymouth, Minn.-based Atritech, a developer of a device designed to prevent dangerous blood clots, raised $22 million in a fourth funding round. Investors included SightLine Healthcare Vintage Fund, Prism Venture Partners and other existing investors.

Atritech’s device, which it calls the Watchman system, is essentially a tiny mesh basket designed to be implanted in the opening to the heart’s left atrial appendage, a small pouch on the top of the heart. That pouch is often the source of blood clots in patients with atrial fibrillation, a condition in which the heart’s upper chambers beat too fast. Ideally, the implanted basket will catch clots that threaten to escape into the bloodstream, where they could cause a stroke.

The funding will allow Atritech to finish enrolling patients in a late-stage trial of the Watchman device, which is being tested against a blood thinner typically given to prevent clots from forming.

UltraShape gets $15.1M for “body contouring” — UltraShape, an Israeli developer of ultrasound systems designed to break down fat cells for cosmetic purposes, raised $15.1 million in a fifth funding round. Investors included Meritech Capital Partners, Israel Seed Partners and Polaris Venture Partners. The company’s non-invasive device isn’t approved for use in the U.S.

Trophos raises $11.6M for neurological drugs — Trophos, a Marseille, France, biotech focused on developing new drugs for neurological conditions, raised $11.6 million (€8.5 million) in a third round of funding. Investors included OTC Asset Management, CM-CIC Capital Privé, Society General Asset Management (SGAM), Viveris Management, Turenne Capital Partners, Blue Medical and the Association Française contre les Myopathies.

Trophos develops drugs that it believes will promote the survival of neurons threatened by degenerative neurological diseases such as Huntingdon’s disease. Its leading candidates target neuropathic pain and amyotrophic lateral sclerosis, better known as Lou Gehrig’s disease.

SafeStitch goes public in reverse merger, raises $4M in debt — SafeStitch, a Miami medical-device maker without a Web site, went public in a reverse merger with the defunct firm Cellular Technical Services. The company will list its shares on the American Stock Exchange. As part of the deal, SafeStitch raised a $4 million line of credit from the Frost Group, a private-equity firm, and also takes control of $3 million in cash held by CTS. The company makes devices for minimally invasive gastrointestinal surgery.

NationsHealth acquires Diabetes Care & Education for $3M — NationsHealth, a Sunrise, Fla., provider of medical products and insurance-related services, acquired Diabetes Care & Education, a provider of insulin pumps and related supplies for diabetics. NationsHealth will pay $3 million, $2.5 million in cash and $500,000 in unregistered common stock.

Obesity-device maker ReShape Medical pulls in $3M — ReShape Medical, a Lake Forest, Calif., developer of minimally invasive medical devices to treat obesity, raised $3 million in a follow-on to its first funding round, PE Hub reported, citing a regulatory filing. Investors included New Leaf Venture Partners and SV Life Sciences. The company was previously known as Abdominis, and has now raised a total of $8 million.

Avalon Ventures raises $84 million in eighth fund — Avalon Ventures, a La Jolla, Calif., venture-capital firm specializing in life-science and wireless-technology companies, raised $84 million in an eighth fund, VentureWire reports (subscription required), citing a regulatory filing. Avalon previously raised $75 million for its seventh fund, which closed in 2005.

LifeBond gets $1.5M for new surgical bandages — LifeBond, a Jerusalem-based device company, raised $1.5 million. Investors included GlenRock Israel and the Zitelman Group.

LifeBond is developing a bandage that exudes a sticky gel when it comes into contact with blood, presumably creating a barrier that minimizes blood loss.

Ensemble Discovery , a Cambridge, Mass., biotech, named former Pfizer vice president Michael Taylor as its CEO. Ensemble is developing new drugs and tests based on large, repetitive molecules called macrocycles.

Ensemble raised $17 million in a first funding round in 2004, and in February VentureWire reported that the company was closing a second round in the “tens of millions.”

(CORRECTED: See below.)

Featured companies: VistaGen Therapeutics, MindWeavers, Cutanea Life Sciences, Heptares Therapeutics

VistaGen raises $3.75M for stem-cell based drug discovery — South San Francisco, Calif.-based VistaGen Therapeutics, a biotech that uses human embryonic stem cells to discover new drugs, raised $3.75 million in a bridge financing as it prepares to raise up to $20 million in a fourth round, VentureWire reports (subscription required). Montaur Capital Partners provided the funding.

VistaGen, founded in 1998, isn’t your typical stem-cell company. Where companies ranging from Geron and Advanced Cell Technology to Novocell aim to use the controversial cells — which must be derived from five-day-old embryos in a destructive process — directly as therapies to help regenerate damaged organs, VistaGen merely grows stem-cell cultures in its labs and uses those cultures to discover and run preliminary safety tests on drug candidates.

The embryonic cells are capable of “differentiating” into any type of cell in the body, which VistaGen says makes them valuable for determining how an experimental drug molecule will interact with living human tissue. The company uses its stem-cell “screens” to identify promising small-molecule drugs (that is, compounds that can be swallowed rather than injected) and to determine what side effects they might cause once ingested. Over time, VistaGen suggests, it might develop screens for drugs that trigger stem cells’ regenerative powers, potentially inducing cellular repair in conditions such as heart disease or diabetes.

For now, however, VistaGen’s lead drug candidate is a relatively prosaic compound called AV-101 that the company plans to begin testing against epilepsy later this year. AV-101 is a “prodrug” — a molecule that’s converted into an active form by the body’s natural metabolism — that turns into a neuroinhibitor once it reaches the brain. In addition to epilepsy, VistaGen suggests that the drug may also have uses in stroke, neuropathic pain and neurodegenerative diseases such as Alzheimer’s disease. For more detailed info, see the company’s Web site here and here.

Oxford’s MindWeavers raises $1.1M for mind-altering software — MindWeavers, an Oxford, England-based software company that develops software designed to improve mental function, raised $1.1 million (£558,000) through City and Merchant Group. Next year, the company hopes to raise up to £1 million with a listing on London’s Plus Markets electronic exchange.

MindWeavers develops its programs based on neuroscience research from Oxford University, which spun out the company in 2000. Its first product was Phonomena, a interactive game for children that the company says builds auditory discrimination and language skills. Several other programs are designed to improve “neuroplasticity” and to stimulate brain activity in middle-aged and elderly people in order to ward off age-related cognitive decline. VentureWire has more.

Skin-care firm Cutanea raises “millions” in convertible debt — Cutanea Life Sciences, a Cambridge, Mass., specialty pharmaceutical company focused on dermatology, raised a “multi-million” dollar round of convertible debt, VentureWire reports. Institutional investors such as Nexus Medical Partners provided the funding. Cutanea licenses neglected or cast-off experimental drugs from universities or other companies and runs them through human tests.

Heptares Therapeutics spins out of Britain’s MRC — The MRC Laboratory of Molecular Biology has spun out a new company, Heptares Therapeutics, with undisclosed seed funding from MVM Life Sciences Partners. The company will focus on drugs for diseases of the nervous system and metabolism. (Hat tip: PE Hub.)

CORRECTION: Due to incorrect information supplied by VentureWire, the VistaGen Therapeutics item originally stated that Montreux Equity Partners provided funding. In fact, Montaur Capital Partners led the funding. The VentureWire correction is here.

NeurogesX, a San Carlos, Calif., biotech focused on pain medication, priced its IPO yesterday at $11 per share, below its expected range of $13 to $15. The company raised approximately $44 million, down from an expected $69 million.

The company’s lead drug candidate, NGX-4010, is a transdermal skin patch designed to deliver low doses of synthetic capsaicin — a version of the active ingredient that makes chili peppers spicy — directly to the site of chronic neuropathic pain. The company claims that one application may provide three months of pain relief.

NeurogesX’s IPO experience mirrors that of many other biotechs, which in general have found it difficult to draw much investor interest with initial offerings — in stark contrast to the enthusiastic reaction of large pharmaceutical companies looking to snap up the makers of promising drugs at rich premiums. NeurogesX’s IPO release is here.