VentureBeat

TODAY’S HEADLINES:

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

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

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

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

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

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

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

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

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

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

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

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

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

Featured companies: Aldagen, LDR, Lyten Endoscopy, MachLabs, Permatox, TeleMedicine Clinic, ThromboVision

Spinal-implant maker LDR raises $25M — Austin, Texas-based LDR, a maker of spinal implants, raised $25 million in a third funding round. Investors included Telegraph Hill Partners, Austin Ventures, Rothschild Private Equity and PTV Sciences.

LDR sells spinal-fusion devices, artificial disks and other spine-related devices in more than 30 countries, and plans to use the funds for further expansion.

Aldagen adds $9M for adult stem-cell work — Aldagen, a Durham, N.C., biotech developing regenerative therapies with “adult” stem cells, raised an additional $9 million (PDF link), bringing its third funding round to a total of $23 million. Investors in the additional financing include Tullis-Dickerson, CNF Investments, Harbert Venture Partners and Intersouth Partners.

The company’s most advanced experimental treatment uses stem cells derived from umbilical-cord blood to somehow improve the speed and effectiveness of cord-blood transplants in children, although the company doesn’t explain how. Nor has it revealed the results of an early-stage human test. Other treatments now entering clinical trials use stem or related progenitor cells isolated from a patient’s own bone marrow to treat heart failure or clot-related oxygen deprivation in the limbs.

The Triangle Business Journal has more.

ThromboVision raises $4M for personalized-medicine diagnostics — The Houston, Texas, biotech ThromboVision said it raised $4 million in a first funding round. Investors included the private-equity firm National Healthcare Services and private investors.

ThromboVision is developing new tests of platelet activity that may help doctors determine which patients are most likely to respond to low doses of blood thinners such as aspirin or Plavix, which are used to prevent clots that can cause heart attacks or strokes. This is similar — in concept, at least — to the FDA’s recent push to require the use of genomic tests to determine the proper dosing of warfarin, another blood thinner. (See our coverage here.)

MachLabs launches two device companies — MachLabs, a Redwood City, Calif., investor partnership founded by entrepreneurs Michael Laufer and John Lonergan, recently launched two medical-device startups, VentureWire reports (subscription required). Lyten is developing a minimally invasive treatment for obesity, while Permatox hopes to introduce a non-invasive alternative to Botox.

TeleMedicine Clinic receives €7M for radiology services — Barcelona-based TeleMedicine Clinic, a center for the outsourced analysis of medical images such as X-rays and MRIs, raised €7 million ($9.7 million), VentureWire reports. Investors included Kennet Partners, Active Capital Partners and an undisclosed European seed investor.

(UPDATED at 6:30am PT on Friday: See below.)

Featured companies: DNA2.0, Globus Medical, Inotek Pharmaceuticals, Operon Biotechnologies, PleuraFlow

Globus Medical raises $110M for spinal implants — Globus Medical, an Audubon, Pa., developer of spinal implants, raised $110 million in a fifth financing round. Investors included Clarus Ventures, AIG SunAmerica and other large, institutional private-equity funds.

Some have called this the largest venture-capital funding of the year — by a grand total of $1.65. That’s one dollar and sixty-five cents. No lie. That seems to present a definitional problem of sorts, because there is only one named venture-capital firm in the deal, Clarus Ventures, which is all of two years old and has a grand total of nine companies in its portfolio. In addition, AIG SunAmerica is a veritable smorgasbord of financial services, none of which seem to include venture capital, and Globus itself says the rest of its funding comes from private equity.

Previous financings at Globus consisted of debt and four angel rounds, VentureWire reports (subscription required). Prior to the latest funding, the company had raised $18 million in equity from angel investors and $25 million in debt from Silicon Valley Bank and Bank of America. The company plans to retire that debt this year.

Globus, which was founded in 2003, said the funds would fund clinical trials of “multiple innovative technologies under development.” The company claims to be one of the world’s ten largest manufacturers of spinal implants, with more than $120 million in “annualized” revenues. According to VentureWire, Globus revenues last year amounted to $82 million, a figure that may grow to $120 million this year.

The company also recently settled six lawsuits with Synthes, agreeing to pay $13.5 million to the Swiss medical-device maker and to refrain from soliciting or hiring Synthes employees for a full year. Synthes had sued Globus, which was founded by former Synthes employees, accusing it of misappropriating trade secrets. There’s more detail at the Philadelphia Business Journal and the Philadelphia Inquirer.

UPDATE: Tom Salemi at the In Vivo blog has more on what the deal means for Globus in the spinal-device market. For what it’s worth, he doesn’t think this funding should be considered a venture-capital deal, either.

Inotek receives $19M for cancer drugs — Beverly, Mass.-based Inotek Pharmaceuticals, a biotech that aims to tackle cancer, heart disease and inflammation, raised $19.3 million in a third funding round. Investors included Hercules Technology Growth Capital, Meditor Capital Management, Mitsubishi UFJ Capital, Care Capital, La Caisse de dépôt et placement du Québec, MedImmune Ventures, Pitango Venture Capital, and Rho Ventures.

Inotek’s lead drug candidate targets an enzyme in the cellular nucleus that helps repair DNA damage. Disabling that enzyme could make it easier to kill tumor cells.

DNA2.0 strikes artificial-DNA co-marketing deal with Operon – DNA2.0, a Menlo Park, Calif., biotech that bills itself as the largest U.S. provider of synthetic genes, struck an agreement with Huntsville, Ala.-based Operon Biotechnologies under which Operon will co-market DNA2.0’s gene-synthesis services. Meanwhile, it also appears that Operaon will share its nucleic-acid synthesis technology with DNA2.0 to improve DNA2.0’s “speed of synthesis.”

This deal probably isn’t all that huge in and of itself, but DNA-synthesis services are likely to grow in prominence as bioengineers become ever-more versed in techniques for modifying natural genes or even creating new genes from scratch. That’s what the emerging field of “synthetic biology” is all about, and it’s definitely worth watching.

PleuraFlow raises almost $1M for drainage device — PleuraFlow, a Bend, Ore., device startup, raised slightly under $1 million in seed financing, VentureWire reports (subscription required). Investors included the angel group BVC Investor, affiliated with the Bend Venture Conference, and the Cleveland Clinic. PleuraFlow is developing a device to improve pleural and pericardial drainage following heart surgery. The company doesn’t have a Web site.

UPDATE (7:05pm PT): Added items on Globus Medical and Inotek.

UPDATE REDUX (6:30am PT Friday): Expanded Globus item.

Featured companies: Concentric Medical, Vertebration, Vision RT, Kemeta

Clotbuster Concentric Medical files for $69M IPO — Mountain View, Calif.-based Concentric Medical, which makes and markets devices for removing dangerous blood clots from the brains of stroke patients, filed to raise up to $69 million in an initial offering. The company’s devices consist of catheters that are threaded into the body’s circulatory system via the femoral artery in the groin and passed into the brain to the site of the clot. There, a wire at the end of the catheter coils around the clot, permitting its removal.

Although Concentric’s device has been approved since 2004, the company is still losing money despite briskly expanding sales. The company posted a $6.9 million net loss in 2006, down from $9.7 million in 2004. Sales rose to $11.3 million from $2.3 million over the same period.

Concentric’s clot-removal device is based on technology licensed from the University of California. Among the risk factors noted by the company is the fact that the device can malfunction and sometimes causes additional injury to the delicate blood vessels of the brain. Concentric said it has submitted 82 medical-device reports to the FDA as of June 30; in 56 of those events, the device’s tip fractured, and in 22 instances a blood vessel was damaged.

Spinal implant maker Vertebration raises $750K — Vertebration, a Columbus, Ohio, developer of spinal implants, raised a $750,000 seed round, VentureWire reports (subscription required). The funding consisted of $500,000 in venture debt arranged by NCT Ventures and a $250,000 private placement to angel investors.

The company may seek a first funding round of $3.5 million to $10 million later this year, according to VentureWire. Its Web site should be active next week.

From the VentureWire piece:

Columbus, Ohio-based Vertebration plans to take its first product, a spinal implant called Xycor, to market in late October. The implant works to restore the height and space between two vertebrae or a partial vertebra through a minimally invasive procedure. Xycor received 510(k) clearance from the Food and Drug Administration earlier this year. Vertebration is developing instruments to accompany its lead product, as well as other products for the spine market.

Vision RT gets $500K for radiation imaging — Vision RT, a London-based developer of three-dimensional imaging tools for guiding radiation therapy, raised $495,725 (£250,000) from the Capital Fund, VentureWire reports. The company’s tools provide a three-dimensional model of a patient in order to properly direct radiation-beam treatment for cancer and other diseases.

Kemeta takes equity investment from Dow Chemical for breath analysis — Kemeta, a Phoenix developer of breath-analysis systems, said Dow Chemical took a minority equity stake in the company. Details of the transaction weren’t disclosed.

Kemeta aims to produce a palm-sized analyzer that can measure breath acetone, a by-product of burning fat, for use in obesity. The sensor technology was originally developed by Dow.

I didn’t write about Medtronics’ $3.9 billion acquisition of Kyphon when it was announced almost two weeks ago, largely because it seemed to be a pretty straightforward merger of two big public companies with relatively few implications for the venture medical-device business.

The good folks at the In Vivo Blog beg to differ, and weighed in earlier this week with a sharp analysis of the deal. To summarize, Kyphon was seen as an upstart in the spinal-device market — a venture firm that grew up, went public, and appeared on the verge of threatening the hegemony of the Big Three device makers by snapping up promising little companies before they could. (In Vivo doesn’t name the Big Three, but they have to be Medtronic, J&J and Boston Scientific.) Yet Medtronics’ decision to take out Kyphon may do little to stem a new wave of competition from spinal-device startups.

As In Vivo tells it:

Kyphon’s rapid recent growth and willingness to pay a premium price to acquire new technology marked perhaps the largest shock waves threatening to disrupt the status quo in the spinal market, where small companies have had little choice other than the Big 3 when looking for potential acquirers. Recently, however, that sector has been undergoing a bit of a shake-up with the major companies losing market share…. These losses have largely come at the hands of the many burgeoning spine start-ups. Analysts now estimate there are as many as 150 spinal device companies, compared with one-third that number just a few years ago….

[R]ather than entering a period of slower growth and retrenchment or consolidation, this group of spine industry veterans predicted that a number of product, market, and clinical forces are coming together to drive significant future growth, with one panelist suggesting that the current $4 billion spine market will more than triple in the next few years.

The factors contributing to this perfect storm in spine include innovations in diagnostics, particularly new imaging technologies, along with new implant designs, and a patient population growing not just from overall aging but from younger patients looking to take advantage of new treatment options. Clinically, the spine market is characterized by variety of conditions that can be treated by numerous therapeutic approaches; doctors are not wedded to any single therapy and continue to explore different options, resulting in a fertile environment for companies with innovative technology.

We’ve certainly seen no shortage of spinal-device companies getting funded here at VentureBeat Life Sciences over the past few months — a group that includes Active Implants, Amedica, Gentis, Interventional Spine, Orthopedic Development and Pegasus Biologics, among others. (I’m sure I missed a few.) There’s certainly no shortage of innovation in the space, even though it’s far from certain that most — or even many — of these innovative techniques will end up being safe and effective. (There are also plenty of spine-related device horror stories out there as well, with the tale of J&J’s Charite spinal-disc replacement perhaps chief among them.)

In any case, there’s no question that hegemony is boring, and the idea that one or more of these startups could hit it big and keep shaking things up is certainly appealing. On the other hand, if market share at the Big Three is shrinking while innovation proceeds apace among startups, that may just cause the big companies to step up their M&A activity while they can — perhaps reaching even further down to earlier-stage companies, the same way Big Pharma has done recently in biotech. As it turns out, it’s awfully hard for smaller companies to compete against big, cash-rich incumbents, especially ones who can make a buyout offer the startups can’t refuse. As Kyphon itself ultimately realized, I guess.

Salt Lake City-based Amedica filed to raise up to $74.8 million in an IPO, just a week after it raised $13.2 million in a fourth funding round. The maker of ceramic implants for spinal and joint repair said it doesn’t expect its first products to reach the market until next year.

Amedica’s S-1 filing, by the way, is the first I can recall seeing that explicitly lists “healthcare reform” as one of its major risk factors:

We face significant uncertainty in the industry due to government healthcare reform.

Political, economic and regulatory influences are subjecting the healthcare industry to fundamental changes. Reforms under consideration in the United States include mandated basic healthcare benefits, controls on healthcare spending, increases in insurance premiums and increased out-of-pocket requirements for patients, the creation of large group purchasing organizations that aim to reduce the costs of products that their member hospitals consume, and significant modifications to the healthcare delivery system. We anticipate that the U.S. Congress and state legislatures will continue to review and assess alternative healthcare delivery systems and payment methods. Due to uncertainties regarding the ultimate features of reform initiatives and the timing of their enactment and implementation, we cannot predict which, if any, of such reform proposals will be adopted, when they may be adopted or what impact reform initiatives may have on us.

This may be standard boilerplate these days, but like they say on TV, it was new to me.

Check out Amedica’s filing and its press release for more.

Amedica, a Salt Lake City maker of ceramic implants for spines and joints, raised $13.2 million in a fourth round of funding. Creation Capital placed the financing. The company had previously raised more than $30 million.

The company is developing a line of ceramic knee, hip and spinal-disk replacements, along with related ceramic spine implants. Its release is here.