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TODAY’S HEADLINES:

• BrainCells raises $30M for neuroregeneration drugs (release)
• EKR Therapeutics takes in $50M plus $95M in debt for pain, heart drugs (release)
• Wright Medical acquires Berkeley’s Inbone Tech for $24M (release)
• Argolyn Bioscience names Nixon Ellis as CEO (release)

BrainCells raises $30M for neuroregeneration drugs – San Diego’s BrainCells, a startup focused on drugs intended to stimulate the growth of new neurons, raised $30 million in a second funding round. Investors included MedImmune Ventures, Bay City Capital, Oxford Bioscience Partners, Technology Partners, Pappas Ventures and Neuro Ventures.

BrainCells set out several years ago to discover drugs that stimulate neuron growth, following pioneering discoveries at the Salk Institute that revealed mechanisms by which the brain itself regrows its primary cells under certain circumstances. The startup, which raised $17.7 million in a 2004 first round, has been screening experimental compounds against neural stem cells to identify ones that had the previously overlooked property of promoting the growth of new brain cells.

The company’s lead drug candidate, BCI-540, which it licensed from Mitsubishi Pharma, will soon be mid-stage, phase II trials as a potential treatment for depression and anxiety disorder. (Mitsubishi had previously tested as a possible Alzheimer’s therapy, so it’s already been taken by 700 patients and is considered safe.) A follow-up compound, also licensed from a Japanese company — Taisho Pharmaceutical — remains in animal testing at the moment.

EKR Therapeutics takes in $50M plus $95M in debt for pain, heart drugs – Cedar Knolls, N.J., specialty pharma EKR Therapeutics raised $50 million in a fourth funding round that also included $95 million in debt. Investors in the equity round included MPM Capital, LLR Partners, Quaker BioVentures, the Garden State Life Sciences Venture Fund, NewSpring Capital and ESP Equity Partners. GE Healthcare Financial Services provided the debt financing.

EKR, like most specialty pharmas, acquires or licenses cast-off drugs from other companies, usually in hopes of finding new uses for them. Although the release doesn’t say so specifically, this funding will likely cover the company’s recent purchase of several drugs from the rapidly disintegrating PDL BioPharma; last month, EKR said it had raised an undisclosed amount of funding for that deal, in which it agreed to pay $85 million up front and another $85 million in potential milestone payments.

The company also has the distinction of using that deal to “re-acquire” several drugs that an earlier incarnation known as ESP Pharmaceuticals handed to PDL in a 2005 acquisition, an interesting turn of events we covered here.

Last week, the Irvine, Calif., startup PrimeGen Biotech made a startling claim: It had successfully transformed adult skin, kidney and retina cells into stem cells, without using viral gene therapy that could trigger cancer. That would represent a significant advance over the discovery last year (see our coverage) that inserting just four genes into ordinary cells could reawaken their ability to transform themselves into any type of tissue, potentially opening the door to regenerative medicine that doesn’t rely on stem cells derived from five-day-old embryos.

But there’s no shortage of reasons to treat PrimeGen’s claims with skepticism, starting with the fact that it chose to announce them at last week’s Stem Cell Summit, an investment conference in New York whose Web site already seems to be defunct. Add in the facts that PrimeGen has been making similar claims for more than two years but hasn’t ever published its findings in a scientific journal, that it only seems to present actual data at obscure overseas meetings — one organized by the Pontifical Academy for Life and the World Federation of Catholic Medical Associations, for instance, and another arranged by Serono Symposia International, a producer of continuing medical educational events — and that it appeared inordinately tickled when a pro-life U.S. Senator praised its work as “the greatest thing on the horizon” in a 2006 congressional hearing, and you have an awfully good basis for suspicion.

PrimeGen also stands out as a very odd duck in the world of stem-cell startups. The company has largely been bankrolled by two tech-industry entrepreneurs, Kingston Technology co-founder John Tu and AST Research co-founder Thomas C.K. Yuen, neither of whom have any background in biology or medicine so far as I can tell — or even a history of supporting such work. Yuen, in fact, serves as PrimeGen’s chairman and CEO, another discordant note. The company’s Web site is an amateurish mess rife with scientific vaguery of the highest order, meaningless puffery — did you know that PrimeGen is “the global leader” in stem-cell research and regenerative medicine? Me neither — and executive bios that tout routine biomedical accomplishments such as “being a Principle[sic] Investigator of NIH grants” as if they were the Nobel Prize.

That’s all shaky enough, but none of it gave much pause to mainstream publications such as the U.K. magazine New Scientist and the Philadelphia Inquirer, which played up the company’s unsubstantiated claims in recent articles (see here and here). Only the Inquirer offers a few reasons to question PrimeGen’s alleged achievement — in particular, pointing out that research now suggests it takes about two weeks to turn normal cells into what are technically callled “induced pluripotent stem cells,” whereas PrimeGen claims to do it in five to seven days.

The New Scientist piece, which goes into the most detail about PrimeGen’s technique, says the company used stretches of DNA that “code” for the same four genes used in one of last November’s gene-therapy experiments plus a fifth gene called Nanog. The company’s scientists supposedly attached the DNA to carbon nanoparticles that it mixed with the adult cells to reprogram them into iPS cells. Using the proteins coded by the genes allegedly had the same effect.

All this is certainly plausible — but so were other stem-cell “breakthroughs” that never panned out, most notably fabricated research touted by in 2005 by South Korean researcher Hwang Woo Suk, who claimed to have produced embryonic stem cells from adult tissue via cloning. Of course, it’s impossible to rule out the possibility that PrimeGen can indeed do exactly what it says here, but the signs aren’t auspicious. PrimeGen says it has submitted its latest results to a stem-cell meeting in Philadelphia this summer, and its science had better match or exceed its hype if it wants to be anything but a colossal vanity project.

TODAY’S HEADLINES:

• Q Thera takes in $15M for neural stem-cell treatments (release)
• Stroke clotbuster Concentric Medical withdraws IPO (IPOhome)
• Avera recaps with $9M to relaunch human tests of GI drug (VentureWire)
• Tissue repairer Nerites raises $5.7M (release)
• Semafore Pharma aims for $7.5M to launch new cancer-drug trials (VentureWire)
• Triage Wireless gets $6.7M for “cuffless” blood-pressure monitors (peHUB)
• MAKO Surgicals prices IPO, falls in first day of trading (WSJ)
• ImmunoCellular acquires assets of Molecular Antibody Technology (release)

Q Thera takes in $15M for neural stem-cell treatments – Q Therapeutics, a Salt Lake City biotech working on neural stem-cell treatments for neurological conditions, has received the first portion of a $15 million second funding round. Investors in the round included vSpring Capital, Invitrogen, Epic Ventures, Toucan Capital, University of Utah Research Foundation, Salt Lake Life Science Angels and Q management.

Q is taking aim at diseases such as multiple sclerosis and cerebral palsy that result when the protective myelin sheath that protects nerve fibers and the spinal cord deteriorates, often for little-understood reasons. The company is developing neural stem cells that can produce new glial cells, which in theory should be able to regenerate the damaged myelin. (Irritatingly enough, the company insists on calling its product “Q cells.”) The company aims to begin clinical trials in transeverse myelitis, a paralyzing form of MS, next year.

Stroke clotbuster Concentric Medical withdraws IPO – Concentric Medical, a Mountain View, Calif., developer of medical devices for removing stroke-causing blood clots, withdrew its proposed IPO. The company becomes the eighth life-science startup to abandon an IPO this year.

Concentric, of course, cited “unfavorable market conditions” as the reason for its withdrawal. The device maker, which is still unprofitable, reported working capital and cash and short-term investments of $20.3 million at the end of June and has been burning cash at a rate of about $7 million a year, so it’s not necessarily in dire straits. Concentric, in fact, today announced it had arranged a $15 million line of credit with Horizon Technology Finance, giving it an additional cushion.

The company makes and sells a catheter-based device that can be snaked through a patient’s blood vessels to the brain in order to physically “grab” and remove stroke-causing blood clots. Although Concentric won approval for the device in 2004, sales have grown more modestly — in part, perhaps, because Concentric hasn’t undertaken the clinical studies necessary to demonstrate the usefulness of its technique compared to other treatments, and has no plans to do so. (The company listed this point as a risk factor in its SEC filings.) What’s more, the Concentric device can sometimes damage blood vessels in the brain; in one of two studies, almost ten percent of patients suffered a cranial hemorrhage.

Our previous coverage of the company is here.

Avera recaps with $9M to relaunch human tests of GI drug – Avera Pharmaceuticals, a San Diego specialty pharma developing drugs against a variety of conditions, recapitalized with a $9 million “first” funding round, VentureWire reports. Such a recap usually amounts to a restart for a company, which in this case was prompted by a halted clinical trial of a drug for irritable bowel syndrome and overactive bladder.

Investors in the recap included all participants in the company’s previous funding round: Aisling Capital, SV Life Sciences, Aberdare Ventures, BioAsia Investments, H.I.G. Ventures, Montreux Equity Partners, Bay City Capital, BTG PLC, Frazier Healthcare Ventures, InterWest Partners, St. Paul Venture Capital and Windamere Venture Partners. The company declined to provide a valuation to VentureWire, but it’s almost certainly suffered a “down round,” or it wouldn’t be recapitalizing.

Avera shut down mid-stage trials of its drug, known as AV608, last year after animal testing turned up potential toxicity issues. The company has since redesigned the drug to eliminate a compound it called a “non-active metabolite,” and hopes to resume studies later this year. Avera had raised more than $72 million prior to the recap.

A potentially interesting legal drama is unfolding at Minerva Biotechnologies, a Waltham, Mass., startup developing biochips and exploring the biology of cancer stem cells. In a terse release, the company said it has terminated CEO Jim Czirr and launched a search for his successor. Minerva also said it has filed suit against Czirr in Massachusetts Superior Court.

Details are still rather sketchy at this point. I spoke briefly with Minerva founder Cynthia Bamdad, who declined to say much about Czirr until she’d consulted her lawyers. Bamdad said Czirr was named CEO in October 2005, but “basically stopped performing any work function back in July” of 2007. “That was the reason for the recent board action.”

So far, I’ve been unable to track down Czirr for comment.

Czirr, described in this Boston Business Journal article as a former center for the University of Michigan football team, is also apparently at odds with his previous company, cancer-drug developer Pro Pharmaceuticals. Czirr stepped down as board member and executive at Pro Pharma in 2003, but still holds roughly 15 percent of the company’s outstanding shares. Czirr has been publicly critical of Pro Pharma’s financial management.

Bamdad is a fascinating personality in her own right. As this 2004 Technology Review piece explains, Bamdad began her biotech career at age 36 as an artist and single mother of five with no higher degrees or scientific background. Newly divorced, she sold her Ferrari, earned an undergraduate physics degree in three years and a Harvard biophysics doctorate in five, produced a marketable biosensor from her academic work, took it to a company that was shortly acquired by Motorola, and went on to found Minerva in 1999.

Her company started life as a developer of nanoparticle-based biochips, but more recently has pushed into stem-cell science. Bamdad said Minerva scientists, in conjunction with academic researchers at UC Santa Barbara, are beginning to develop drug candidates that would attack cancer stem cells, which are primordial cells that may initiate and sustain tumors. The company has also recently taken strides toward understanding how embryonic stem cells grow and “differentiate” into the 200 or so cell types in the body. Minerva has 16 employees and has raised between $12 million and $13 million over its lifetime, all from angel investors, Bamdad told me.

I’ll likely follow up with another post when we know more about what’s actually going on with this controversy.

(NOTE: Apologies — especially to RSS readers — if you’ve seen this post before, but an apparent server error ate it late yesterday and I was only able to recover it this morning. Enjoy, or ignore, as seems most fit.)

Featured stories:

• Stem-cell science, money and death
• Gene tests: Out of control?
• Clinical-trial data wants to be free
• Drug, biotech industries face uncertainty
• Short takes

Clones, regrown hearts, money and death — Last week, the San Diego biotech http://www.stemagen.com/ announced that it had cloned human embryos by transplanting the nuclei of adult skin cells into oocytes, or human egg cells. The cloned embryos reportedly into blastocysts, the five-day-old clumps of roughly 100 cells from which researchers can, if all goes well, extract stem cells. (The research isn’t aimed at creating cloned babies.) Although not of immediate practical use, the ability to use embryo cloning to make genetically matched stem cells would be a big step forward for the field, since the technique could be used to produce stem-cell lines specifically for the study of particular genetic disease. The Stemagen embryos, however, didn’t actually yield any stem cells, leaving some researchers skeptical that the company had actually achieved what it claimed. The NYT has more.

Another team of researchers at the University of Minnesota recently created a beating rat heart in the laboratory, although the work didn’t grow the heart from scratch and didn’t specifically use stem cells. The team used detergents to clear living cells from a dead rat heart, leaving the outer structure and valves as a scaffold that cold be “repopulated” by injected cells from newborn rats, which eventually developed into working heart muscle that pumped blood and conducted electrical signals. Eventually it may be possible to do the same with hearts taken from human cadavers and stem cells extracted from a patient’s bone marrow, potentially yielding a newly transplantable heart.

Meanwhile, stem-cell pioneer James Thomson, a University of Wisconsin biologist, argued for a major boost in state stem-cell funding, saying that Wisconsin needs to hand out $50 million a year in order to compete with California’s $3 billion program. And in sad news, a 9-year-old girl with a fatal genetic condition called Batten disease died after being treated in a clinical trial with neural stem cells intended to correct a brain-enzyme deficiency in Batten patients. Preliminary results suggested the death was a result of her disease and not the stem-cell therapy, developed by the Palo Alto, Calif., biotech Stemcells.

Test, genes and politics — A federal advisory panel raised concerns over the proliferation of genetic tests, complaining of misleading or false marketing as well as the possibility that patients could be harmed by basing medical decisions on inaccurate tests. Unsurprisingly, many tests fall through loopholes in federal regulation, partly as the result of divided responsibilities between Medicare and the FDA. No agency even knows how many such tests are currently on the market. New tests — or the prospect of them — are popping up all the time, such as a recent finding that five specific DNA variations may help predict a man’s risk of prostate cancer, a test that, predictably enough, will be commercialized within the next few months by a startup called Proactive Genomics. The panel doesn’t appear to have addressed personal-genomics services like 23andMe or deCODEme, but chances seem good that Washington will want to weigh in sooner or later.

Making the most of clinical data — Reported results of drug trials and other medical interventions tend to be heavily skewed toward “positive” trials that appear to demonstrate the effectiveness of whatever therapy is being studied. Efforts to encourage reporting of “negative” results — that is, those that show no effect, which can also yield useful information — have faced an uphill battle. Over at Fierce Biotech, the founder of Raven Biotechnologies — a company best known around here for its attempt to swallow the corpse of VaxGen — cites her personal experience to argue that neither drug companies nor scientific journals are inclined to publish negative results. “The publishing industry and pharma reinforce each other’s biases” toward positive news, Jennie Mather writes. Meanwhile, in the NYT, Memorial Sloan-Kettering Cancer Center biostatistician Andrew Vickers bemoans the culture of secrecy that discourages even academic cancer researchers from sharing their data from clinical trial more openly. Allowing others access to the data could not only improve clinical trial designs, but potentially point the way to new diagnostic tests and treatments.

Pharma, biotech under fire — Politicians are turning up the heat on the drug industry, the WSJ notes, listing efforts to allow reimportation of cheap Canadian drugs, force Medicare to negotiate drug-price discounts, permit generic forms of biotech drugs and enact healthcare reform as among the major threats to Big Pharma and Big Biotech. In California, a recent report from the California Healthcare Institute raises similar concerns about the biotech industry, arguing that increased government oversight could crimp drug development. New drug approvals are already at a 24 year low, the In Vivo blog noted recently, although research productivity at drug companies seems to be the major culprit.

Short takes:

• Pfizer last year won approval for the first drug to treat fibromyalgia, a chronic pain condition whose existence still isn’t well accepted by doctors — including the one who first defined it in 1990, but has since changed his mind. (NYT)
• California’s plan to become the first state to require electronic tracking of prescription drugs — a measure designed to thwart drug counterfeiting — may be delayed another two years, to 2011, as the drug industry upgrades its computer systems. (SF Chronicle)
• Northstar Neuroscience brain-stimulation device fails in stroke-rehabilitation trial, highlighting the hit-or-miss efforts to treat brain and nerve disorders with neuromodulation. (NYT)

TODAY’S HEADLINES:

• TransEnterix gets $21M for minimally invasive GI surgery (release)
• Stem-cell developer Bioheart’s IPO postponed (Forbes.com)
• Medical-practice software provider AdvancedMD acquired by Francisco Partners (release)
• Peptimmune draws $8.2M for MS drug trials (release)
• Drug-delivery co. Talima Thera names Martin Babler CEO (release)
• Alimera Sciences aims for autumn IPO to fund diabetic eye-disease drug (VentureWire, sub req’d)

TransEnterix gets $21M for minimally invasive GI surgery — TransEnterix (no Web site), a Research Triangle Park, N.C., device maker developing tools for “natural orifice” gastrointestinal surgery, raised $21 million in a first funding round. Investors included SV Life Sciences, Parish Capital Advisers and Synergy Life Science Partners.

According to the Web site for Synecor, a North Carolina incubator that founded TransEnterix, the company is at work on tools and devices for minimally invasive “trans-oral” surgery using an endoscope passed through the mouth and down the esophagus. This procedure is designed to enable surgeries through the stomach wall and other unspecified “natural entry points,” potentially in a way that could supplant minimally invasive laparoscopic procedures that require entry through the abdominal wall. Patients would be consciously sedated during the procedure.

The funding will allow TransEnterix to “deliver” its first-generation tools, presumably for use in clinical trials, and to fund development of next-generation devices.

Stem-cell developer Bioheart’s IPO postponed — Bioheart, a Sunrise, Fla., developer of a stem-cell-based heart therapy, has postponed its troubled IPO. Although the company doesn’t seem to have officially yanked it yet, odds are now good that it will.

Bioheart’s woes started last October, when it abruptly slashed its offering price and fired its underwriters. The company’s IPO has lingered on life support ever since. We gave readers some good reasons to be skeptical about Bioheart — which, notably, is backed by former football great Dan Marino, among others — as long ago as last July.

Medical-practice software provider AdvancedMD acquired by Francisco Partners — AdvancedMD, a Salt Lake City provider of Web-based medical-practice management software — now there’s a mouthful — announced that it was acquired by the private-equity firm Francisco Partners. Financial terms weren’t disclosed.

AdvancedMD, founded in 1999, sells a series of Web-based products designed to handle administration, billing and electronic medical records for physicians. The company had previously raised venture funding from Dominion Ventures, Windward Ventures and Hunter Capital. Francisco has already named a new CEO, and said that it intends to “leverage” the company’s success with “additional resources” to accelerate its growth.

Peptimmune draws $8.2M for MS drug trials — Cambridge, Mass.-based Peptimmune, a biotech at work on drugs for autoimmune and metabolic conditions, raised $8.2 million in the first stage of its fourth funding round. The company anticipates closing a second tranche in the second quarter. Investors included New Enterprise Associates, MPM Capital, Hunt Ventures, Boston Medical Investors and Silicon Valley Bank Capital.

Peptimmune is focused on using protein fragments known as peptides to disrupt or otherwise modulate immune-system reactions associated with disease. Its lead candidate, PI-2301, is a “random sequence” peptide similar in certain respects to the approved drug Copaxone, which Peptimmune is currently testing against multiple sclerosis in early-stage human tests.

Alimera Sciences aims for autumn IPO to fund diabetic eye-disease drug — Alimera Sciences, an Alpharetta, Ga., biotech focused on eye disease, is contemplating an IPO this fall, VentureWire reports (subscription required). The funds will ideally support the launch of the company’s first innovative product, a treatment for a blinding complication of diabetes known as diabetic macular edema.

Alimera, which started life as a specialty pharma that resold over-the-counter eye products, began development of its current candidate, Medidur, in 2005. The treatment, co-developed with the nanotech company pSvidia, is a tiny structure designed to be injected into the back of the eye, where it steadily emits a corticosteroid called fluocinolone acetonide. The idea is to provide the smallest possible quantity of the steroid directly to the back of the eye, where a fluid buildup in the retina steadily obscures vision. Many ophthalmologists currently treat the condition with steroid injections, although no drugs are approved for the disease.

Medidur is currently in late-stage, phase III human tests. Alimera expects data from that trial in late 2009 and could file for approval in 2010.

TODAY’S HEADLINES:

• Cancer stem-cell co. OncoMed strikes GSK partnership worth up to $1.4B (release)
• Kosmix pulls in $10M for health, lifestyle search (release)
• CDI Bioscience pulls in $3M for protein-production improvements (release)
• UroMedica takes in $7M for incontinence devices (VentureWire, sub req’d)
• Draths raises $2.5M for flu drugs (PE Hub)

Cancer stem-cell co. OncoMed strikes GSK partnership worth up to $1.4B – Redwood City, Calif.-based OncoMed Pharmaceuticals, a biotech founded to target and destroy the “cancer stem cells” that researchers believe may lurk at the heart of every tumor, struck a major partnership with GlaxoSmithKline to discover and commercialize new cancer drugs based on OncoMed’s technology.

The deal allows GSK to license up to four of OncoMed’s monoclonal antibody drugs that are directed at multiple cancer stem-cell targets. In turn, OncoMed gets an undisclosed initial payment, an equity investment, and milestone payments of up to $1.4 billion, plus double-digit royalties on any marketed products. The arrangement includes OncoMed’s leading product candidate, OMP-21M18, which is scheduled to begin human testing this year.

Cancer stem cells are, like most stem cells, thought to be progenitor cells that give rise to a diverse population of other cell types. In this case, however, the cancer stem cells theoretically keep tumors alive by constantly producing replacement tumor cells as they are killed off by chemotherapy, radiation or the body’s defenses. Cancer stem cells, in fact, may explain why tumors return so easily after surgery or chemotherapy, since if even a few stem cells survive, they can easily recreate the tumor.

CDI Bioscience pulls in $3M for protein-production improvements – CDI Bioscience, a Madison, Wisc., biotech aiming to improve the efficiency of genetically engineered cells in the production of biotech drugs, raised $3 million in a first funding round. Battelle Ventures and Innovation Valley Partners provided the funding.

CDI has developed a process that forces bioengineered cells into a “senescent” state, which CDI claims is characterized by greater energy production (in terms of increased numbers of mitochondria) and increased protein synthesis and output. The company claims that cells “shifted” into senescence routinely produce three to seven times the amount of engineered protein — the output that biotechs purify into drugs — than their unshifted counterparts.

Featured companies: Fate Therapeutics, Medgenics, Satoris

UPDATED: Expanded items on Fate Therapeutics and Medgenics. The Satoris item is now a standalone post here.

Fate Therapeutics launches regenerative-medicine quest with $12M — In one of the splashiest launches in recent memory, Seattle’s Fate Therapeutics launched a new regenerative-medicine quest and raised $12 million to help it along. The company aims to develop drugs that redirect fundamental cell biology in ways that mimic the regenerative powers of stem cells, either by “reprogramming” normal cells into stem cells or by directing existing “adult” stem cells in the body to activate their regenerative powers.

I mentioned the hype, right? Fate’s release — and its Web site — prominently quotes one of its scientific advisors saying the company’s approach amounts to “the dawn of a new day in medicine,” so it seems safe to say that the company doesn’t lack for self-confidence. Fate also arranged a slew of positive press coverage timed to its announcement, including this story in Forbes.

Fate has assembled a team of scientific stem-cell luminaries — see the release for details — and the potential of this sort of approach is certainly huge. At the moment, most stem-cell companies are trying to use transplanted cells themselves to regenerate damaged or diseased tissues, still an unproven approach with a number of shortcomings — among them, the likelihood that patients receiving cell transplants will have to take immunosuppressive drugs to prevent transplant rejection.

By contrast, targeted drugs that can push existing cells back into a primordial, regenerative state could open up entirely new forms of medical treatment. Assuming, that is, that everything works — and that’s a big if at this point. Understanding of cells’ natural regenerative mechanisms remains in its infancy, so it’s probably worth taking Fate’s grander claims with a grain of salt until the company proves that it can do what it claims it can.

Here’s Forbes on what Fate has in store for us:

Already, Fate Therapeutics has treatments in clinical trials to improve the potency of cord-blood stem cells and to treat myelodysplastic syndromes, anemias that strike 10,000 Americans a year. Another drug program might help reduce the impact of the genetic disorder that causes Down syndrome. Other treatments could affect the same litany of diseases touted as targets for stem cell therapy: Alzheimer’s, osteoporosis and Parkinson’s, to name a few. Because tumors are caused by stem cells run amok, drugs to turn down their activity might be potent cancer medicines.

Fate, of course, isn’t alone in this quest. Plasticell, a fairly new U.K. biotech with a much lower profile than Fate, is also looking for non-invasive ways to tap cellular regeneration; see our coverage here.

Investors in the funding include Arch Venture Partners, Polaris Venture Partners, Venrock and OVP.

Medgenics raises £3.3M in London IPO — Vienna, Va.-based Medgenics, a biotech that aims to help patients produce genetically modified protein drugs within their own bodies, raised £3.3 million ($6.8 million) in an initial offering associated with its listing on the AIM market of the London Stock Exchange, VentureWire reports (subscription required). The company is developing “Biopumps,” which are tiny protein “factories” made from a patients’ own tissue that are designed to provide lasting drug treatment for chronic conditions such as anemia or hepatitis.

Featured companies: Bind Biosciences, Clarus Therapeutics, HealOr, HistroRx, Plasticell, SpinalMotion, Xenome, Yaupon Therapeutics

UPDATED: Expanded items on SpinalMotion and Plasticell. Previous items on Evalve and Excaliard have been expanded into standalone posts here and here.

Spinal-disc maker SpinalMotion arranges $14M loan facility — SpinalMotion, a Mountain View, Calif., developer of artificial spinal discs, arranged a $14 million “loan facility” — sort of a line of credit — with GE Healthcare Financial Services. The company last raised $20 million in a third round in September 2006, and to date has raised a total of $44.2 million in venture funding, according to VentureWire (subscription required).

SpinalMotion’s artificial cervical and and lumbar discs are designed to provide alternatives to spinal-fusion surgery or an approved artificial disc (J&J’s Charite) for degenerative-disc conditions. Both are being tested in large clinical trials, and the company said in June that both trials are now fully enrolled.

I wasn’t able to reach anyone at the company — the release itself was issued by GE Healthcare — and so haven’t had a chance to ask why SpinalMotion decided to take on debt rather than pursuing another venture-financing round. The obvious answer would be that management believes the company can get better terms from either VCs, IPO investors or potential acquirers following the release of those clinical-trial results, and is willing to take on debt to tide the company over until the data is in.

The obvious risk, meanwhile, is that if either or both trials go sour, the company will be in much more of a hole if it plans to raise new funds. It’s a calculated gamble, one whose outcome will be interesting to observe.

Plasticell takes in £690K for stem-cell work — Plasticell, a U.K. biotech hoping to develop new drugs that mimic the regenerative effects of stem cells, has pulled in £690,000 ($1.4 million) in the company’s first institutional funding round.

The Capital Fund, a London-based VC outfit, provided £250,000 of that funding, while unidentified existing invested accounted for another £440,000. Plasticell also received a £1.1 million grant from the U.K. government in January to develop robotic systems for culturing stem cells.

Plasticell hasn’t yet made much of a splash, although its scientific advisors include some heavy hitters in the U.K. stem-cell research community, including Sir Martin Evans, who shared the Nobel Prize last month. The company is pursuing two complementary objectives: Culturing stem cells in order to identify the various biochemical signals that cause them to “differentiate” into various types of body tissue, and searching for drugs that might mimic or alter those signals in both stem cells and normal cells.

Such work could have a variety of applications, such as cancer treatments or “regenerative medicine” that restores tissues damaged by disease or injury. In a way, the company’s efforts parallel work by other research teams that recently reported a way of “reprogramming” normal cells to convert them into stem cells (see our coverage).

OTHER HEADLINES OF NOTE:

• Exiqon to buy cancer-diagnostics startup Oncotech for $45M (GenomeWeb, reg req’d)
• Australia’s Xenome raises $10M for new peptide drugs (release)
• Nanoparticle-drug maker Bind Biosciences receives $16M (release)
• Yaupon takes in $16M for cancer, CNS drugs (release)
• Hormone-drug maker Clarus draws $8M (release)
• Israel’s HealOr receives $8M for skin-care drugs (release)
• HistoRx names Rana Gupta as CEO (release)

(UPDATED: See below.)

Two research groups have just reported ways to “reprogram” ordinary cells in ways that cause them to revert into a primordial state resembling that of embryonic stem cells. Those embryonic cells have long been controversial because they’re derived from five-day-old embryos in a destructive process, but also hold the promise of unlocking the body’s ability to regenerate damaged or diseased organs because they’re capable of transforming themselves into any type of tissue.

The new techniques — more specifically, improvements on this early work, which essentially functions as a proof of principle in humans — could potentially break the political logjam over stem-cell research. For more than six years, anti-abortion politics have held back the field, thanks to a presidential order that blocks funding for any work that doesn’t involve a handful of stem-cell lines that existed in 2001. Although states like California, which has just begun spending $3 billion that voters authorized for stem-cell work three years ago, have picked up the slack, the federal restrictions have clearly held scientists back and forced some to relocate overseas. (For our previous coverage of stem-cell issues, see the end of this post or click here.)

If it’s possible to produce embryonic-like stem cells (technically, “pluripotent” cells) without destroying embryos, however, moral objections to the research should fall away. “My personal barometer of optimism has gone up a bit,” says James Thomson, the University of Wisconsin researcher who first isolated human embryonic stem cells almost a decade ago and who led one of the teams reporting results today. “This will remove the restrictions [on stem-cell work]… and the research will accelerate.” Thomson believes that the federal limitations may have cost the field three to four years of lost time.

In its current state, however, the new technique isn’t yet a panacea. The two teams — Thomson’s in Wisconsin, which published its findings in the journal Science, and a separate group at Kyoto University in Japan, which published in Cell — both achieved their feat by transplanting four genes known to be active in embryonic stem cells into ordinary “somatic” cells, the non-reproductive cells that compose almost almost all of the body’s organs. (Thomson’s team used fetal skin and a newborn’s foreskin, whereas the Japanese group used skin and connective-tissue cells from adults.) The Japanese team, led by Shinya Yamanaka, a stem-cell scientist who recently accepted an appointment at the UCSF-affiliated Gladstone Institute (see our coverage here), laid the groundwork for this approach when they successfully reprogrammed mouse skin cells into stem cells back in June (our coverage here).

That technique, however, involves the use of retroviruses that integrate new genes into the cells’ genomes — a risky process that can inadvertantly make the cells cancerous. The two teams also use different sets of genes, one of which — the c-MYC gene used by Yamanaka’s group — is also linked to cancer.

Scientists still have to figure out what these genes are doing and whether there are other simpler and less dangerous ways of achieving the same effect. It’s also still not clear whether the reprogrammed cells are identical to the embryonic cells, although Yamanaka’s group has reportedly already coaxed the reprogrammed cells to transform into heart and nerve cells.

Still, the reports represent a giant step forward for stem-cell research, although Thomson and other experts caution that it’s far too soon to abandon work on the original embryonic stem cells. After all, it was a decade of research into those cells that made the reprogramming technique possible in the first place. The reprogrammed cells may already be useful in searching for new drugs and in unraveling the genetic components of disease, since for the first time it should now be possible to produce pluripotent cells with a known genotype — at least without using the also-controversial cloning process known as somatic-cell nuclear transfer (SCNT), which is sometimes called “research cloning.”

The reprogramming experiments come just a week after Oregon scientists reported obtaining embryonic stem cells from cloned rhesus-macaque embryos. Primates had never been successfully cloned before. The primate results will serve as a useful backstop for the reprogramming work, since it should be possible to compare the resulting pluripotent cells to determine how different they are. If both methods produce equally potent cells, “the whole field is going to completely change,” Jose Cibelli, a primate stem-cell researcher at Michigan State University, told Science. “People working on ethics will have to find something new to worry about.”

The mainstream press is all over the story, of course. For more, see the NYT, the WaPo, and the LA Times for starters. The Science piece linked above has more technical detail. Also, the Center for Genetics and Society has a timely, albeit opinionated, release about the work.

UPDATED: Expanded considerably from original version.

Further reading:

• Chinks in the stem-cell monopoly
• Is Big Pharma tiptoeing into stem cells?
• Brazil’s great stem-cell experiment
• Massachusetts jumps on the stem-cell bandwagon
• Legal cloud lifts from California stem-cell effort
• Guilt-free stem cells (first item)
• Novocell: With diabetes study pending, investors pony up another $25M
• Stem cell “brain drain” or “brain gain”?
• California’s stem-cell management disarray
• Stem-cell institute gets a new president, but its management challenges haven’t gone away

California’s $3 billion stem-cell agency, which has been without a permanent leader since the end of April, finally filled that void yesterday by naming Alan Trounson as its second president.

Hopes are obviously high that the widely respected Australian scientist, pictured at left, can bring some stability to the institute, formally known as the California Institute for Regenerative Medicine. A string of CIRM staffers, including former president Zach Hall and chief scientist Arlene Chiu, have departed or announced their resignations in the past several months, despite the fact that the agency is finally starting to get rolling with major grant programs for stem-cell science and research facilities. Although CIRM insists that these departures are individual decisions unrelated to any larger issue, it sure looks like the agency’s heavy responsibilities, lean staffing and Byzantine management structure are simply burning out its employees. (CIRM insiders have since confirmed that assessment in confidence. See my previous coverage here.)

Trounson certainly has a glittering resume and experience in both academia and business, having founded several fertility clinics and at least one biotech company, Singapore’s ES Cell International. (He’s currently director of the stem-cell and immunology laboratories at Monash University in Victoria, Australia.) With luck, his background will stand him in good stead in dealing with Robert Klein II, the strong-willed real-estate magnate who heads CIRM’s powerful oversight board, and who clashed with Hall several times during his tenure as president — even squabbling over who had the right to assign office space, according to a piece by David Jensen over at Wired News. Trounson, who will earn $475,000 a year, has already released a statement touting his intention to forge a “partnership” with Klein and the oversight board.

That said, the challenges CIRM still faces are significant, and it doesn’t help that Trounson apparently won’t even start his new job until the end of the year — and even then will likely work part-time while he winds down his involvement with his Monash laboratory. With all due respect to acting president Richard Murphy, it’s still likely to be a while before CIRM gets the steady hand on the tiller it appears to need so badly.

For more information, see the comprehensive coverage at Dave Jensen’s California Stem Cell Report, which also includes links to a number of mainstream-media stories.

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.

(CORRECTED: See below.)

These should be the best of times for California’s $3 billion stem-cell program. Lawsuits that barred the institute from spending its vast sums have been dismissed, serious money has started to flow to scientists, and a $227 million capital-spending project that will build new laboratories across the state is gearing up.

For all its successes, however, the stem-cell organization — formally known as the California Institute for Regenerative Medicine — can’t seem to keep its top officials on board. First, there was the abrupt resignation of the institute’s first president, Zach Hall, who departed CIRM at the end of April, months earlier than his original plan, amid internal tensions over that capital-spending project. By mid-summer, the stem-cell body had made little progress finding a replacement and instead tapped Richard Murphy, the recently retired head of the Salk Institute and a former member of the stem-cell institute’s powerful oversight committee, to take the reins on a temporary basis (PDF link).

Then came the news last week that the institute’s top scientific official, Arlene Chiu, is also leaving unexpectedly. Chiu, who joined CIRM with great fanfare in mid-2005, ended up shouldering additional responsibility when Hall left. Last week, she said simply that she would be returning to her home in Los Angeles to “pursue new professional directions” — a statement that carries more than a whiff of burnout. (At least she’s not leaving to spend more time with her family.) Chiu doesn’t leave until October, and will remain a consultant to the institute after that.

CIRM spokesman Dale Carlson says these and other recent staff departures noted by David Jensen over at the California Stem Cell Report were all for individual reasons, that they’re unrelated to one another and that “[t]he timing is coincidental and nothing more should be read into them.” Maybe that’s true, and absent calling them all up, there’s really no way to know for sure, although CIRM certainly has an incentive to put out the message that all is well.

That said, it seems safe to say that the stem-cell agency is probably one of the most grueling places to work in all of biomedicine. Structurally, CIRM is a Rube Goldberg-inspired contraption in which a panel of 26 appointed academic luminaries, business types and patient advocates oversees a professional staff of no more than 50. The powerful oversight committee chairman, Robert Klein II, essentially runs the show, which undoubtedly complicates the job of finding a prominent biologist — not usually the shyest and most self-effacing people around — willing to give up their laboratory in order to butt heads with Klein over the institute’s management and direction.

What’s more, CIRM itself was deliberately designed to function on a shoestring. That hard cap of 50 staffers was initially intended to reassure California voters that the agency wouldn’t waste taxpayer money on a hiring binge, and in that sense, it’s clearly worked. On the other hand, add the fact that the agency hasn’t even come close to filling all 50 positions to the string of departures, and it begins to look a lot like the institute is paying the price by burning through its human resources at an accelerated rate. (See also this related comment from Christopher Thomas Scott of Stanford’s Stem Cells in Society program over on Dave Jensen’s blog.)

This is certainly one way to run an organization, and it’s probably helped the stem-cell organization avoid criticism of how it’s managing taxpayer funds. (It also would have been unseemly to staff up too much when the agency was living primarily off of charitable donations, as it was before the courts dismissed the lawsuits.) On the other hand, there are other risks to running so lean. Last spring, CIRM approved a $2.6 million grant to a Los Angeles outfit called the CHA Regenerative Medicine Institute, a nonprofit subsidiary of a for-profit South Korean company, and one whose founding president appeared to be embroiled in plagiarism allegations. The resulting mini-scandal appears to have since fizzled out, particularly once the plagiarism allegations were retracted, but it’s an early cautionary tale for CIRM, which surely doesn’t want to face future scandals that could have been prevented with a bit of additional staff oversight.

Read More:
* On CIRM and stem cells, see this item on whether the U.S. “brain drain” is reversing or not, and this item on whether Big Pharma is tiptoeing into embryonic stem-cell investments (with a followup here).
* For other biotech-related pieces, check out this item on Koronis and its unique anti-HIV strategy, these looks at recent baby steps toward “personalized medicine,” a take on the ridiculously large IPO envisioned by Talecris Biotherapeutics, and two items on startups that aim to pioneer the dawning age of “personal genetics.”
* On more general medical subjects, see my admittedly opinionated takes on healthcare reform, evidence-based medicine, the nascent push for electronic health records and Andy Grove’s quixotic healthcare-reform crusade.

CORRECTION: This item originally stated that CIRM “handed out” a $2.6 million grant to the CHA Regenerative Medicine Institute. That grant is still in administrative review, so I’ve corrected the wording.