VentureBeat

(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.

House-Senate confrontation set over biogenerics – Late last month, a key group of senators reached agreement on legislative provisions that would authorize copycat versions of biotech drugs, which are typically complex proteins manufactured by genetically engineered cells (see details here and here). These provisions would finally put biotech drugs — which don’t face cut-rate competition once their key patents expire — on a par with traditional pharmaceuticals, and have been a long time in coming. They’re not perfect, but they’re about as good a compromise as we’re likely to see any time soon..

The catch is that biogenerics supporters want to attach this langauge to a reauthorization of the FDA’s user-fees act, the awkwardly named PDUFA, which has to pass by September to keep the FDA operating smoothly. The Senate’s version passed in May, whereas the House just approved its version yesterday — but didn’t include a biogenerics pathway. The senators want to add it to their version of the bill, which has to be reconciled with the House version in a conference committee. But key House members, including Energy and Commerce Chairman John Dingell, a Michigan Democrat, appear likely to object, since they haven’t had a chance to weigh in on the provision.

The upshot: Turf wars between the houses of Congress may cost us our best shot at biogenerics legislation in some time. Tying the measure to PDUFA would be one of the best ways to sidestep legislative roadblocks that opponents and their biotech/pharma backers are likely to throw up — but the window is closing rapidly. The WSJ has more here.

Digital medical records are good for your health — or are they? One of the strongest arguements for digitizing medical records is that they’ll help prevent medical errors and improve medical care. A recent review of other studies in the journal Health Services Research gave digitized records a strong vote of confidence when it found that hospitals that switched to electronic drug-ordering systems saw a 66 percent drop in medication errors. (Such mistakes apparently kill 500,000 U.S. hospital patients every year.) Similarly, a report from the Pharmaceutical Care Management Association predicts that electronic prescribing could save Medicare as much as $29 billion over the next two years while preventing two million medication errors.

As with any technology, however, electronic records are no panacea. Another study of walk-in doctor visits found no improvement in treatment quality among practices that used electronic medical records versus those that still relied on paper. The study’s conclusion: Implementing digitized records is just the first step — doctors and medical groups still need to do a lot of work to get the most out of them.

On a related note, a Senate committee recently passed legislation that would offer subsidies to convince doctors to install digital health-record systems.

RNAi is hot, hot, HOT — Once again, it’s boom times for a new drug technology, and this time the spotlight is on RNA interference — a fascinating but largely unproven method for turning off individual genes by using a short stretch of double-stranded RNA to activate ancient gene-silencing machinery inside cells.

The party really got started last year, when Merck paid $1.1 billion to acquire Sirna Therapeutics, a fledgling RNAi company that had barely managed to move a single drug into an early-stage trial. Now things have heated up even further. Last Friday, AstraZeneca struck a $400 million deal with Silence Therapeutics. Then on Tuesday, Roche stepped up to forge a $1 billion deal with Alnylam, an early pioneer in the area.

What’s worth remembering is that no matter how promising a technology like RNAi seems, putting it to practical use almost always takes far longer and costs more than people expect in the early stages. Just take a look at the roll call of other drug technologies that have undergone similar cycles of hype and disappointment — gene therapy, antisense, therapeutic vaccines. All remain promising — but none of them worked the first time out of the gate. Even monoclonal antibodies took close to two decades before anyone could make a reasonable drug with them. Maybe RNAi will be different — but I wouldn’t bet my wallet on it.

Have cancer vaccines gotten a raw deal? A paper in Clinical Cancer Research (described here) argues that regulators and companies may be too quick to dismiss clinical-trial results if they focus on tumor shrinkage rather than long-term outcomes like survival. That may well be true, as tumor shrinkage is a notoriously bad measure of whether drugs work or not, although it’s also worth noting that a reconsideration still wouldn’t have helped Dendreon’s Provenge vaccine, since its survival data was so statistically equivocal. (Separately, the SEC has now opened an informal inquiry into Dendreon’s public disclosures about Provenge this year.)

DNA transplant “transforms” microbial species – J. Craig Venter’s group at his eponymous institute takes the honors, described here in the WaPo. Next up: Transferring an entirely synthetic genome into a DNA-less microbe to create “artificial life,” something Venter says may happen within months. Similarly, here’s the NYT on the new science of “synthetic biology.” Brace yourselves.

Does “pay for performance” improve medical care? A few weeks ago, the WSJ said no, citing a Medicare experiment. Today, the NYT says yes, citing… a Medicare experiment! I’ll have more to say once my head stops hurting.

Pre-implantation genetic diagnosis may harm fertility – Or so say the authors of a Dutch study described by the WSJ here. Several researchers seem to think the results need to be verified elsewhere before abandoning the procedure, in which a single cell is extracted from an IVF embryo for genetic analysis.

Stem cells tailor their own environments — At least according to Canadian researchers, who explored the specifics of how embryonic stem cells communicate with the cells around them. The Globe and Mail has the story.

Simple enzyme short-circuits bacterial drug resistance – Basically, it prevents bacteria from swapping the genes that confer resistance to antibiotics.

High-throughput output –

• Vermont sets up a Web site comparing pharmacy drug prices (Kaiser)
• Researchers discover molecule that may promote food allergies (BBC)
• Breast-cancer risk genes may not influence survival (WSJ)
• Congressional Democrats want to know who muzzled the former surgeon general (Bloomberg)
• Scientists identify gene linked to autism (BBC)
• Robotics help stroke patients regain function (NYT)

(NOTE: This item originally incorrectly stated that J. Craig Venter’s company, Synthetic Genomics, was involved in the research that transplanted one microbe’s genome into another. In fact, it was Venter’s own research institute, the J. Craig Venter Institute.)

What secrets lurk in the heart of DNA? – Didn’t the Human Genome Project answer that question? Think again. Last week, scientists involved in a project called Encode reported on a detailed analysis of one percent of the genome, and the findings have undercut a host of conventional wisdom about how genes and DNA work. Most notably, the Encode study suggests that much of the genome — the long stretches of seemingly inactive genetic “letters” surrounding functional genes, sometimes unfairly called “junk DNA” — is actually a beehive of complex and little-understood activity.

The WaPo’s Rick Weiss, one of the few mainstream reporters to tackle the consequences of the Encode report (which was published in 29 separate papers), put it this way:

The new work also overturns the conventional notion that genes are discrete packets of information arranged like beads on a thread of DNA. Instead, many genes overlap one another and share stretches of molecular code. As with phone lines that carry many voices at once, that arrangement has prompted the evolution of complex switching, splicing and silencing mechanisms — mostly located between genes — to sort out the interwoven messages.

The new picture of the inner workings of DNA probably will require some rethinking in the search for genetic patterns that dispose people to diseases such as diabetes, cancer and heart disease, the scientists said, but ultimately the findings are likely to speed the development of ways to prevent and treat a variety of illnesses.

One implication is that many, and perhaps most, genetic diseases come from errors in the DNA between genes rather than within the genes, which have been the focus of molecular medicine.

Complicating the picture, it turns out that genes and the DNA sequences that regulate their activity are often far apart along the six-foot-long strands of DNA intricately packaged inside each cell. How they communicate is still largely a mystery.

The implications are preliminary but profound, since so much of today’s cutting-edge medical enterprise is based on the premise that understanding genes and their variation is the key to understanding disease. Increasingly, that appears to be only part of the story — possibly not even a particularly large part. All of which suggests that understanding the genome wasn’t the beginning of the end of the quest to understand the workings of life — just the end of the beginning, and maybe not even that.

Scanning the genome of a DNA pioneer – Much as he must have anticipated, the news last week that James Watson, the co-discoverer of DNA, had sequenced his own genome drew a flurry of largely unenlightening media attention (see here and here for just two examples). Yes, it’s interesting to know that Watson has some of the same reservations about knowing his genetic disease risks as many others — the scientist didn’t want to know the status of his apolipoprotein E gene, which can indicate the risk of Alzheimer’s disease — and yes, as the technology improves, more people are going to want their genome sequenced. As the Encode study referenced above suggests, however, sequencing the genome is probably just the start of actually understanding an individual’s genetic makeup. So two cheers for Jim Watson and the low-cost genome sequencers, but no one should be under the illusion that this event is the “milestone” many have made it out to be.

Genetic-association overload – Scientists employing the technique of “whole-genome association” recently announced that common genetic variations appear to underlie seven common diseases — bipolar disorder, coronary artery disease, Crohn’s disease, hypertension, rheumatoid arthritis, and Type 1 and Type 2 diabetes. (See the NYT piece here, although a subscription may be required). The finding was noteworthy because it suggested that several of the diseases may share common origins — and, of course, because knowing the effect of these genetic variations might provide clues to new treatments.

This study is the latest of several that have recently turned up much more solid evidence of links between DNA variants and disease (see my earlier coverage here, here and here), and it seems safe to say that we’re just at the beginning of an avalanche of such announcements. Which, of course, means, it’s right about time for boredom to set in — and fortunately Tom Goetz is on hand to deliver. Now it’s time to anticipate the backlash.

Synthetic Genomics hits it big – At least in terms of valuation. As Matt reported yesterday, the synthetic-biology startup founded by genomics pioneer Craig Venter raised an undisclosed sum of venture funding and is now valued at something close to $300 million — according, that is, to Venter himself. Synthetic Genomics aims to create artificial microbes that could assist in the production of new clean-burning fuels — for instance, by converting coal into natural gas.

In a separate but related effort, Venter’s own research institute has been trying to determine the minimum number of genes necessary for life by systematically knocking genes out of a simple microbe. Earlier this month, a patent application from Venter’s institute claimed ownership of the 381 genes that resulted from this effort. The idea here is that it should be possible to synthesize that short genome, insert it into a microbe from which the DNA has been removed, and “boot up” a largely synthetic organism. The synthetic genome would be designed so that additional genes could be easily inserted, theoretically making it an ideal platform for industrial use. The patent application, in fact, claims production of ethanol or hydrogen fuel as an initial use.

What’s perhaps most striking about all this are the parallels to Venter’s early attempts to lay claim to large chunks of the human genome. (Those never really worked out, but not for his lack of trying.) As science writer Carl Zimmer points out in this post, Venter’s approach to synthetic biology seems to embody the same sort of land-grab mentality, by attempting to lock up the basic genes necessary for creating synthetic organisms. That stands in sharp contrast to the “open-source biology” movement, in which researchers are building publicly available “genetic toolkits” for designing and building new synthetic organisms.

In any case, it’s far from clear that Venter’s attempted land-grab will work any better this time around, but this could easily turn into another epic battle between “open” and “closed” technology philosophies. So make some popcorn and grab a seat.

Number of human genes finally determined? – One of the early conundrums created by the first human-genome map was the surprisingly small number of human genes turned up by the Human Genome Project. Although some initial estimates had ranged as high as 100,000 to 150,000, the first draft of the genome put the number at 30,000 to 40,000, and that number has been falling steadily ever since. (See here for details.)

Now, an MIT computational biologist named Michele Clamp has a new bottom-line answer: 20,488 genes. As Science’s Elizabeth Pennisi writes in this news story (subscription required):

Clamp compared all the human genes in a database called Ensembl with those cataloged for dog and mouse. In all, 19,209 were the real, protein-coding McCoy, 3009 had been erroneously put on the gene list, and 1177 remained ambiguous, she reported.

She rated the “geneness” of these leftovers by comparing them to random stretches of DNA. Almost all made the grade with respect to a genelike proportion of the bases G and C, but not for features such as the distribution of short insertions and deletions in their sequences. Overall, 1167 were “bogus” and lacked any independent evidence that they coded for proteins, she reported. She did a similar analysis with the other gene databases, then summed the unique genes of all of them to get her final count.

Given the tremendous genome complexity that’s now coming into view, the low number of human genes isn’t quite the shock it once was — but it’s still nice to have an answer.