VentureBeat

Featured companies: Formac Pharmaceuticals, Pradama, Protein Sciences, SantoSolve, Scandius BioMedical

UPDATED: Expanded items on Protein Sciences, SantoSolve, Scandius and Pradama.

Vaccine maker Protein Sciences gets $1M — Protein Sciences, a Meriden, Conn., biotech working on a faster way to make flu vaccines, raised $1 million in a convertible-debt offering. Diamyd Medical, a Stockholm-based biotech focused on diabetes, provided the funding.

The funding boosts Diamyd’s total investment in Protein Sciences to $4 million. Conversion of its earlier investment made the Swedish company Protein Sciences’ second-largest shareholder. According to VentureWire (subscription required), Protein Sciences had previously raised $9 million since mid-2004. That doesn’t appear to count the company’s earlier incarnation as MicroGeneSys, a controversial AIDS-vaccine company that successfully lobbied Congress for federal funding to test its product in the early 1990s. (It failed, and the company appears to have largely started anew since then.)

Protein Sciences’ big claim to fame is its work on “recombinant” flu vaccines, which can be genetically engineered quickly instead of grown using whole flu virus in chicken eggs or animal cells. The jury is still out on whether recombinant vaccines really work well, despite periodic waves of hype; my coverage of the last one involving Protein Sciences is here. the U.S. biotech is also manufacturing proteins for Diamyd products such as a therapeutic diabetes vaccine.

Sports-medicine specialist Scandius BioMed acquired by Covidien — Scandius BioMedical, a Littleton, Mass.-based medical-device startup focused on sports injuries, was acquired by Covidien, a publicly traded healthcare-products company in North Haven, Conn. The release is here; the companies didn’t disclose financial terms.

Scandius marketed several products for the reconstruction and healing of ligaments and bones that are often damaged in competitive athletics. According to the company’s Web site, it has raised $13.3 million in equity financing since its founding in 2000, with investors including Commerce Health Ventures, Ivy Healthcare Capital, KBL Healthcare Ventures and Stockton Partners.

Norway’s SantoSolve receives $7M for pain drugs — SantoSolve, an Oslo biotech working on a new class of pain drugs, raised $7 million in a new funding round. Investors included DnBNor, Gezina, Glastad Invest, Teknoinvest and InnovationsKapital.

SantoSolve, founded in 2002, said the funds would allow it to move its leading drug candidate, an arthritis pain drug called 2PX, into late-stage human testing. The company is also testing the drug against neuropathic pain.

Osteoporosis drug maker Pradama raises $1.2M — Louisville, Ky.-based Pradama, a biotech developing an oral drug for osteoporesis, raised $1.2 million in a first funding round, VentureWire reports. Investors included Kentucky Seed Capital Fund, Kentucky Science and Technology Corp., Triathlon Medical Ventures, Commonwealth Seed Capital and Cardinal Venture Fund.

From VentureWire:

Pradama, based in Louisville, Ky., is developing a means of targeting bone-building drugs for osteoporosis to the skeleton. To do this, it links anabolic therapies to a derivative of tetracycline that homes in on bone. One drug it’s considering using with the targeting technology is an estrogen derivative, Pierce said, though other undisclosed therapies are also being studied.

OTHER HEADLINES OF NOTE:

• Belgium’s Formac Pharma pulls in €1.7M for new drug-delivery tech (release)
• Osteoporosis drug maker Pradama raises $1.2M (VentureWire, sub req’d)

Featured companies: AerovectRx, Dicerna Pharmaceuticals, Harmony Information Systems, Intelligent Hospital Systems, Merrion Pharmaceuticals, Syntaxin, SymBio Pharmaceuticals

UPDATED: Expanded items on Harmony Info, SymBio Pharma and Merrion Pharma, added Dicerna item.
UPDATE REDUX: Added Syntaxin item.

U.K. biotech Syntaxin raises £16M for pain and nervous-system drugs — Syntaxin, a U.K. biotech focused on drugs that affect cell secretion, raised £16 million ($33.2 million) in a second funding round. The company’s release is here.

Investors in the round included SR One, the venture capital arm of GlaxoSmithKline; Life Science Partners; Abingworth; Johnson & Johnson Development; and Quest for Growth. Syntaxin is developing drugs derived from bacterial toxins that block the release of chemicals known as neurotransmitters, which may be useful in treating pain, respiratory disease, neurological problems and obesity and related metabolic disorders.

Harmony Info, a healthcare IT provider, raises $28M to fund acquisition and expand sales — Reston, Va.-based Harmony Information Systems, a maker of healthcare software for government agencies and nonprofits, raised $28 million in a second funding round consisting of equity and debt. Investors included JMI Equity, Updata Partners, ORIX Venture Finance and Comerica Bank.

On Monday, Harmony announced the acquisition of rival Synergy Software Technologies for undisclosed terms. Harmony provides IT systems that handle electronic medical records, billing and insurance-claims management.

Japan’s SymBio Pharma closes in on ¥2B funding — Tokyo’s SymBio Pharmaceuticals, a specialty pharma founded in 2005, is near closing a ¥2 billion ($17.4 million) third round of funding, VentureWire reports (subscription required). The company is focused on acquiring and developing drugs for cancer, blood disease and autoimmune conditions.

Co-founder Lowell Sears, a former Amgen CFO and now CEO of Sears Capital Management, has long been active in the Asian pharmaceuticals market. From VentureWire:

He was a founding investor, for instance, in Peninsula Pharmaceuticals Inc., an Alameda, Calif.-based company that licensed late-stage antibiotics from Japanese companies. Johnson & Johnson acquired Peninsula in 2005, and Forest Laboratories Inc. bought Peninsula spinout Cerexa Inc. in January.

Sears and Fuminori Yoshida, whom Sears once hired to be president of Amgen’s Japanese unit, started SymBio to do the reverse of Peninsula by acquiring Asian product rights.

Like JapanBridge, an MPM Capital-founded company we wrote about here, SymBio essentially aims to acquire drugs or drug candidates from elsewhere in order to win regulatory approval and sell them in Japan.

Irish specialty pharma Merrion slashes IPO range — Dublin’s Merrion Pharmaceuticals, a specialty pharma we last checked in on over the weekend, sharply lowered its expected IPO range. The company, which had hoped to sell as many as 4.6 million shares (listed in the U.S. as American Depositary Shares) for $10 to $12, now expects only $6 to $7 per ADS.

That lowers Merrion’s maximum IPO take to $32.2 million, down from an earlier $55.2 million, and gives the company a post-offering market capitalization of up to $122.9 million. Merrion rejiggers existing drugs to make them easier to take by mouth.

New RNA-interference biotech Dicerna shoots for $13M, aims to work around RNAi patents — Dicerna Pharmaceuticals, a stealthy, Boston-based biotech in the field of RNA interference, aims to raise $13 million in a first funding round, the In Vivo blog reports. The company, co-founded by John Rossi of Duarte, Calif.’s City of Hope National Medical Center and Mark Behlke of Integrated DNA Technologies, is focused on making new drugs via the “gene-silencing” properties of RNAi while sidestepping a patent thicket that has grown up around the technology. The company expects to close its funding in November.

Unless you’re a nucleic-acid chemist (or a patent lawyer focused on same), the details of Dicerna’s strategy are most likely beside the point, although I’m sure the In Vivo folks would welcome your attention if you’re really interested. Suffice to say that the company’s founders believe they’re found a new way to build these gene-silencing molecules that isn’t covered by some of the fundamental patents in the field. If that’s true — and no one will really know for years, if ever — it could spark new attention from Big Pharma and other biotechs that have so far sat out the increasingly frantic, and expensive, race to make RNAi drugs.

As with any early-stage technology, it’s helpful to bear in mind that no one has yet demonstrated that RNAi molecules can even work as safe and effective drugs, much less that they’ll be the magic bullet that some have claimed. Still, a lot of money has been sloshing around the field recently (see our coverage in the third item here), and there’s little doubt that deep-pocketed folks still on the sidelines will want to at least check out Dicerna’s claims.

OTHER HEADLINES OF NOTE:

• IH Systems pulls in $7.6M for robot syringe-filler (release)
• AerovectRx names Ed Cannon as new CEO (release)

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

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

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

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

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

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

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

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

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

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

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

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

(UPDATED at 7:10pm PT: See below.)

Featured companies: NeurAxon, VytronUS, Avila Therapeutics, CardioNet, Ventana Medical Systems, CytoLogix, PlaCor

NeurAxon raises $32M for pain drugs — You have to hand it to Waltham, Mass.-based NeurAxon — the company certainly knows how to keep itself in the news. Today, it announced it has raised $32 million in a second funding round, a week after it reported a positive early-stage trial result for its experimental migraine treatment.

Investors included Delphi Ventures, OrbiMed Advisors, BDC Venture Capital, Genesys Capital Partners, H.I.G. Ventures, NeuroVentures Fund, Ventures West Capital and Lawrence Bloch, NeurAxon’s CEO.

Stealthy VytronUS gets $6.6M — Los Altos, Calif.-based VytronUS, a secretive medical-device company, raised $6.6 million in a first funding round, PE Hub reports, citing a regulatory filing. Delphi Ventures and New Enterprise Associates provided the funds.

Avila Therapeutics receives undisclosed first funding — Avila Therapeutics, a Waltham, Mass., biotech focused on cancer and viral disease, raised an undisclosed first funding round in February, VentureWire reports (subscription required). Investors included Abingworth Management, Advent Venture Partners, Atlas Venture and Polaris Venture Partners. The company doesn’t have a Web site.

Wireless heart monitor CardioNet files to raise $150M in an IPO — CardioNet, a San Diego medical-device firm focused on wireless heartbeat monitors, filed to raise up to $150 million in an IPO. The company still isn’t profitable, although its sales appear to be set to double this year.

The In Vivo blog has some additional insight into CardioNet’s rather convoluted funding history.

Defunct device maker wins patent case against Ventana — CytoLogix, a failed medical-device startup formerly based in Cambridge, Mass., won a patent-infringement suit against publicly traded Ventana Medical Systems of Tuscon, Ariz. A jury awarded CytoLogix $10.8 million in damages, but said Ventana wasn’t liable for related antitrust claims. CytoLogix attorneys have said they will seek to have the damages paid to the company’s shareholders, VentureWire reports.

From VentureWire:

CytoLogix alleged in the patent litigation that Ventana learned about CytoLogix’s proprietary intellectual property by gaining access to a confidential business plan that CytoLogix had distributed in the mid-1990s as part of its search for venture capital. This allegation stemmed from an admission made by Ventana’s then-Chairman Jack Schuler, as part of an address he made in October 1999, at a U.S. Trust investment conference in Tarrytown, N.Y.

In the speech, Schuler described in detail how years before, Ventana had made use of information in the business plan. A 2002 Barron’s article about the litigation quotes him in the speech as having acknowledged the competition in a major way.

CytoLogix sold its business operations to Dako in 2002, and currently exists only to pursue the litigation. Ventana, meanwhile, is trying to fend off an unsolicited takeover offer from Roche.

The original Barron’s article on the lawsuit is here, and there’s a little more detail on the decision in this AP story.

PlaCor names new CEO — PlaCor, a Plymouth, Minn., developer of blood-cell diagnostics, named John Reinke as CEO, effective Sept. 4. PlaCor is developing diagnostic tests of platelet reactivity intended to determine patient response to anticoagulant treatment following serious blood-clot incidents, which can lead to heart attacks or strokes. Current CEO Bill Haworth will become the company’s chief scientific officer.

UPDATE (7:10pm PT): Added items on Ventana/CytoLogix lawsuit and PlaCor.

(UPDATED at 6:40pm PT: See below.)

Featured companies: Nereus Phramaceuticals, KFx Medical, NeuroMed Pharmaceuticals, Adnexus Therapeutics, Masimo, Biofisica, Aegera Therapeutics, LymphoSign, InfuScience, Palmetto Infusion Services

Nereus Pharma raises $45M for ocean-derived cancer drugs — San Diego’s Nereus Pharmaceuticals, a biotech that searches for cancer drugs in marine microbes, raised $45 million in a follow-on to its fourth funding round.

The company features an all-star lineup of investors, which includes BankInvest, Roche Venture Fund, Astellas Venture Management, Boston Life Science Venture Corporation, Taiwan Global Biofund, Eminent Venture Capital, HBM BioVentures, Alta Partners, Forward Ventures, Advent International, GIMV, InterWest Partners and Pacific Venture Group.

From the press release:

The proceeds from the financing will be drawn down in two tranches and used to complete Phase I and begin Phase II clinical trials for Nereus’ two drug candidates. The first compound, NPI-2358, is being evaluated for the treatment of solid tumors and lymphomas in Phase I clinical trials. It is a potent, selective tumor vascular disrupting agent (VDA), a class of compounds that represents a novel approach to disrupting the intrinsic tumor blood flow, which leads to tumor cell death. NPI-2358 has favorable preclinical characteristics, such as a longer duration of action on tumor blood flow, activity against multi-drug resistant tumor cell lines and a favorable preclinical toxicology profile. The compound is one of 200 analogues that were produced after finding activity and novel chemistry from a marine fungal extract.

Nereus’ proteasome inhibitor NPI-0052 is in Phase I trials for solid tumors, lymphomas and multiple myeloma. Preclinical studies indicate that this next generation compound may be superior to Velcade(R), with broader target inhibition, faster onset of action, higher potency, oral and intravenous availability, and activity against myeloma cells resistant to Velcade(R) (bortezomib, Millennium), Thalomid(R) (thalidomide, Celgene Corporation), Revlimid(R) (lenalidomide, Celgene Corporation) and steroid therapy. NPI-0052 was derived from a marine-obligate gram-positive actinomycete (Salinispora tropica).

Rotator-cuff specialist KFx Medical raises $10M — San Diego’s KFx Medical, a Carlsbad, Calif., developer of minimally invasive repair systems for rotator-cuff injuries, raised $10 million in a second funding round. Investors included Alloy Ventures, Charter Life Sciences, Arboretum Ventures, Montreux Equity Partners, and MB Venture Partners.

It’s pretty difficult for a non-surgeon to figure out exactly how KFx’s system works better than current medical practice, but if you’re interested in a look, check it out here.

NeuroMed Pharma drops Merck work on pain drug, raises $36M — Vancouver-based NeuroMed Pharmaceuticals, a biotech focused on new pain meds, discontinued Merck-funded work on an experimental pain drug called MK-6721. The Merck collaboration, valued at as much as $475 million, will continue.

Separately, NeuroMed has raised $36 million toward a fifth funding round, VentureWire reports (subscription required). That round isn’t yet complete, and the investors haven’t been disclosed. The funding is designed to pay for completing late-stage human trials of a separate pain drug the company recently licensed from a J&J subsidiary.

Adnexus raises $15.5M against cancer — Adnexus Therapeutics, a Waltham, Mass., biotech developing a new class of drugs against cancer and other diseases, raised $15.5 million in a third funding round. Investors included HBM BioVentures (Cayman), Atlas Venture, Flagship Ventures, Polaris Venture Partners and Venrock. The company intends to use the proceeds to further clinical development of its lead candidate, Angiocept, which is currently in early-stage trials in cancer.

Masimo IPO raises $233 million, jumps 23% on first day — Irvine, Calif.-based Masimo, a major developer of non-invasive patient monitors, priced its IPO in the middle of its predicted range of $16 to $18 per share, raising as much as $232.9 million — just shy of the quarter-million-dollar mark we discussed here. Since the offering involved a hefty chunk of shares sold by existing shareholders, however, the company can only pocket up to $55.9 million of the proceeds. Investors received the offering warmly, pushing the stock up to $20.90 yesterday, a rise of 23 percent.

Biofisica raises $2M in venture debt for wound healing — Atlanta’s Biofisica, a medical-device maker focused on wound healing, raised $2 million in debt financing from Leader Ventures. The company makes an electrical-stimulation device designed to speed the healing of wounds, and currently sells it in the United Kingdom.

Aegera acquires LymphoSign, uniting two Canadian oncology biotechs — Aegera Therapeutics, a Montreal biotech focused on cancer, acquired Toronto’s LymphoSign, another cancer-specialized biotech, for undisclosed terms. Several shareholders also made additional investments in Aegera’s previously announced third funding round.

InfuScience acquires Palmetto Infusion Services — InfuScience, a Chicago provider of drug-infusion therapy, acquired Palmetto Infusion Services of Beaufort, S.C., for an undisclosed sum.

UPDATE (6:40pm PT): Added KFx Medical item.

Featured companies: NeurAxon, TechniScan Medical Systems, ViewRay, Advion BioSystems, NanoTek, Cerionx, Ionscope, EncorePath

NeurAxon to raise $25M for pain treatment – Waltham, Mass.-based NeurAxon, which just named Lawrence Bloch as its new CEO last week, now plans to raise $25 million in a second funding round this quarter, VentureWire reports (subscription required). The round is slated to wrap up when — and if — the company’s lead drug, a migraine treatment that targets an enzyme called neuronal nitric oxide synthase, produces positive early-stage data.

Ultrasound scanner TechniScan wins $1.7M grant extension — Salt Lake City’s TechniScan Medical Systems, a maker of ultrasound breast-imaging systems for cancer diagnosis in conjunction with mammography, said the NIH had extended a small-business innovation grant for another year to the tune of $1.7 million. The total grant will now amount to $2.8 million. TechniScan has raised approximately $20 million from angels and venture investors.

Real-time imager ViewRay raises $3M — ViewRay, a Gainesville, Fla., developer of real-time imaging systems, raised $3 million in a first funding round, VentureWire reports. Individual investors provided the funding. ViewRay’s technology combines an MRI scanner with a gamma-ray radiation treatment system to provide real-time imaging during cancer radiation treatment.

Lab-tools maker Advion BioSystems acquires NanoTek — Advion BioSystems, an Ithaca, N.Y., developer of “lab-on-a-chip” microfluidics systems, acquired Knoxville, Tenn.-based NanoTek. Terms of the deal weren’t disclosed. Advion has raised a total of roughly $17 million in venture funding, according to VentureWire.

Pipette cleaner Cerionx raises $2.5M in debt — Exton, Pa.-based Cerionx, a manufacturer of pipette-cleaning systems, raised $2.5 million in debt financing from BlueCrest Capital Finance, VentureWire reports. The company’s devices clean pipettes without the use of solvents, employing instead an electric field that atomizes remaining organic debris on pipette tips.

Microscopy company Ionscope raises $1.4M — Ionscope, a London-based developer of new scanning ion conductance microscopy technology, raised $1.4 million (£680,000) from individual investors of the Cambridge Angels Group. The company’s technology can allegedly image live cell membranes at resolutions up to 50 times greater than possible with existing technology.

Encore Path raises $500K for stroke rehabilitation — Encore Path, a Baltimore developer of training devices to assist in the rehabilitation of stroke patients, raised $500,000 in seed funding, VentureWire reports. Investors included the Maryland Venture Fund of the state’s Department of Business and Economic Development and the Maryland Technology Development Corp., as well as angel investors and friends and family. The company was originally founded in 2006 as NewRegen with a focus on neural rehabilitation for stroke patients. Now Encore Path is developing a training device for restoring arm movement, and hopes to raise a larger first round next year when that device launches.

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Argolyn Bioscience, a Charleston, S.C.-based developer of drugs for neurological problems, raised $15.8 million in a first financing round. The funding was led by Intersouth Partners and Quaker BioVentures, joined by Amgen Ventures.

Argolyn is at work on new peptide-based drugs, which are made from short stretches of protein, for schizophrenia and pain. Neither of its lead candidates have yet entered clinical trials, although the company said the new funding will allow it to begin human tests. Peptides are theoretically much more selective than traditional “small molecule” drugs, but usually can’t be administered in pill form because their fragile molecules break down in the digestive system. Argolyn says it can modify peptides to improve their stability, although it so far stops short of saying it can deliver them orally.

Roxro Pharmaceuticals, a Menlo Park, Calif., specialty pharmaceutical company focused on pain drugs, raised $42.7 million in a second funding round. The company’s release is here (PDF).

Founded in 1999, Roxro acquires discarded or failed drugs from other companies and pushes them through clinical development. Although I keep thinking the bloom has come off this particular trend, investors apparently can’t get enough of the strategy, at least to judge by this sizable round. The company’s lead candidate is ROX-888, a painkiller designed to be taken via an intranasal spray, which is currently in late-stage trials. The company plans to file for FDA approval of the drug in the first half of next year.

The round was led by Prospect Venture Partners and Sutter Hill Ventures, joined by Thomas Weisel Healthcare Venture Partners.