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Emerging Medical Ventures

Elsevier Business Intelligence | www.ElsevierBI.com | Vol. 16 No. 3 | MARCH 2011

Investing À La Carte: Making Separate Bets On Discovery And Development To Boost Near Term Returns

1 Valuation Watch Device IPO Class Of 2007: Making News, Some Returns

3 Venture ’round Phase4 Ventures Spins Out Of Nomura To Focus On Europe

By ChRISTOpheR MORRISON

As executives and investors scramble to find business models that more closely link investment and return, a handful of technology firms have alit on variations of a capital-efficient strategy: let someone else do the development dirty work.

Vein Device Companies Dig Deeper By MARy STuART

Vein diseases such as deep vein thrombosis, pulmonary embolism and chronic venous insufficiency have historically been the province of drug therapies, but they shouldn’t be, according to the clinical societies and medical device companies that are trying to create a groundswell in interventional vein treatments.

profileS

Antidepressants: Emerging From Their Funk?

24 Forest’s acquisition of Clinical Data to get its just-approved antidepressant signals continuing strong demand. But better, and much needed, treatments remain elusive. 26 Euthymics Bioscience engineers triple reuptake inhibitors for depression. 28 naurex preps a peptide as an antidepressant. 30 PharmaneuroBoost aims to boost the benefits of antidepressants.

Start-Ups Across Health Care 32 Edge Therapeutics provides local drug delivery for acute brain injury. 34 Ensemble Therapeutics makes mid-sized macrocyclic molecules, en masse. 36 Magnetecs offers real-time robotic catheterization for cardiac arrhythmias. 37 Mederi Therapeutics resurrects RF technology for treating digestive disorders. 40 Surefire Medical’s novel embolotherapy catheter treats liver cancer. 42 EMErgingS in BriEF: 2C Tech Corp., Atherolysis Medical, Axena Technologies, Prevention Pharmaceuticals

Gilead Takes Calistoga To Boost Cancer Effort

7 Slice of the induStry US Markets For Peripheral Stents Get AAA Rating

8 capital MatterS Avalon’s Sweat Equity

44 Science MatterS A New Genetic Connection In Liver Cancer – As Powerful As Her2/neu In Breast?

46 on the MoVe Who’s Going Where In Biopharma And Medtech Start-Ups

53 executiVe SuMMarieS

dealS

Recent Financings Of Private Companies And Tech Transfers Between Academia And Industry

VENTURE ’ROUND Device IPO Class Of 2007 Making News, Some Returns

be considered financings events beyond the initial amount raised at the IPO. Follow-up funds have been hard to come by for the class of 2007. Only two of those 11 companies – Insulet and EnteroMedics – have raised follow-on capital from public investors. As for liquidity, venture capitalists are in a better position. Admittedly, the price paid for a publicly traded company or market capitalization are imprecise barometers of what sort of returns on investments venture capitalists can expect, but venture investors in nine of the 11 companies saw the value of the companies raise higher than the number of dollars invested. Only two of the 11 companies didn’t fare well, as they invested far more than they ultimately commanded in price. Surgical tool company Power Medical Interventions raised $107 million before going public and being acquired by Covidien Ltd. for $64 million. Xtent, meanwhile, brought in $75 million from VCs before going public and being dissolved after its stent technology failed to pan out. The jury is still out on EnteroMedics, which raised $63 million from

Exhibit 1

Device Class of 2007: Life After The IPO IPOs Priced

Still Public

Acquired

IPOs Filed and Withdrawn

Still Private

Acquired

SOURcE: Elsevier’s Strategic Transactions

VCs before going public. The company is currently valued at $16 million and has raised $58 million in several follow-on financings from public investors. A dozen companies had filed to go public in 2007 but withdrew their offerings. The window simply slammed shut on most of them. Given the mixed performance of those companies that did get out, the failure to go public might have been a good thing, either for the compa-

Exhibit 2

Gains/Losses Device IPO Class Of 2007* VC Raised Val at time of deal Current Value

Inc . Int Pow e rv e r en Me t io d ns ica V ir Inc l tua . lR ad io lo Co gic rp. Xte nt Inc . B io Fo rm Me dic To Inca l mo . Th e ra py In c En . ter oM ed ics Inc . Tra ns1 Inc . Ins u le tC o rp . Ma s im oC orp . Ac cu ra y In c .

2000 1800 1600 1400 1200 1000 800 600 400 200 0

Se no Rx

Accuray Inc.’s bid to acquire TomoTherapy Inc. would bring together two companies with complementary radiation-based treatments for cancer. The deal – valued at $277 million – would also combine two of the 11 medical device companies that succeeded in going public in 2007, the last year the sector had a respectable chance to go public. The merits of the Accuray-TomoTherapy deal will be weighed by shareholders on both sides. But a review of those 11 companies shows their performance is decidedly mixed. Only five of the 11 will still be publicly held when and if the deal for TomoTherapy closes. Two of those five – cardiovascular company Masimo Corp. and insulin pump maker Insulet Corp. – are faring well, sporting shares with prices in the double-digits. Shares in Accuray, gastrointestinal-oriented EnteroMedics Inc. and spine company TranS1 Inc. all are trading in single numbers. It’s no surprise then that only those two of the five – Masimo and Insulet – are valued higher today than they were on the day of their IPOs, according to Elsevier’s Strategic Transactions. This is an unfortunate trend. Of the six IPO companies that were acquired by strategic partner, and – in the case of Virtual Radiologic Corp. – a financial buyer, only Virtual Radiologic and SenoRx Inc., maker of breast cancer diagnostics (and now a division of CR Bard Inc.), commanded prices that were higher than their valuations immediately after their IPOs. Furthermore, in a development that’s potentially troubling for venture capitalists and hopeful private companies, the tired old mantra, “An IPO isn’t a liquidity event, it’s a financing event” is only half true. Yes, medical device venture capitalists have long given up the idea that they might distribute or sell off their shares in a company soon after the IPO (or standard six-month lock up.) But what’s unclear is whether IPOs can

($) mm

VALUATION WATCH

* Vc investments for Masimo and Accuray were not available. SOURcES: Elsevier’s Strategic Transcations; SEc Filings; company records; Dow Jones VentureWire Lifescience ©

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARch 2011

nies or for the potential public investors. Five of those companies went on to raise $178 million in additional venture capital rounds following the pulling of the IPO. Five other companies would be acquired. Only one – eyeonics – produced any returns for its investors (although the terms of the deal with Bausch & Lomb Inc. were never disclosed) with the other four selling for six-figure price tags as buyers sought bargain prices for disappointing assets. [A#2011900050]

– Tom Salemi

Exhibit 3

Device Post IPO/Withdrawal Fund Raising VC Raised after Withdrawl

175.48 Broncus ($38 million) TransMedics (32.48 million) Concentric ($15 million), Amedica ($30 million), CardioMEMS ($60 million*)

Public Dollars Raised after IPO

228 EnteroMedics (58.74), Insulet Corp. ($170)

100

150

200

250

$ (mm)

*capital came from St. Jude Medical Inc. as part of a investment that gave the larger company the right to eventually purchase cardioMEMS. SOURcE: Elsevier’s Strategic Transactions

Special Report from

2010 RepoRt on

Drug GMp Recalls and Warning Letters ” features an publishers of “The Gold Sheet This special report from the announced GMP warning letters that FDA analysis of drug recalls and drug ical context. in 2009, and puts them in histor and can help guide your corrective and warning letter trends that Use it to gain insight into recall arking comparisons and more. compliance gap analyses, benchm preventive action programs, four recalls in 2009. With the past g of a record deluge of drug . The report explores the meanin could be in a period of decline for recalls, it suggests drug quality that years now among the top five r and several manufacturers repacke drug a at owns breakd ns, including warning Last year’s record reflects GMP sanctio of variety a to led inspections and recalls, were identified during FDA looking to let FDA mandate an import alert. Congress is its letters, consent decrees and hile, FDA adds suspensions to could grow even heavier. Meanw change as FDA ramps which means the rain of recalls could that though rare, tional recalls remain severe. more be to enforcement arsenal. Interna tend ts s that recalls of outsourced produc up enforcement abroad. It appear t manufacturers. g letters are going to contrac And FDA says most of its warnin

in the first year of the explosion of enforcement activity The report also charts the sudden ents were swift and harsh. g letter rate doubled and punishm after a few years of Obama administration. The warnin and force, field ing. The agency expanded its But that was just the beginn g about Form 483 findings. FDA will bring it on. No more ditherin training, its new investigators and slammed KV with a ion, inspect after days 10 import alert just hit Canada’s Apotex with an to file field alerts. Ranbaxy ANDA after inspectors found it failed consent decree just four weeks EU and WHO saw nothing wrong. GMP concerns, even though reviews halted were by FDA’s of the agency and others. Last rest the with will coordinate more FDA’s criminal investigators but with a new focus on foreign on the same issues as before, in China. year’s 34 warning letters harped data integrity in India and GMPs on g focusin are offices API makers. FDA’s new foreign its regulatory discretion. Expect money but further constrained Congress showered FDA with as tree. decorate 2012 PDUFA Christm Dingell’s Globalization Act to

Inside the latest QA/QC nightmare: A special report from

Drug recalls, GMP warning letters, even import alerts: It’s a QA/QC nightmare, and professionals like you are desperate for guidance in navigating the new compliance minefields.

Get it right now in this Special Report:

2010 Report on Drug GMP Recalls and Warning Letters.

“The Gold Sheet,” the world’s most thorough, comprehensive guidance on international QA/QC compliance, has prepared this new roadmap to the future.

Use it to guide your corrective and preventive action programs, compliance gap analyses, benchmarking comparisons and more.

This analysis was recently featured on CNN Money and Fierce Pharma. Don’t be the only QA/QC professional who misses it! Get it HERE:

http:/ //pages.elsevierbi.net/GS910E 2

MARch 2011 | START-UP

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DEALMAKING

VENTURE ’ROUND

prevent gluten from being transported across the gut. Shire previously held exclusive global rights (outside of the US and Japan) to larazotide (then called AT1001 or SPD550) through a deal signed with Alba in 2007. This older regional agreement was still more expensive than what Cephalon is paying now--Alba received from Shire $25mm up front with a potential for $80mm in pre-commercialization milestones tied to just the GI indications (it would have gotten an additional $40mm for each other therapeutic use), plus $220mm in sales milestones tiered doubleWhenandthe managedigit royalties. In 2009,ment Shire terminated the alliteam at Phase4 ance and returned the rights when Phase II data Ventures, London-based venture capital showed thethe primary outcome was not statistically arm ofcant. Japanese on signifi Alba bank plansNomura, to select announced a more diseasespecific primary for the upcoming Phase February 8 thatendpoint it had acquired the business IIb trial. Larazotide would be a nice complement from its parent, it wasn’t just about a group of to another Phase II Cephalon immune disease venture capitaliststreatment escaping Lupuzor/ the restrictions of candidate--lupus Rigerimod (also the subjectlimited of an option-based having a single partner who’sagreement, also their signed with ImmuPharma in November 2008). employer. The move also highlighted two imCephalon also has ART621 for psoriasis and rheuportant featuresand of Cinquil the VC The matoid arthritis, forlandscape. adult eosinophilic asthma in its immunology first is continued investor pipeline. interest in Europe,

MAP gets $60mm up front and $97mm in development and regulatory milestones, including payments when Levadex’s NDA is accepted and upon the first commercial sale. MAP, which completed a $47.1mm FOPO a few months ago to finish Phase III trials of Levadex, plans to file the NDA within the next few months. MAP will own the NDA and cover the expenses of that regulatory filing (unless there are additional development or regulatory requirements and those costs surpass an undisclosed threshold, at which point Allergan would chip in and split the bill). In addion gastrointestinal diseases, infectious tion, MAP is in charge of manufacturing, supply, diseases-focused Nabriva Therapeutics and distribution and will book product revenue. Forschungs GMBH, spun out of Novartis MAP and Allergan plan to target neurologists and pain retainsTherapeutics ex-US rights and the AG,specialists; UK-basedMAP Chroma Ltd. right to promote the product to primary care and OncoMed Pharmaceuticals Inc. and physicians in the US. The partners, which will split Paratek Pharmaceuticals in theLevadex US. sales 50/50, have also agreed Inc. to develop for additional migraine in Portfolio indications companiesincluding that apparently adolescents aged 12-18 and a headache disorder. didn’t make the cut include Zosano Pharma They will share development costs and jointly Inc., a Johnson & Johnson spin-outLevadex focusedis manage clinical studies and marketing. an formulation delivery, of dihydroergotamine (DHE) onoral transdermal which remains that’s via the self-administered Tempo withindelivered the old fund in Nomura. In July 2009, inhaler. MAP licensed the inhaled DHE from Nomurain Phase4 led a $30 million Series C Nektar 2004. Levadex could provide patients with a better effectrapid-delivery profile than theform IV form in the group,side whose of of DHE, which(PTH, often Eli causes nausea. The drug is teriparatide Lilly & Co.’ s Forteo) also expected to work faster and last longer than for severe osteoporosis haswill been triptan medications. Levadex be ready a niceto fit start Allergan’s Phase III for some time. Zosano recently with Botox, a product that’s traditionally been used to deal get rid wrinkles, inked a regional for of theunwanted product in Japan but was approved this past October for chronic and other Asian markets, but terms and migraine. Levadex also complements Amerge the and identitySTATdose of the partner remain Imitrex System, two confidential. other migraine treatments that Allergan co-promotes under San Diego-based Phenomix Corp. dis-a 2005 cross-licensing deal with GSK.

Phase4 Ventures Spins Out Of Nomura To Focus On Europe

VENTURE CApITAL

which will replace the US as Phase4’sINC. primary ALEXION PHARMACEUTICALS geographic focus from now on, despiteGMBH some ORPHATEC PHARMACEUTICALS high-profile retreats from the region by US-in Alexion Pharmaceuticals Inc. (specializes complement inhibitors andismonoclonal antibodbased VCs. The second the growing, and ies) has paid $3mm up front assets increasingly creative, role for forpatents large and secondrelated to German biotech Orphatec Pharmaary playersGMBH’s in the still-vulnerable VC sector: ceuticals candidate for molybdenum swooping inciency to buy(MoCD) a “significant of cofactor defi Type A.portion” The partners formed Ventures’ a researchinvestment collaboration to advance this Phase4 assets came Hartherapeutic. (Feb.) bourVest Partners a US, based fund-of-funds Orphatec also eligible for $42mm and privateis equity investment firm. in development, regulatory, and sales milestones. MoCD Now in this case, Nomura wasn’t Type A is granted, an autosomal recessive ultra-rare metain trouble; had always been bolic disease independence that causes severe neurological deterioration, andPhase4, usually leads to death in newborns the plan for at least in theory, ever within weeks or months. The disorder is caused since the group was set up in 2004 as a sepaby a lack of cyclic pyranopterin monophosphate rate, albeit affiliate,tomanagement company. (cPMP), a precursor molybdopterin and later to wasn’t MoC, which is critical It a forced sale, for butnormal more functionality about the of certain enzymes. Without MoC, neurotoxic Japanese bank’s strategic priorities coinciding sulfite builds up (because of the loss of sulfite with a drive by Phase4 management enzyme) to free oxidase, a molybdenum-dependent and can cause uncontrollable seizures and brain itself. But this isn’t the first time HarbourVest damage. Orphatec’s candidate (called precursor has picked up unwanted or abandoned VC Z)--a pterin intermediate isolated from E. coli--is assets: in early 2009, the group acquired a cPMP replacement therapy that gets rid of the Lehman Brothers’ business accumulated sulfite.VC The Germanfollowing companythe had been senrolling patients in a and Phase I/II in trial, but bank’ bankruptcy in 2008, later 2009 according to clinicaltrials.gov, the IND application it was a joint buyer, with Coller Capital, of 3i was withdrawn and the study was shut down. Group PLC’sa European VC portfolio. In addition, Phase I trial that was registered in Australia suspended. deal compleNor iswas thisalso the first time thatThe a VC team has mentsout Alexion’s on orphan diseases, spun of an focus investment bank owner:such For-as paroxysmal nocturnal hemoglobinuria, for which bion Capital Partners emergedjust outadded of Dutch it markets Soliris. The company some bank AMRO in 2006, also with the (in help other ABN potential orphan disease candidates the inflColler ammation area) to itsunderwrote pipeline through of Capital, which 75% ofthe a recent $111mm up-front purchase of Taligen new €200 million ($277 million) fund. Therapeutics. In this most recent spin-out, Phase4 ALLERGAN INC. Ventures will manage a newly-created MAP PHARMACEUTICALS INC. fund, Phase4 Ventures III LP, for HarMAP Pharmaceuticals Inc. (inhaled drug delivbourVest, and manage an existing, older ery devices) has licensed spec pharma Allergan fund for Nomura. Phase4 Ventures Inc. exclusive US co-promotion rights toIII itsconacute migraine Levadex (formerlyfrom MAP0004). Untains fivedrug biotech companies the origder certain circumstances, may expand inal portfolio, including Allergan AstraZeneca PLC the licensed territory to Canada. (Jan.) spin-out Albireo Pharmaceutical, focused

solved in 2010 after partner Forest Labo-

ANACOR PHARMACEUTICALS INC. ratories Inc. dumped its diabetes-focused MEDICIS PHARMACEUTICAL CORP.2010. DPP-4 inhibitor dutogliptin in April Anacor Pharmaceuticals Inc. and fellow derma(See “Phenomix Folds After Diabetes Drug tology company Medicis Pharmaceutical Corp. Fails To Attract Partner To Fill Forest’ s have joined forces to discover and develop boronShoes,” “The Pinkcompounds Sheet” DAILY, August based small-molecule for acne. (Feb.)

30, 2010.) led a regulatory, $55 milAnacor gets Nomura $7mm upPhase4 front; R&D, and milestones of up to $153mm; lionsales C round in Phenomix in 2007.and high single-digit low double-digit royalties. Anacor Phase4 to Ventures Managing Partner Dewill use its boron chemistry technology to discover nise Pollard-Knight, PhD, and her team, who drug candidates and perform early development remain based in London, have investedglobal peractivities. Medicis--which gets an exclusive license the resulting products--willin bethe in charge sonally,to alongside HarbourVest, new of additional development and commercialization fund, whose size isThe as newly yet unknown. How-(it of the therapeutics. public Anacor ever, “there’ s through significant follow-on2010 capital” raised $67mm its November IPO) has used its to compadiscover available forboron-based the existingplatform portfolio five compounds that are currently in the clinic: nies, she told START-UP. She says there’s also AN2690 for onychomycosis, AN2728 for psoriasis, a good possibility of new investments before GSK052 (formerly AN3365) that is partnered with GlaxoSmithKline infections causedsays by Gramthe end of 2011.forPollard-Knight that negative bacteria, AN2718 for onychomycosis the new fund will continue to lead investand skin fungus, and AN2898 for psoriasis and ment rounds and will maintain a reasonably atopic dermatitis. Medicis has penned several acne treatment deals over the of years including long-term investment horizon “about” five one Pharmaceuticals, and yearswith (withGlenmark some that may run longer). Prior markets Solodyn, Plexion, Ziana, Dynacin, and to this spin-out, Phase4 tended to invest $15Triaz independently for the condition. 30 million per company over the course of

APRICUS BIOSCIENCES INC. the investment term. This time, though, the ELIS PHARMACEUTICALS LTD.

amount invested “will depend on the size

Elis Pharmaceuticals Ltd. (United Arab of the new fundcompany and the opportunities Emerites-based that develops that and markets branded, generic, and over-the-counter come along,” explains Pollard-Knight. treatments) has licensed rights to Significantly, whereasexclusive under Nomura’ s market Apricus Biosciences Inc.’s (focused on

ownership Phase4 had invested primarily

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in the US, as much as two-thirds of Phase4’s capital will now be invested in Europe, according to Pollard-Knight. That’s because the funding drought in Europe – not helped by the retreat of several other US-based VC firms such as Atlas Venture – is pushing down valuations and forcing ultra-efficient business plans. As such, Europe “is a good environment for investing, as long as you have the teams to execute” those investments, says Pollard-Knight. And indeed, she claims that several US-based VC firms that Phase4 has co-invested with in the past have expressed interest in looking more closely at European-based investment opportunities for the same reason. According to Sander Slootweg, managing partner at Forbion Capital Partners (which now has €350 million under management in three funds, and raised a fresh, €140 million fund in September 2010), “deal flow has never been stronger” in Europe, a region he claims is beginning to be seen by some “as a more interesting place to invest than a couple of years ago.” And according to him, it’s not necessarily because of rock-bottom valuations brought on by Europe’s funding drought, either; Slootweg points to the quality of science, number of patent applications and journal articles, and to the opportunities arising from the closure of various Big Pharma R&D sites, including, most recently, Pfizer Inc.’s decision to close its facility in Kent, UK, which employs 2,400 people. (See “Pfizer’s UK Sandwich Has Wrong Kind of Filling,” The IN VIVO Blog, February 2, 2011) As such, Forbion is expanding its European footprint – it opened offices in Munich, Germany, in 2010, hiring Holger Reithinger from Global Life Science Ventures as a partner and to run the German office. One of Forbion’s most lucrative investments was in BioVex Inc., acquired in January 2011 by Amgen Inc. for $425 million in up-front cash. (See “Amgen Takes Out Cancer Vaccine Developer BioVex In Potential $1B Deal,” “The Pink Sheet” DAILY, January 24, 2011.) BioVex may have become a USbased group, but it originated in the UK, as a spin-out of University College London; as such, Forbion’s investment, in 2003, “was a European investment,” clarifies Slootweg. “We would probably not have invested if it had been a pure US play.”

There are plenty of other examples of companies starting up in Europe and moving westward; Germany-rooted Alantos Pharmaceuticals, also acquired by Amgen, in 2007, is another. From an investor perspective, this flow offers European funders an opportunity to get in early when it’s cheap and leverage the more generous growth and funding opportunities in the US later on. Slootweg claims that the investment bank heritage gives Forbion some subtle advantages over its VC competitors – advantages that Phase4 may also be able to leverage. He says the strong financial background of some of the team gives them an advantage when considering M&A options for investee companies, and when talking to other investment bankers, and that the in-team combination with members from industry “makes us more versatile.” Plus, “since most of our [limited partner] investors are financial people, we can easily speak their language,” he argues. It’s not exactly a huge competitive edge; many regular VCs have team members with investment banking experience. But it may yet become more relevant as secondary players such as HarbourVest and Coller Capital – which markets itself as providing liquidity to investors wishing to extract themselves early from their private equity investments – step up their activities in the VC sector. That’s likely to happen, according to Slootweg: limited partner funds have dried up, thus new funds are fewer, and (mostly) smaller. But merging funds is tricky, if not impossible, given their complex ownership structure. So more typical when a VC can’t raise its next fund “is to see secondary transactions where the interest in the fund is offered to the likes of HarbourVest or Coller Capital,” summarizes Slootweg. Not that secondary transactions are easy, either: even though “the idea was always that we would eventually raise outside money,” recalls Pollard-Knight, it took a long time for Phase4 to win its independence, mostly because of the complex structures and asset-holding vehicles involved in the transaction. An attempt to pull in outside funds in a captive structure – that is, with Nomura remaining in control of the management company – was aborted in late 2007 because of market conditions. [A#2011900065]

- melanie Senior

VENTURE ’ROUND

This month in

Gilead Takes Calistoga To Boost Cancer Effort BIOTECH DEALmAkINg

Gilead Sciences

Inc.’s acquisition of Calistoga Pharmaceuticals Inc. for $375 million up front February 22 is the richest deal yet for an emerging class of cancer drugs that many companies large and small are hotly pursuing. The generous price tag, which could jump to $600 million with performance milestones, shows Gilead, a relative newcomer to oncology, is serious about branching out beyond its traditional strength in HIV. Phosphoinositide-3 kinase (PI3K) inhibitors are compounds that block an intracellular signaling pathway critical for numerous cell functions, including proliferation and survival. With the power to cut off a key lifeline to unchecked cell reproduction, the new class could affect oncology profoundly. It could be significant in inflammatory diseases and other indications as well. Gilead’s gambit gives it a PI3K pipeline led by CAL-101, which is undergoing Phase II trials for hematological malignancies. The move further diversifies Gilead with the most advanced compound in a hotly contested field. The Foster City, CA, biotech has spent more than $4 billion since 2006 for oncology and cardiovascular assets. The deal also rewards the decision by Calistoga and its backers to pursue an especially chemically selective compound – a choice that could prove influential among others developing drugs, too. Calistoga was spun out of Icos Corp. (now part of Eli Lilly & Co.), and raised a $26.5 million Series A round in 2007 from lead investor Frazier Healthcare Ventures and Alta Partners, Three Arch Partners, and Amgen Ventures. It eventually raised $96 million over three rounds. With Calistoga now spoken for, there are few independent companies left standing with a promising unpartnered PI3K asset. Earlier deals aligned larger pharmas with innovative programs. Roche acquired UKbased PI3K specialist Piramed Ltd., already a Genentech Inc. partner, in spring 2008 for $160 million plus a subsequent $15 million payment. Sanofi-Aventis paid $140 million,

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plus earn-outs worth up to $1 billion, to license two PI3K candidates from Exelixis Inc. in 2009. And Infinity Pharmaceuticals Inc. committed a small $13.5 million upfront payment plus $25 million in research funding in July 2010 to license a portfolio of selective PI3K inhibitors from Intellikine Inc.; milestone payments could add $450 million to that deal. Meanwhile, Novartis AG and Roche’s Genentech have their own internally developed clinical candidates, while Pfizer Inc. and Bayer AG are known to have preclinical programs. Most observers agree that Calistoga’s program was the most advanced in the bunch. Lazard Capital Markets analyst Joel Sendek wrote in a research note the day of the deal that CAL-101 “has demonstrated the most promising early clinical data, comparing across trials and indications,” of any PI3K candidate, noting that it produced “impressive responses” in almost all patients with relapsed or refractory hematologic malignancies on whom it was tested. CAL-101 is distinguished mainly by its ability to affect a particular protein form, the delta isoform, within the PI3K family. While other programs are designed to target all four isoforms of PI3K, Calistoga has aimed to inhibit the delta isoform with minimal effect on other isoforms, thereby sparing patients potential side effects. For example, blocking the alpha isoform is thought to have beneficial effects on solid-tumor cancers, including breast and prostate cancers, but is also associated with metabolic side effects. According to Jamie Topper, MD, PhD, a partner with founding investor Frazier, the delta isoform’s expression is limited to the hematopoietic system. The drug is under study in B-cell malignancies, where it has shown efficacy as a standalone therapy for refractory indolent non-Hodgkin’s lymphoma, and in conjunction with Rituxan (rituximab) for chronic lymphocytic leukemia in elderly treatment-naive patients. University of California, San Francisco, cancer biology professor Martin McMahon, PhD, described CAL-101 data as “impressive” and attributed much of its success to ©

• Celgene Flexes Its Muscles • Rox Gets Blood Pumping In COPD • Sanofi/Genzyme: Emblematic Of What Big Pharma’s Buying Now • How To Avert Biopharma’s R&D Crisis • Growth Interrupted: Sustaining The Israeli Life Science Innovation Engine Around The Industry

• Benlysta’s Broad Label Prepares The Way For A New Blockbuster • At AAOS, Should Product Companies Fear Physician Employment? • Daiichi’s Handsome Buyout Price Validates Plexxikon’s Business Model • In Europe, A Device Incubator Takes On New Partners Deals In Depth

• An overview of biopharma, medical device, and in vitro diagnostics dealmaking in January 2011

march 2011

Vol. 29, No. 3

Elsevier Business Intelligence www.ElsevierBI.com Biotechnology

Celgene Flexes Its Muscles By Alex lAsh Pulmonology Devices

g Pharmaceutical Dealmakin

Sanofi/Genzyme: Emblematic Of What Big Pharma’s Buying Now By ellen FosTer licking

Rox Gets Blood Pumping In COPD By Tom sAlemi

Cameron Healthr: Is This The Cure Fo

The Israeli Life Science R&D Crisis • Sustaining How To Avert Biopharma’s

Innovation Engine

For a free copy call 1-800-332-2181 +1 (908) 547-2159 (outside US)

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2011 Windhover Information Inc., an Elsevier company. | START-UP | MARch 2011

DEALMAKING

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MONTH IN ThisTHIS month in

Believing In Biosimilars: Industry Takes The Long View FDA is open for business on biosimilars as it works out the specifics of the new review pathway. But for companies considering an entry into the space, two big questions still remain: Does a profitable market exist, and how conservative will FDA be on those initial approvals?

Teenage Wasteland: Paying for “Adolescent” Technologies The debate over comparative effectiveness research has focused heavily on standards of evidence to judge the relative value of different therapies— and standards for when and how conclusions should drive coverage policy. Less attention has been paid to a more fundamental question: when should the value determination be made. CMS’ top coverage official has an idea that would radically change that process.

Job One for Big Pharma Big Pharma is repositioning in DC post-health care reform, with the goal of heading off any further cuts in the name of deficit reduction. Wall Street’s sour view on the impact of health care reform may help the pharmaceutical industry make sure the new law pays off in the long run.

The Regulator and the Regulated: Part II FDA’s dean of drug development Robert Temple and Amgen’s head of research and development Roger Perlmutter sat down to discuss opportunities and challenges for biopharmaceutical developers in the current regulatory environment during The RPM Report’s FDA/CMS Summit for Biopharma Executives. In Part 2 of their conversation, they discuss REMS, advisory committees and comparative effectiveness.

for a complimentary copy of

The RPM Report:

Regulation | Policy | Market Access,

call (800) 332-2181 www.theRPMreport.com

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mpany | IN VIVO: ThE BusINEss & MEdIcINE REpORT | March 2011|

VENTURE ’ROUND its specificity. But, he said, pan-inhibitors that hit all four isoforms – alpha, beta, gamma and delta – remain viable candidates in some instances, with “not terribly clinically significant” side effects that could be rendered manageable through dose limiting. CAL-101 is the only isoform-selective anti-PI3K molecule in the clinic. Several preclinical candidates, such as those involved in the Infinity/Intellikine deal, are also selective and could represent the next generation of PI3K drugs. But several others are pressing ahead with pan-inhibiting PI3K molecules. Novartis, Roche, and publicly traded Oncothyreon Inc. all have pan-inhibitors in the clinic. Privately held Semafore Pharmaceuticals Inc. has pan-inhibitor SF-1126 in Phase II. Like UCSF’s McMahon, Semafore acting CEO Michael Becker says a well designed drug that affects all four isoforms can still be effective. He also cites a survey of selectively inhibiting PI3K drugs presented at last year’s American Society of Clinical Oncology conference that shows less variation among their toxicity profiles than one might expect. The survey suggests to Becker that clinical strategy rather than selectivity could be a big part of CAL-101’s strong performance. As a result, Semafore has realigned its efforts around B-cell malignancies, with its paninhibiting prodrug designed to concentrate within solid tumor areas and spare nearby healthy tissue. Becker, a consultant who took the helm at Semafore last year after its venture investors ceded control to its original angels, adds, “You would want to hit all the isoforms, if you can do that safely.” Sofinnova Ventures partner Michael Powell, PhD, a stakeholder in Intellikine and former backer of Piramed, says that once side effects of pan-inhibitors are known and understood, dosage and combination therapies can potentially be adjusted to ensure safe and efficacious treatment. Frazier’s Topper still believes avoiding side effects through selectivity is the best path. He also points out that selectivity itself is a somewhat fluid concept: the deltaselective CAL-101 also has a measurable effect on the gamma isoform, with less impact on alpha and beta. Few unpartnered assets remain in the PI3K field. Oncothyreon is actively shop-

ping its Phase II candidate, the pan-selective PX-866, and Intellikine has an alpha-selective compound that remains pre-clinical. More drugs are in the making, however, that combine a PI3K inhibitor with another mechanism that affects the same pathway. PI3K itself triggers two more protein kinases in sequence along the PI3K/ Akt/mTOR pathway, leading to a variety of cell processes including cell motility, apoptosis and protein synthesis as well as cell growth, proliferation and survival. Clinical work at UCSF and other cancer centers shows that simultaneous inhibition of PI3K and the mammalian target of rapamycin (mTOR) can avert a feedback loop in the pathway and block both upstream and downstream signaling. Two of Novartis’ three clinical compounds, one of the two in the Sanofi/Exelixis arrangement, one of Roche’s, and Semafore’s SF-1126 are all PI3K/mTOR blockers; Merck & Co. Inc. and AstraZeneca PLC are also investigating elsewhere in the pathway with internally developed preclinical candidates. With Calistoga off the table, unpartnered assets with good data are that much scarcer, and potential buyers may be willing to pay more to acquire them. Sofinnova’s Powell says nearly every Big Pharma with an interest in oncology has long expressed a desire to create or obtain a PI3K inhibitor. And while Intellikine has already shown a willingness to partner one PI3K portfolio, its alpha-selective one may not be available for a business-development deal. “You can’t keep partnering everything,” Powell says, hinting that the company is at this point best suited to an acquisition. Topper says that if Calistoga’s compound becomes a first-in-class approved drug, it could lead to even more extensive research, and eventually more dealmaking. He points to the 1997 approval of Rituxan as the critical moment for a class of oncology drugs that bind to CD20, and suggests that PI3K inhibitors could follow the same path. “There are five or ten CD20s now,” says Topper of the antibodies used to treat lymphomas and leukemias. “You could see the same thing happen here.” [A#2011900067]

- Paul BonanoS

SLICE OF THE INDUSTRY US Markets For Peripheral Stents Get AAA Rating After three decades of dramatic innovation in coronary artery disease, peripheral vascular disease has moved up in the evolutionary chain. With the mature coronary artery space now offering low single-digit growth rates, medical device companies of all sizes are looking to the product opportunities in peripheral arterial disease, a market estimated to grow by 10 to 12% per year from its current level of $3 to $3.5 billion. Two major acquisitions in the space have underscored the opportunities. In January 2010, Medtronic Inc. paid $350 million plus earn-outs to acquire Invatec SPA, which, beginning in peripheral vascular disease, captured the European market and is now bringing its strategy to the US. (See “Invatec: Translating Global Success in Vascular Devices to the US Market,” IN VIVO, October 2009.) Five months later, Covidien Ltd. acquired ev3 Inc., a major presence in non-coronary percutaneous interventions with some 100 such products. The medical device industry has officially recognized that peripheral vascular disease is not an extension of interventional cardiology, but is in need of innovation directed at peripherally specific products. This recognition has extended beyond arterial disease to new markets opening up in venous

erated $468 million in revenues in 2010. AAA and thoracic aortic aneurysm stent grafts are intended to provide reliable and lasting isolation of unstable aneurysmal sacs from the aortic circulation to minimize the risk of catastrophic aneurysm rupture. More than a decade ago, the first minimally invasive alternatives to open surgery for the repair of AAAs hit the market, but the growth of the industry has not been linear. First generation company Guidant (now part of Boston Scientific Corp.) introduced and withdrew a product called Ancure, which was responsible for some patient deaths, and physicians have been cautious adopters of endovascular repair products ever since. Edwards Lifesciences Corp. also tried and abandoned the space. But in retrospect, these failures can be seen as the trial and error that accompanies the first generation of any medical device in a new clinical application. Today, healthy gains in the AAA stentgraft segment will continue to be driven by the penetration of no-option and surgical AAA caseloads, accelerated by innovative new products. (See Exhibit 1.) Indeed, venture capitalists are re-evaluating the field, after its early troubles, and they’ve decided they like it. In the past year alone, four endovascular AAA repair start-ups were funded Exhibit 1 to the tune of $100 Peripheral Vascular Stent Markets, Forecast 2009-2014 million: TriVascular ($M) Inc., Endologix Inc., Aptus Endosystems Inc., and Altura MediCaGr cal Inc. Three major 2009almost neck and neck Year 2009 2010e 2011e 2012e 2013e 2014e 2014 players will be bound AAA Stent Grafts 514 570 618 671 717 770 8.4% to have their eyes open for the competitive adLower Extremity 454 468 483 509 546 569 4.6% vantages to be gained Artery Stents from the kinds of new products start-ups can NOTE: Numbers are rounded; source report continues detailed figures, as well as other product categories including carotid provide. artery stents, renal artery stents, and transjugular intrahepatic portosystemic shunts. disease. (See,“Venous Device Companies Dig Deep,” this issue.) According to “US Markets for Peripheral Vascular Stents,” a report recently published by the Medtech Insight division of Elsevier Business Intelligence, the peripheral vascular stent market yielded more than $1 billion in revenues in the US in 2009, and will continue to grow at an overall rate of 7.2% in coming years, with some product segments growing even faster. Stents for carotid arteries are expected to yield a 36.5% annual compound growth rate through 2014 (although from a low base of $111 million in 2010) and endovascular products for the repair of aortic aneurysms (AAA) will grow by 8.4%, according to the Medtech Insight report. AAA endografts accounted for 43.7% of peripheral vascular stent sales last year. This segment, dominated by Medtronic, which holds an almost 33% market share, Cook Group Inc., with a 32% market share, and WL Gore & Associates Inc., with an almost 30% share, produced revenues of approximately $570 million in 2010, making it the largest product in the peripheral vascular stent market today, followed by stents for lower extremity arteries, which gen-

SOURcE: Medtech Insight Report #A254, January 2011. For more information about the report, contact Neil Smith, at Ne.Smith@elsevier.com ©

[A#2011900066]

-mary STuarT

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARch 2011

CAPITAL

MATTERS Welcome to Capital Matters, START-UP’s monthly column to highlight new ideas and strategies for financing innovation, as well as the people and firms bringing them to life. We have been chronicling the ongoing pressures reshaping the medtech and biopharma industries in the pages of START-UP, as well as our sister publications, IN VIVO, “The Pink Sheet” and “The Gray Sheet.” We’re convinced that from the turbulence of health care reform, regulatory hurdles, and the “Valley of Death” funding gap, new products, companies, and business models will emerge. Capital Matters will explore new venture models, academic partnerships, pioneering disease foundations and much more. You’ll read about old dogs learning new tricks, and new players you’ve never heard of. Even as some traditional venture groups retreat from early life-science investment, great ideas need to move forward. That’s what Capital Matters is all about. Thanks for reading, and please let us know what you think. – The START-UP editors (CapitalMatters@Elsevier.com)

March 2011 | START-UP

The early-stage diversified firm raised a $200 million fund, its ninth, even though it’s a terrible time to be a biotech investor. Just ask its founder. Founded 28 years ago, Avalon Ventures

Dear Readers,

Avalon’s Sweat Equity

in San Diego said in January that it had closed its ninth fund with $200 million committed, which was $50 million more than planned and a third larger than its previous fund. For a firm that invests half its money in tiny lifescience start-ups, it was an impressive number at a time when the venture industry is reeling and the biotech side of the business is, by some accounts, severely damaged. In the 10-year period ending September 30, 2010, venture capital returned 4.6% for its LPs, worse than the major stock indices according to Cambridge Associates. Highprofile firms such as Domain Associates, Polaris Venture Partners and Atlas Venture have all closed funds smaller than their anticipated goals, and others have gone out of business entirely. Some earlystage firms now focus on their portfolio companies’ survival rather than new start-ups. (See “As Some VCs Are Running On Empty, Others Top Off The Tank,” START-UP, July 2010.) The new fund isn’t necessarily a fullthroated endorsement of Avalon’s biotech side. In fact, the diversified Avalon couldn’t have done it without its high-tech partners. Avalon was an early investor in Zynga Inc., a highflying developer of Facebook games such as Farmville that just raised cash at a company valuation of $10 billion. An anticipated IPO would be beyond blockbuster, and LPs were happy to re-up. “We don’t know if there will be a Zynga II in the ninth fund, but the good news is that we were able to raise the ninth fund based on Zynga,” says managing director Jay Lichter, PhD. It’s notable, though, that even with the fundraising muscle the high-tech side brought to bear, the $200 million will be split down the middle, says Lichter. That’s a vote of confidence in the firm’s unusual “sweat equity” strategy, which consists of three main elements. First,

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Avalon almost always seeks to provide seed capital, pre-Series A cash. Second, it prefers to invest alone, sometimes into a company’s Series A round. Third, its four general partners who lead investments typically serve as CEO of two or three start-ups simultaneously. Lichter himself is CEO of ophthalmology drugmaker ReVision Therapeutics Inc., sleep apnea treatment developer Sova Pharmaceuticals Inc., and Afraxis Inc., which is developing therapies for the rare Fragile X syndrome. “We’re all entrepreneurs, all operations people,” Lichter says. “When Kevin [Kinsella] started the firm, he would earn sweat equity: find someone with a good idea, work for them, and guide them toward an exit. It’s still that way, to some extent.” The firm’s health care investments, 16 currently active that it has announced publicly, also include antibiotic, inflammatory disease and oncology drug developers and a medical device start-up. Of the seven life sciences investments in the 2007-vintage eighth fund, which closed at $150 million, one has folded and the rest remain private. Several have prospered enough to attract large subsequent rounds, such as ear disorder specialist Otonomy Inc. Other early-stage investors put their own partners in management roles, notably Third Rock Ventures, whose founders ran Millennium Pharmaceuticals Inc. (now a part of Takeda Pharmaceutical Co. Ltd. known as Millennium: The Takeda Oncology Co.). But Third Rock brings a lot more cash and other VCs to the table. Going solo, Avalon’s seed strategy calls for quarterly budgets and funding for its portfolio companies. Once it hits its cap, it calls the cumulative seed funding – typically in the single-digit millions of dollars – a “Series A” and looks to syndicate a Series B. Avalon reserves enough capital to follow on with several times that amount in later rounds.

Other earlystage investors put their own partners in management roles, but Avalon’s seed strategy calls for going solo.

Capital Matters By investing early, the firm can receive a handsome return on a modest sale price. Lower prices mean more potential buyers and healthier competition. Lichter says an average-sized exit in the $120 to $140 million range doesn’t deliver much for firms that have put in $100 million, but such a sale yields a strong multiple for a start-up backed by less than $15 million. Avalon usually brings in a senior science executive early, but a full-time CEO can join anywhere from a few months to three years after Avalon’s first investment. For example, Otonomy raised its $38.5 million Series B round last summer, two years after it was founded, and Lichter passed the reins to new CEO David Weber only after the round, led by RiverVest Venture Partners and Novo Ventures, closed.

side has notched its own victories. Last month, Amgen Inc. acquired cancer vaccine developer BioVex Inc. for $425 million up front plus an earn-out that could drive the total to $1 billion. That wasn’t a sweat equity seed deal, though; Avalon joined BioVex’s syndicate during its Series C round in 2003. (See “Amgen Takes Out BioVex In Potential $1 Billion Deal,” “The Pink Sheet” DAILY, January 24, 2011.) Still, exits haven’t come easily, and in February Avalon’s founder Kevin Kinsella publicly blamed Big Pharma for pushing the biotech sector “to the point of extinction.” In an interview with online news site Xconomy, Kinsella said the sluggish IPO market has handed enormous leverage to buyers, crippling an ecosystem that has historically produced innovative medicines. Avalon hasn’t had a portfolio life sciences company go public in more than a decade. Eleven have been acquired since the mid-1990s. (Those numbers are a bit deceptive, however, as

Avalon’s founder Kevin Kinsella publicly blamed Big Pharma for pushing the biotech sector to the point of extinction.

Funding Pet PrOjects in tOugh times The prospect of a Zynga IPO has boosted Avalon’s profile, but the biotech

Avalon didn’t raise a fund between 1991 and 2001.) The new fund shows LPs have at least some faith in biotech, as there are plenty of high-tech-only funds to switch to. But Avalon knows it has to go places it wouldn’t normally go. The firm recently backed Aratana Therapeutics Inc., a Kansas City start-up working on illnesses afflicting cats and dogs, in a $20 million Series A alongside MPM Capital and Cultivian Ventures. “There’s a shorter timeline to revenue, development is less expensive, and the regulatory bar is lower,” Lichter says. “If you can get $100 million products that cost $3 or $4 million, you should do it,” he says of his hopes for Aratana. “Faced with the issues [surrounding exits], you’ve got to do something.” [A#2011900060]

- Paul Bonanos

E-mAIL ThE EDITOR AT: Capitalmatters@Elsevier.com

RelATed ReAding Amgen Takes Out BioVex In Potential $1 Billion Deal, “The Pink Sheet” DAILY, January 24, 2011 [A#14110124010] As Some VCs Are Running On Empty, Others Top Off The Tank, START-UP, July 2010 [A#2010900149] AcceSS TheSe ARTicleS AT oUR online SToRe: www.windhover.com/article

Exhibit 1

Avalon Ventures’ Notable Exits INVEsTMENT

sPECIALTy

DEAL

BIoVEx INC.

Vaccines

acquired by amgen in January 2011 for $425 million up front, plus $575 million earn-out

IDuN PhArMACEuTICALs INC.

apoptosis

acquired by Pfizer for $280 million in February 2005

syTErA oPhThALMICs INC.

Dry age-related macular degeneration

acquired by Sirion Therapeutics Inc. for about $25 million up front in 2006; subsequently reacquired by avalon

oNyx PhArMACEuTICALs INC.

Oncology and genetics

$32.1 million IPO in May 1996

VErTEx PhArMACEuTICALs INC.

Infectious and inflammatory diseases, including hcV

$25 million IPO in 1991; also acquired avalon portfolio company aurora Biosciences corp.

AThENA NEurosCIENCEs INC.

alzheimer’s disease

$50 million IPO in 1991; sold to Elan corp. PLc for $600 million in 1996

SOUrcES: Elsevier’s Strategic Transactions; avalon Ventures web site ©

2011 Windhover Information Inc., an Elsevier company. | STarT-UP | March 2011

Biotech Business Models

Investing À La Carte:

Making Separate Bets On Discovery And Development To Boost Near Term Returns as executives and investors scramble to find business models that more closely link investment and return, a handful of technology firms have alit on variations of a capital-efficient strategy: let someone else do the development dirty work. By Christopher Morrison

n as costs and risk mount, a few small biotechs are avoiding drug development work altogether, instead enabling others with their tools at the earliest stages. n Not every platform is cut out for this particular brand of earlystage emphasis, but a handful of capital-efficient companies have emerged to build potentially profitable businesses out of discovery. n Such platform-only-no-development opportunities may be rare, but a successful play can enable investors to make multiple, distinct bets along the drug discovery and development continuum. n The duo of platform-focused adimab and infectious disease specialist arsanis is a pioneering experiment in the dis-integration of discovery and development risk.

There’s an old ice hockey saying that’s become an oft-used metaphor for biotech companies and investors seeking big payouts from pharmaceutical partners: don’t skate to where the puck is, skate to where the puck is going to be. Biotech tastes, like that frozen pastime, move quickly. So instead of guessing where pharma wants to be in four or five years, what if biotechs could make a solid return by providing their pharma customers with a platform to get where they want to go by themselves? Savvy entrepreneurs and investors, like those backing young antibody discovery firm Adimab LLC, transgenic mouse firm Ablexis LLC, and a handful of other tech plays like Nimbus Discovery LLC and Amunix Inc. have found ways to dissociate their bets on discovery platforms and the products they throw off, allowing for an à la carte investment strategy that may provide the best 10

March 2011 | START-UP

www.ElsevierBI.com

of both worlds. What’s more, these business models can provide venture investors with pre-exit revenue opportunities: a way to make money without betting, or selling, the farm. So far Adimab is the most compelling story. It eschews development and is banking solely on discovery to build a lucrative business. It has done so in a capital-efficient manner, raising an undisclosed but modest sum from venture investors to build its platform. The drawback, of course, is that investors might wind up forsaking absolute returns for higher multiples. And while it’s important to be capital efficient, the laws of biotech economics remain firm: low risk still tends to yield low reward. In the case of Adimab, the strategy has been to provide pharmaceutical partners with monoclonal antibodies against select targets on a non-exclusive basis. (See “Adimab Inks Merck, Roche Deals and Banks on the Value of Discovery,” START-UP, June 2009.) With a raft of top tier pharma and biotech collaborators, the program, only initiated two years ago, is off to a roaring start. (See Exhibit 1.) But the biotech’s next step, taken in early 2011, will allow its investors to back a new development company, enabled with homegrown Adimab technology. Arsanis Inc. will use Adimab’s yeast-based antibody discovery engine to develop drugs against infectious disease targets. The company will run research out of Vienna, Austria, and plans to hire 20 to 25 employees in the next few months, according to founder and chief scientist Eszter Nagy, MD, PhD, a former SVP of research at Austrian vaccine maker Intercell AG. In late February the company announced it had raised $9.6 million from Adimab backers OrbiMed, SV Life Sciences, and Polaris Venture Partners. (See “Adimab, Arsanis and Platform Cloning: A New Biotech Model?” The IN VIVO Blog, February 9, 2011.) This was the plan all along: Adimab never wanted to do its own development work. That’s an unusual position in biotech, partly

BIoTEch BuSINESS ModElS This kind of near term revenue opportunity has grown in importance as venture partners grapple with a dearth of IPO opportunities and increasingly few bona fide acquisition paydays. Acquisitions more often than not resemble alliance deals: 19 of 25 acquisitions of venture-backed biotechs in 2010 comprised upfront payments plus contingent value rights. (See “Biotech Backers Are Learning to Live with Exit-by-Earn-out,” START-UP, March 2010.) What’s more, most initial public offerings have for years been nonexits, with VCs sometimes even doubling down on investments to avoid the dilutive haircuts of slashed share prices. Meanwhile the average money raised privately to fund biotech drug development for companies acquired in the past few years has crept well above NegOTIATINg NeARTeRM ReTuRNS $60 million, according to Elsevier’s Strategic Transactions database – Such a platform-only business model has its charms. As Gernand that’s for the companies who manage an exit. No, in 2011 the gross points out, it’s cheaper than embracing development work, smart investor needs a way to make money before an exit presents potentially avoiding tens of millions of dollars in preclinical and itself. (See “In the Midst of a Shakeout, Biotech VCs Must Embrace New clinical risk. And structured appropriately, even as it avoids havPartners, New Math,” START-UP, September 2010.) ing to predict the appetites of pharmaceutical acquirers, it also can Another antibody discovery biotech, Ablexis, is attempting to draw for investors a dotted line from investment to exit – or at least secure near term returns for its investors Third Rock Ventures and to a trickle of an early return. Pfizer Venture Investments through an unusual partnership model. (See “Ablexis’ Pharmaceutical Consortium,” Exhibit 1 START-UP, December 2010.) Launched Non-exclusive Club: Adimab’s Development Partners in late 2010, Ablexis is building a next-generation transgenic mouse PARTNeR DATe TeRMS platform and already has garnered Merck & co. Inc. June 2009 Multi-target therapeutics deal. undisclosed interest – and at least $5 million in upfront, preclinical, clinical, sales milestones; non-dilutive funding – from five royalties. pharmaceutical partners (the only one disclosed is Pfizer Inc.). To fund the roche June 2009 Single oncology target; therapeutics and diagwork to create its AlivaMab Mouse platnostics. undisclosed upfront, preclinical, cliniform, founder and CEO Larry Green, cal, sales milestones; royalties. PhD, hit on a model designed to link Pfizer december 2009 Single cNS/pain target deal; therapeutics and a near term milestone payment from diagnostics. undisclosed upfront, preclinical, the company’s pharma consortium clinical, sales milestones; royalties. – valued at $50 million minimum – with an immediate return for its venundisclosed december 2009 Single oncology target deal; therapeutics and ture backers. (See “2010 Exit/Financing pharma diagnostics. undisclosed upfront, preclinical, clinical, sales milestones; royalties. DOTY Nominee: Ablexis/Pharma Five,” The IN VIVO Blog, December 9, 2010.) Novartis July 2010 Two undisclosed targets; therapeutics and Though very different, Adimab and diagnostics. undisclosed upfront, preclinical, Ablexis and the emerging Nimbus clinical, sales milestones; royalties. Discovery have at least one common Eli lilly december 2010 Two undisclosed targets; therapeutics. untrait: they’re all structured as LLCs to disclosed upfront, preclinical, clinical, sales make it easier to return cash to their milestones; royalties. shareholders. (See Sidebars: “Shelter Me: LLC Prevalence a By-Product of New human Genome december 2010 Single undisclosed target; therapeutics and Start-Up Models” and “Nimbus Discovery: Sciences diagnostics. undisclosed upfront, preclinical, Building a Business on Water.”) clinical, sales milestones; royalties. There are also ways for private bioGenentech december 2010 Two undisclosed targets; therapeutics and techs to return cash to shareholders diagnostics. undisclosed upfront, preclinical, without sticking entirely to discovclinical milestones; royalties. ery platform strategies. Amunix, run and owned by serial entrepreneur and arsanis January 2011 Multiple undisclosed infectious disease targets. CEO Willem “Pim” Stemmer, PhD, is Terms of the relationship are undisclosed. working to apply its proprietary XTEN SourcE: Elsevier’s Strategic Transactions; adimab long-acting formulation technology to because untested technologies have trouble commanding value before partners can see an inkling of proof-of-concept data. If a biotech is promoting a technology platform that isn’t well validated, “what ends up happening is that people will say ‘The science sounds great, but show me that this really works,’” Adimab CEO Tillman Gerngross, PhD, told START-UP in 2009. “And before you know it you’re in the business of conducting preclinical development with a company that was originally put together to solve a scientific problem. And it creates tension and requires resources that are very significant.”

2011 Windhover Information Inc., an Elsevier company. | STarT-uP | March 2011

BIoTEch BuSINESS ModElS

shelter Me: LLC prevalence A By-product of new start-Up Models Alongside the desire for early returns is an attempt to provide those returns in a tax-efficient way. As such Adimab LLC has restructured from a C-corp. to an LLC – a limited liability company – to avoid double taxation: once as a corporate entity and again as dividends are taxed when distributed to shareholders. (See “Advantages of the Limited Liability Corporation (LLC) Structure,” START-UP, September 1999.) Though considerably costly and complex to establish, as early-stage dividends become more common, LLCs are likely to proliferate in biotech circles, both in terms of companies making the awkward transition (in addition to Adimab, Knopp formed an LLC parent in 2010, Knopp Biosciences LLC) and those companies created from the outset as LLCs (Ablexis LLC, for example, or nimbus Discovery LLC). The structure isn’t without its drawbacks. LLCs create complications for VCs’ limited partners, particularly for foreign investors and certain tax-exempt institutions like universities. But these wrinkles can be ironed out by adding a variety of layers of corporate structure. a variety of commercially validated molecules. It has now twice partnered with asset-focused funding specialist Index Ventures to create biotechs around individual XTEN programs. In February 2011, Amunix and Index created Diartis Pharmaceuticals Inc. around VRS-859, an XTEN formulation of the diabetes drug exenatide; that program was hived off from Versartis Inc., which was created in 2010 by the same investors and is now pursuing a long-acting formulation of human growth hormone. Stemmer told START-UP that Amunix could apply XTEN to 20 to 30 molecules, which could be licensed directly to pharma – one deal has been signed but not announced, he said – or used to create more singleasset entities like Diartis. (See “Two’s a Crowd: Versartis Raises $21 Million Series B, Cleaves Off Diabetes Asset to Form Diartis Pharma,” “The Pink Sheet” DAILY, February 16, 2011.) Meanwhile, in August 2010 Knopp Neurosciences Inc. (a division of Knopp Biosciences LLC) licensed to Biogen Idec Inc. exclusive worldwide rights to develop and commercialize its Phase II dexpramipexole compound for amyotrophic lateral sclerosis. As part of that deal Biogen paid $20 million in up-front cash and invested $60 million in the biotech. That cash was distributed to Knopp’s investors. Reata Pharmaceuticals Inc. likewise rewarded its venture backers with an undisclosed dividend when in September 2010 Abbott Laboratories Inc. paid the biotech $450 million up front for rights to the Phase II chronic kidney disease candidate bardoxolone. (See “Reata’s $450 Million Up-Front Haul Sets a Record But Remains an Outlier,” IN VIVO, October 2010.)

eNTeR The CLONe Among the various ways to enrich shareholders before the endgame of an exit, Adimab’s vision of dis-integrating platform discovery from even a whiff of preclinical development sets it apart. Its success in building early-stage value through partnerships – at its September 2009 Series D led by Google Ventures, the company

March 2011 | START-UP

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boasted a $520 million pre-money valuation – has allowed for extreme capital efficiency. “Tillman is the master of spending little and getting a lot for it,” says SV Life Sciences managing general partner Mike Ross, PhD, who also backed Gerngross’ previous company GlycoFi, which was sold to Merck & Co. Inc. in May 2006 for $400 million. “And the Adimab business model doesn’t require spending a lot of money to get great things to happen,” he says. “But as soon as you start doing clinical trials, that’s over. We didn’t want to mix therapeutics with Adimab.” Moving from platform to product company is a tricky and expensive adolescence. Until recently though it was often viewed as a necessary value-creation step, unless the technology was so promising that a pharma acquirer stepped in, as Merck did with GlycoFi, before the biotech hit puberty. But unlike GlycoFi, Adimab is not for sale, its executives and backers say. The Arsanis solution of creating a new biotech to pursue products while Adimab focuses on platform has long been the plan, says Gerngross, even if a GlycoFi-esque exit was the original idea when Adimab was founded in 2007. The biotech and its backers were soon convinced they had an extraordinary technology. “So as an investor,” asks Ross, “wouldn’t it be nice if you could get some therapeutic bang for your buck out of this technology, in addition to the technology value itself?” The Adimab-Arsanis relationship seems straightforward at first. Arsanis pays Adimab for a non-exclusive technology license – similar to what other companies who non-exclusively license the Adimab technology pay – and Adimab stands to gain milestone fees as Arsanis moves antibodies through development and, eventually, royalties on sales of any Adimab antibodies. Adimab doesn’t own any of Arsanis, but Adimab’s investors do, and this is where it becomes more complex. The investor syndicate and board at both companies overlap, but they aren’t exactly the same. Adimab executives Gerngross and COO Errik Anderson join Arsanis CSO Nagy and investors Carl Gordon, PhD (OrbiMed Advisors), Ross (SV Life Sciences) and Terry McGuire (Polaris) to comprise Arsanis’ directors. (Gerngross, Ross, McGuire and Bill Maris from Google Ventures fill the seats in Adimab’s boardroom.) Gerngross describes the relationship between Adimab and Arsanis as arm’s length, though he and Anderson are listed below Nagy among the company’s management on Arsanis’ web site. In terms of forming the company, “our role was to put together the syndicate and validate Eszter and the team,” he says. “She’s a phenomenal scientist with great business sense and the ability to get stuff done.” Nagy doesn’t foresee any conflict of interest between the two companies but points out that OrbiMed, which is not represented on the platform company’s board, has more at stake in Arsanis than it does in Adimab. “During any negotiation, Tillman and Errik have to wear their Adimab hats, and I’m supported by OrbiMed,” she says.

PLATfORM STReNgTh IS Key The value proposition at Arsanis is rooted in Adimab’s antibody technology. But, says Nagy, it is driven by the ability to combine that technological advantage with a deep understanding of how to apply those antibodies in infectious disease indications. “In large pharmaceutical companies the infectious disease expertise mainly exists in the vaccine area, where as monoclonal

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BIoTEch BuSINESS ModElS antibodies are developed in the drug sector,” she says. “We can pair the technology and anti-infectives expertise to create products that don’t only meet proof of concept hurdles but proof of relevance” in attractive markets where there are sub-optimal or non-existent alternatives. Nagy declined to specify Arsanis’ targets but noted these areas include nosocomial infections or superbugs like MRSA. Arsanis won’t be alone in applying antibody technology to thorny infectious diseases. Pfizer tied up with Theraclone Sciences Inc. in January 2011 to go after two infectious disease targets and two cancer targets; in January 2010 KaloBios Pharmaceuticals Inc. landed $35 million up front from SanofiAventis for a global license to its Phase II antibody against Pseudomonas aeruginosa; and MorphoSys AG has a broad 2009 partnership with Daiichi Sankyo Co. Ltd. in the space. Intercell, with whom Adimab had held partnership discussions prior to forming Arsanis, decided to acquire its own antibody technology in mid 2010 when it bought Cytos Biotechnology AG’s MAb platform for €15 million. Antibody technologies are prevalent, but Gerngross and his backers hold fast to the notion that Adimab’s is far and away the

best. “The antibody field, as far as ‘give me binders’ is concerned, that’s a commoditized business,” says Gerngross. “If time isn’t of the essence there are plenty of ways to get there, and we’re not in that business.” Only time – and the success of Adimab-derived products – will tell. But as pharmaceutical companies are increasingly interested in the same set of hot targets, an edge in quality and time can translate into important advantages down the road. Finding antibodies that have therapeutic relevance, he says, “is the art we have perfected and getting to that point quicker is in essence where our value lies.” Without that platform strength, it’s unlikely Adimab could have pursued its dis-integration model. “Separating the platform from the platform’s products is an interesting way to structure a company, but to do it you need a very strong platform,” says OrbiMed managing partner Carl Gordon. If that technology wasn’t good enough straight out of the box, he says, then pharma partners are going to want you to validate it yourself. “A lot of companies start off as platforms but go down the product route only because they have to, because pharma won’t pay enough money for the technology,” he says. And without the chance at an early technology-licensing return, going after product plays has become the default venture mindset.

nimbus Discovery: Building A Business on Water As START-UP went to press the newest example of discovery and development dis-integration emerged from stealth. At the core of Nimbus Discovery LLC is technology from computational drug design specialists Schrödinger LLC, which holds an undisclosed material equity stake in the biotech. Schrödinger’s in silico WaterMap technology evaluates the energy of individual water molecules at a target’s binding site. Knowing which molecules will be tougher to displace with a ligand and designing around them can have dramatic effects on binding potency, says Atlas Venture partner Bruce Booth. “Once you know the architecture, your lead optimization campaign is much more efficient,” he says. As Schrödinger’s fundamental business is software, not drug development, the company worked with Atlas to build Nimbus, and benefits from service fees from the company as well. Nimbus has exclusive rights to use Schrödinger’s tools around 20 targets – the ones where it believes WaterMap can be transformational. What further sets Nimbus apart from traditional discovery ventures is that the biotech is structured as an LLC holding company that acts as an umbrella over target- or molecule-specific C-corp subsidiaries. Each time a candidate is licensed, explains Booth, “that licensing is effectively an acquisition of a company that includes just the IP and that particular data package.” The structure, though more complex, is reminiscent of Index Venture’s panGenetics BV, which also managed multiple companies under one management and investment structure. One of them, a Phase II anti-NGF antibody, was in 2009 sold to Abbott Laboratories inc. for $170 million up front. (See “PanGenetics NGF Antibody Sale Illustrates Index’s Asset-Focused Strategy,” START-UP, December 2009.) Atlas has seeded Nimbus since 2009, says Booth, and in March 2011 as it emerged from stealth the company announced that Bill Gates, the Microsoft founder and philanthropist (and one of Schrödinger’s investors) contributed to that seed round. Spending less than $2 million, the company has generated an inhibitor of IRAK4, “an exciting but difficult to drug” immunokinase target implicated in various cancers and inflammatory conditions, and lead scaffolds against other targets, says Booth. The corporate structure “gives us a lot more options as a board and shareholders to realize value over time,” says Booth. “It captures all the benefits of a normal C-corp with considerable optionality around the ability to monetize early programs.” That has been a key issue for discovery oriented companies, says Booth. As an industry, it has been tricky to figure out how to fund drug discovery-stage companies and generate early returns and returns over time, rather than waiting for that “hockey stick moment,” he says. “The hockey-stick model is incredibly challenging: sometimes your drug doesn’t work in Phase II and you’re ten years in and in an unpleasant situation.” Finding ways to build value over time through partnerships is therefore essential for drug discovery companies. Using the Nimbus LLCenabled model, management will also be able to accrue value over time instead of sitting on illiquid stock options, points out Booth. For now, Nimbus management comprises only two full timers: CSO Rosana Kapeller, MD, PhD, and VP business operations Jonathan Montagu. Contract research organizations provide the chemists, x-ray crystallographers, and biologists for various projects. Two years in and “Nimbus hasn’t even had to rent any office space at this point,” says Booth. 14

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BIoTEch BuSINESS ModElS ARSANIS’ AMBITIONS Setting up Arsanis took some time. “For this kind of model you have to find the talent and the expertise in a therapeutic area,” says Gordon. “That’s where we spend a lot of time to identify a team of people we believe in that are extremely knowledgeable and extremely driven.” Nagy and company expect to pick up speed rapidly. In the next two years Arsanis aims to launch three programs in undisclosed infectious disease areas. The goal is to establish within two years compelling preclinical proof of concept that the antibodies have a high probability of clinical success. Part of the reason Adimab chose infectious disease was the reliability of animal models. While there is some scientific complexity when it comes to making the antibodies, once the company has preclinical data the models are very predictive, according to the executives. As for further Arsanis-like Adimab technology clones in antibody rich therapeutic spaces like oncology or immune disorders, Gerngross suggests it’s just a matter of finding the right leadership. “The ultimate limitation is not technology, it’s not capital. It’s people,” he says. Meanwhile Adimab will continue its partnering drive. Though most of the company’s deals to date have involved non-exclusive rights around one or two targets, Gerngross suggests broader non-exclusive dealmaking is in the offing. “It’s going to rain. I just can’t tell you exactly when.” Adimab’s Anderson explains that the company will continue to hold out for non-exclusive deal terms, and that its goal is to get the Adimab technology in the hands of as many people as possible. The more users of Adimab’s discovery platform, the more milestones will roll in. (Adimab reported its first milestone payments

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only a few months after inking its first pharma partnerships, with Roche and Merck. Gerngross says the company has been cash-flow positive for some time.) Which means Adimab’s venture investors are about to see their first quarterly dividend. Most biotechs aren’t set up to return cash to shareholders before exit, explains Gordon. “They’re set up to invest it themselves, but at Adimab we don’t need to reinvest all the cash. It’s more clean; here we’ve separated out Arsanis for the reinvestment – it’s a different way of looking at the world.” [A#2011900051] E-MAIL ThE AuThOR AT: C.Morrison@Elsevier.com

related reading Two’s a Crowd: Versartis Raises $21 Million Series B, Cleaves Off Diabetes Asset to Form Diartis Pharma, “The Pink Sheet” DAILY, February 16, 2011 [A#14110216002] Adimab, Arsanis and Platform Cloning: A New Biotech Model? The IN VIVO Blog, February 9, 2011 2010 Exit/Financing DOTY Nominee: Ablexis/Pharma Five, The IN VIVO Blog, December 9, 2010 Ablexis’ Pharmaceutical Consortium, START-UP, December 2010 [A#2010900245] In the Midst of a Shakeout, Biotech VCs Must Embrace New Partners, New Math, START-UP, September 2010 [A#2010900180] Biotech Backers Are Learning to Live with Exit-by-Earn-out, START-UP, March 2010 [A#2010900061] PanGenetics NGF Antibody Sale Illustrates Index’s Asset-Focused Strategy, START-UP, December 2009 [A#2009900281] Adimab Inks Merck, Roche Deals and Banks on the Value of Discovery, START-UP, June 2009 [A#2009900142] Advantages of the Limited Liability Corporation (LLC) Structure, START-UP, September 1999 [A#1999900139] access these articles at our online store: www.windhover.com/article

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2011 Windhover Information Inc., an Elsevier company. | STarT-uP | March 2011

Venous DeVices

Vein Device Companies Dig Deeper Vein diseases such as deep vein thrombosis, pulmonary embolism and chronic venous insufficiency have historically been the province of drug therapies, but they shouldn’t be, according to the clinical societies and medical device companies that are trying to create a groundswell in interventional vein treatments. By Mary Stuart

n The treatment of vein diseases lags behind artery disease by perhaps 30 years, say some. Venous disease is still largely managed medically, despite the boom in interventional technology on the arterial side of the circulation. n Deep vein thrombosis, pulmonary embolism and chronic venous insufficiency represent different points along the same disease continuum, but treatments are spread across numerous clinical specialties making for a fragmented market. n The field is starting to organize on the clinical side, the first clinical trials ever to pit devices against drugs for DVT are in progress, and a new society called the american Venous Forum is collecting data to help the field develop practice standards. n at the same time, covidien has drawn attention to the business opportunities in the field by acquiring, in the last year and a half, three companies with venous devices. n Venture capitalists are beginning to re-enter the space, albeit selectively, after early failures.

March 2011 | START-UP

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fective treatment, patients die or have their lives derailed overnight. Diseases of veins, meanwhile, although no less dangerous, are far more measured and subtle. The clogged veins of deep vein thrombosis (DVT) occasionally cause life-threatening pulmonary embolisms but more often result in swelling and leg pain due to damaged valves, developing over time into a chronic condition that can give rise to non-healing venous ulcers. In short, arterial diseases demand urgency; vein diseases require thoughtful prevention and restoration of comfort. It’s the difference between a heart attack and a pain in the leg. Moreover, the venous device industry is a complicated, fragmented, somewhat confusing space held by a variety of clinicians – interventional radiologists, vascular surgeons, interventional cardiologists, and even wound healing specialists, with a number of different products for distinct applications that just happen to share, at their root, venous disease. But the walls may be coming down, allowing the era of venous technology to be upon us. Just as interventional cardiology took a full decade to gather speed after its start 30 years ago, the past 10 years have served as a long runway for veins and peripheral artery disease. Now may be the time for takeoff. The movement’s lift is coming from several sources. First, individual clinicians and clinical societies like the Society of Interventional Radiology and the American Venous Forum are working to raise the profile of venous diseases In February 2011, the American Venous Forum launched a registry with five modules covering varicose veins, stents, inferior vena cava filters, deep venous thrombosis thrombectomy/lysis, and upper extremity DVT, for the purpose of identifying practice patterns for the future development of guidelines, hitherto lacking in the field. Their efforts are bolstered by the arrival of a much needed public face. In early March, world-class tennis champion Serena Williams suffered a

VEnous DEVIcEs pulmonary embolism from a deep vein thrombosis. Much press around the incident showed the world that it’s not only the old and sedentary who suffer from vein diseases. On the clinical front, three publicly supported clinical trials on venous disease are pitting devices against drugs. TORPEDO, ATTRACT and CAVA, the first randomized clinical trials ever to compare medical therapy with mechanical approaches for the lysis of clots in DVT patients were launched. By testing medical and interventional treatments head-to-head, the study may significantly alter how DVT is treated in the future. (See Exhibit 1.) Finally, the investment climate seems to be improving, both in the number of investors interested in venous devices and in the establishment of at least one interested acquirer. Covidien Ltd. was perhaps the most noticeable harbinger of change when it made three acquisitions in the venous space, acquiring, in 2009 vein ablation company Vnus Medical Technologies Inc. for $470 million in cash and Bacchus Vascular Inc., the developer of a novel thrombolytic device, and in 2010 ev3 Inc., which, among its large cardiovascular portfolio, has technologies for peripheral applications including veins. (See “Covidien Set to Compete in Vascular Business,” IN VIVO, May 2009.) Now start-up Veniti Inc. is taking a similar stance, announcing in early March that it would roll up venous device companies into a new company with a therapeutic focus on veins. Venture capitalists are returning, albeit slowly and cautiously. Their trepidation may be warranted given the unsuccessful efforts

of the first generation of venous devices. Among the cases likely keeping venture capitalists away are the early failures of products from VenPro Inc. (developing a venous valve) and vein ablation company VeinRx Inc., and others, in a market at a very early stage of development. It’s only fair to point out that certain companies that have gained early stage funding recently – Venous Health Systems Inc. (with a compression device for the prevention of DVT) and Crux Biomedical Inc. (developing an inferior vena cava filter) – have an inside edge; both were founded by cardiovascular surgeon Thomas Fogarty, MD, the founder of 33 other medical device companies, including recently acquired Bacchus Vascular. The industry is also blessed with stalwarts that have been able to keep the dream alive. Other companies advancing venous treatments have persevered with platform technologies that just happen to be right for an emerging interventional market in deep vein thrombosis. Ekos Corp. was founded more than 15 years ago with a mission of treating acute stroke and has lived to see a new day where devices are poised to supplant medical management for DVT. What these companies are increasingly realizing is that new and effective venous devices can find a home in huge, underdeveloped markets. According to the American Venous Forum, chronic venous diseases affect more than 20% of the adult population and are more prevalent than coronary artery disease, carotid artery disease, and peripheral artery disease combined.

Exhibit 1

First Clinical Trials Support Device Interventions For DVT TrIal

TrIal DeSIgn

STaTuS

TorPEDo (Thrombus obliteration by rapid Percutaneous Endovenous Intervention in Deep Venous occlusion)

92 patients randomized to anticoagulation alone and 91 patients to anticoagulation plus percutaneous intervention using a range of technologies: manual aspiration, thrombotic therapy via catheter, and the AngioJet aspiration system, among others, with all patients also getting retrievable inferior vena cava filters.

Midterm results, presented at a mean of 30 months at TcT in september 2010 showed percutaneous intervention plus drug is superior to drug alone. (See below.)

Drug group (ConTrol)

DeVICe group

Total venous thromboembolisms

Total post-thrombotic syndromes

5.8 days

2.7 days

Mean length of hospital stay aTTracT (acute Venous Thrombosis: Thrombus removal with adjunctive catheter-Directed Thrombolysis), supported by $10.2 million in funding from nIh’s national heart, Lung, and Blood Institute

Phase III open-label trial; 692 patients with symptomatic acute proximal DVT will be randomly assigned to receive treatment with pharmacomechanical catheter-directed thrombolysis (devices being tested in the trial include the Trellis, Ekos device, and AngioJet to determine if catheter-directed thrombolysis can reduce the risk for post-thrombotic syndrome 2 years later and better preserve quality of life compared with conventional therapy.

Enrollment began in 2009 and to date 50 centers are enrolled in the trial.

caVa (catheter Vs. anticoagulation alone for acute Primary (Ilio) Femoral DVT)

Dutch (Maastricht university Medical center) randomized trial comparing standard anticoagulant therapy with ultrasound-enhanced thrombolysis; 180 patients total, multiple-year follow-up on measures of post-thrombotic syndrome and quality of life.

study start date May 2010, nine centers participating, more being recruited.

sourcEs: society for Interventional radiology; Theheart.org; clinicaltrials.gov ©

2011 Windhover Information Inc., an Elsevier company. | sTarT-uP | March 2011

VEnous DEVIcEs In DVT, MeDICal ManageMenT gIVeS Way To InTerVenTIonal TeChnIqueS Perhaps it’s a sign of the very early stage of development of the field of venous disease, but today, the majority of deep vein thrombosis is still addressed by blood thinners alone, even though the disease process, in one way at least, is not so very different from the coronary artery disease that is served by the devices of interventional cardiology. In DVT, as in artery disease, a clot obstructs a vessel and causes problems. The consequences of that clot, in venous disease, however, have created a different risk-benefit profile for device intervention as compared with artery disease. Arterial clots can lead to heart attacks or limb amputations. Clots in the veins cause damage to valves that result in the life-long condition known as post-thrombotic syndrome, which compromises a patient’s quality of life and overall health, but is not rapidly fatal. With the benefit of the pumping action of the heart, blood courses through arteries at high pressure, but the venous system operates under low pressure and relies on valves to keep blood flowing where it should. Blood has a tendency to flow downward and when a patient is upright, healthy valves keep the blood from pooling below the knee. When the valves become damaged, blood pools in the legs and painful swelling occurs, slow-healing or nonhealing venous ulcers can arise, and 10 years later, nearly 90% of patients are unable to work due to leg symptoms. In this scenario, DVT does not develop, overnight, into a lifethreatening condition the way clots in the arterial system do, but in fact sometimes large venous clots do became a life-and-death matter, by throwing off large emboli that can end up in the lungs and cause heart failure and death very quickly. (See Exhibit 2.) Deep vein thrombosis leads to pulmonary embolism in 600,000 patients in the US each year, and a third of them die. Despite that risk, anticoagulation is the most common strategy for the treatment of patients with DVT, one that reduces the formation of venous clots but does little to address existing large clots. After decades of developing arterial tools to debulk, chew up and otherwise remove clots, why isn’t this strategy employed to re-

Exhibit 2

Deep Vein Thrombosis (DVT)

sourcE: society of Interventional radiology

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move clots in veins? To a small extent it is; thrombectomy devices like the AngioJet of Possis Medical Inc. (a division of Medrad Inc.) are occasionally used, but less than 2% of patients diagnosed with DVT are treated with active clot removal devices. That may due to the historical perception, as noted, of the different risk-benefit profile of treating the veins versus the arteries, especially because using a mechanical tool on an anticoagulated patient can lead to bleeding. Mechanical thrombectomy can damage vein valves or thin vessel walls, and clots in the veins are different than arterial clots; they are often more fibrous and resistant to mechanical forces, so procedures can be lengthy. Some devices violently shear red blood cells, taxing the kidney as it tries to clear the cellular debris. Moreover, venous thrombectomy procedures haven’t been that efficacious in the past, since a thrombus can only be removed where the catheter tracks, and the thrombus that’s left behind continues to cause problems. But perhaps a major hurdle is the lack of randomized clinical trials to guide practice in DVT. The first of many signs of change in clinical practice came in 2008. The American College of Chest Physicians issued recommendations suggesting, for the first time, the use of catheterdirected thrombolysis for acute iliofemoral (from the knee on up) deep vein thrombosis in conjunction with anticoagulation. The guidelines specifically indicate the use of mechanical action along with thrombolytics to reduce the overall treatment time. This is good news for Ekos Corp., which has been working since 1995 on a catheter-based system for ultrasound accelerated thrombolysis. (See “Ekos’ Long, Hard Road,” IN VIVO, March 2005.) The company has embedded miniature ultrasound elements into a catheter, which send pulsed ultrasound waves into a clot to increase its permeability so that thrombolytic drug infused from the catheter eliminates it more quickly. Increasing the clot’s porosity increases the surface area upon which the drug works. Explains CEO Robert Hubert, “If you take an ice cube and drip water on it, you eventually melt the ice cube. But if you take that same ice cube, crush it and then drip water on it, it has the same mass but will melt more rapidly because it has more surface area.” The same thing happens with the clot, he notes. Creating openings in the clot exposes more receptor sites to which drug can bind, dissolving that portion of the clot and at the same time rendering the thrombolytic drug benign to the rest of the body. “You want the efficient use of thrombolytic drugs,” says Hubert. “Concentrating as much of the drug as possible within the clot is very important. It maximizes the efficiency of dissolving thrombus while at the same time minimizes the amount of drug that flows systemically throughout the body, where it can create unwanted bleeding problems.” Ekos began its existence in the very difficult area of ultrasound-accelerated thrombolysis for the treatment of acute ischemic stroke, one of the company’s ongoing development programs, but along the way, the company has found itself with a platform that’s well suited for the ripening DVT opportunity.

VEnous DEVIcEs Hubert says that the EkoSonic system clears venous clots more quickly than current methods. It takes the physician about 15 to 20 minutes to place the ultrasound catheter. The patient remains in the ICU until the clot is cleared, then the physician is able to look at the underlying disease that was obscured by the clot and is thus able to prescribe a certain course of medication or deliver a stent. “Our device is quick and effective, and if the condition is caught in time, it restores valve function,” he states. Ekos is making this argument just as clinical trials such as TORPEDO, ATTRACT and CAVA look like they’ll be making the case that DVT should be treated early and effectively to avoid post-thrombotic syndrome and pulmonary embolism. Huber notes that the company has sold more than 23,000 devices to date, which are in use in more than 325 institutions now. Recently, an even more compelling use of the Ekos platform has emerged, says Hubert, in the treatment of pulmonary embolisms, particularly in the 40% of patients with submassive pulmonary embolism (who need urgent clot removal, but who are not already in hemodynamic collapse with cardiogenic shock). Today those patients are treated with blood thinners in the ICU. The 90-day mortality rate of that group of submassive PE patients is up to 22%, mainly due to right ventricular enlargement that may lead to heart failure. Ekos has gained approval in Europe for the treatment of pulmonary embolism, and in the US has a 510(k) approval for placement of its device in the pulmonary artery, although not a specific approval for the treatment of pulmonary embolism. Hubert notes that physician-sponsored studies in the US are starting to demonstrate the benefits of using EkoSonic for pulmonary embolism. At the ISET (International Symposium in Endovascular Therapy) meeting in mid January, vascular surgeon Tod Engelhardt, MD, of East Jefferson General Hospital in New Orleans reported on the use of the EkoSonic system in 27 patients with pulmonary embolism. Prior to treatment, all patients showed an abnormally large right ventricle typical of PE patients. Uncorrected, this right heart dysfunction is associated with an increased risk of death or permanent pulmonary hypertension. Dr. Engelhardt checked all patients 48 hours after the Ekos treatment and found on CT angiography that the right ventricles of the majority of patients had returned to normal size. All patients survived. On average, the patients were released from the hospital within five days, and from the ICU within 12 hours, as compared with retrospective data showing that these types of patients tend to spend 10 days in the hospital, of which three or four days are in the ICU. For Ekos, the PE opportunity is enormous. In the evolving field of DVT, says Hubert, even after demonstrating high clinical efficacy, the physician adoption rate of a device for a condition

that is still largely treated by drugs is unclear. “But pulmonary embolism is a life and death matter and speed is of the utmost importance.” The company has therefore decided to move forward and invest in clinical trials for the pulmonary embolism indication.

BuIlDIng a BeTTer CloT Trap Most of the time, when blood clots in veins throw off small fragments, they travel at a low velocity to the heart, often succumbing to the body’s own thrombolytic mechanisms before becoming a problem. Occasionally, however, a large fragment will embolize and block a major vessel to the lungs, causing a rise in pulmonary artery pressure that will lead rapidly to heart failure. Since the early 1970s and the introduction of the stainless steel Greenfield filter (sold by Boston Scientific Corp.), inferior vena cava (IVC) filters have been widely implanted in patients with deep vein thrombosis who are at risk for suffering a pulmonary embolism for any number of reasons. Patients with underlying DVT who must remain immobile for long periods of time; long-distance fliers; people who are bedridden following surgery; patients for whom blood thinners are contraindicated; and DVT patients undergoing particular kinds of surgery such as orthopedic or bariatric surgeries are all candidates for these clot-capture devices. The IVC filter is a fairly ubiquitous product, used in some 200,000 procedures each year, and numerous companies with interests in the cardiovascular space sell this product: Boston Scientific, CR Bard Inc., Johnson & Johnson, B. Braun Melsungen AG, Cook Medical Inc., and so on. However, despite its long history, the vena cava filter category has generated some controversy concerning the proper use of the products, and whether and when to retrieve them. Recently, the controversy has deepened. Last year, the products were the subject of a great deal of bad press in the form of an FDA warning, litigation, and a negative article in the Wall Street Journal that appeared in August, all because of reports that filters from at least 10 companies fractured, perforated vessels, migrated, tilted and embolized, presenting a risk for sudden death. These reports were underscored by a study presented in the November 10 issue of Archives of Internal Medicine by William Nicholson, MD, and researchers from York Hospital in Pennsylvania. Founded in 2004 to address the shortcomings of existing inferior vena cava filters, Crux Biomedical Inc. expects to enter a crowded product category in just a year, which might be the right time for the market to appreciate its advantages. CEO and President Mel Schatz says that Crux Biomedical’s origin was a conversation between Thomas Fogarty and an endovascular surgeon who wasn’t happy with the state of the art in vena cava filters. Fogarty put in some seed money and gathered together a team to design an IVC filter to address those shortcomings. “When you come late to a market, you have to clearly identify the problems with existing treatments and design around them,” Schatz says, adding that the company also aimed to create a patentable design, in a market where many products look fairly similar. Accordingly, the company came up with an IVC filter that looks very different from the prevailing filters, many of which resemble the conical framework of an umbrella, with spokes that anchor the

Clinical trials such as TorpeDo, aTTraCT and CaVa look like they’ll be making the case that DVT should be treated early and effectively to avoid post-thrombotic syndrome and pulmonary embolism.

2011 Windhover Information Inc., an Elsevier company. | sTarT-uP | March 2011

VEnous DEVIcEs devices. As noted, some of the problems of conventional devices include fracture and migration. Schatz points out that the vena cava is a pretty harsh environment for devices because it is one of the largest-diameter vessels in the body and is very pliable. The large vein changes shape routinely when a person breathes, coughs, sneezes, has a bowel movement, or strains to lift something. “We designed a device with a helical shape to self-center in the lumen; our goal was better apposition to the vein wall. We avoided the umbrella shape of other devices with their long legs or tines,” says Schatz. The Crux Biomedical filter also avoids sharp angles, an attribute the company hopes will reduce the odds of fracturing after implantation. Over the decades, IVC filters have evolved from permanent to optional filters designed to be retrieved once there is no danger of

clot embolization. (FDA has created the designation “optional” to describe a device that can be used either permanently or on a temporary basis.) Many of the disadvantages of current devices have to do with the fact that, ideally, filters should not be left in the body indefinitely, but many are. There are some indications that over the long term, IVC filters may negatively influence venous flow dynamics and create DVT. While, in the past, certain devices were designed for temporary implantation, in practice, many of those devices are not removed, for a complex set of reasons that includes the fact that filters are often prescribed by one group of physicians (orthopedic or bariatric surgeons, for example) and placed by another (vascular surgeons or interventional radiologists), and follow-up gets lost in the process. Many filters are also difficult to remove, due to filter tilt or

Exhibit 3

The Device Markets In Venous Disease Vein Indications/Product Opportunities/selected companies

Pulmonary Embolism

annual incidence: >600,000 in the us, >1 million Europe; up to 200,000 deaths in the us annually. currently, PE is the third leading acute cardiovascular cause of death in the us.1

InferIOr VenA CAVA fIlTerS

crux Biomedical

next-generation IVc filter aims to correct limitations of conventional products. symmetrical design makes it easily retrievable; helical shape improves wall apposition; avoidance of sharp angles reduces fracture risk.

Veniti Medical

offering an integrated platform of vein treatments; initial products include a stent designed for veins, a varicose vein ablation product gained from the acquisition of Varix Medical, and an inferior vena cava filter gained from Teneo Medical.

ThrOmbOlyTIC DeVICeS

Ekos corp.

ekoSonic catheter delivers low-power ultrasound energy, which in combination with thrombolytic drugs speeds up the process of safely treating serious blood clots. offers safety advantages in the pulmonary artery compared with thrombectomy devices.

Deep Vein thrombosis

approximately 600,000 new DVT cases are diagnosed each year in the us, with as many as 20 million patients having had a prior DVT.

VenOuS STenTS

Veniti Medical

(See above.)

WL Gore

Viabahn and Viatorr stents developed for peripheral artery disease are the subject of investigator-sponsored studies in DVT.

ThrOmbOlySIS DeVICeS (Drug PluS DeVICe)

covidien (Bacchus)

Trellis peripheral infusion system is catheter with two occluding balloons, drug infusion holes between the balloons, and mechanical drug dispersion capabilities. Trellis isolates treatment area with dual balloons on the catheter, and offers more rapid pharmacokinetics due to dispersion of the lytic throughout the thrombus. after clot is dispersed, remaining material is aspirated through the catheter.

Ekos corp.

(See above.)

Pulse Therapeutics

Magnetism-based technology for the destruction of blood clots, aims to target and amplify a much lower dose of lytic drugs (early stage).

ThrOmbeCTOmyDeVICeS

Medrad’s Possis Medical

AngioJet creates high-velocity saline jets that are directed backward from the tip of the device to outflow channels in a coaxial fashion. This generates a vacuum force that draws the thrombus into the catheter.

nexGen Medical systems

Integrated thrombectomy product line includes a mechanical blood clot retrieval device, an embolic protection device, and an infusion catheter for targeted delivery of thrombolytic agents to dissolve any residual clot.

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VEnous DEVIcEs embedding of the retrieval hook. According to Schatz, today only 25% of the devices are removed, although many more have been implanted in patients for temporary applications. “Starting from scratch, we didn’t begin with a permanent design that we later decided should be retrievable,” says Schatz. Crux’s founders had instead the goal of developing a device with the durability of a permanent implant that also offers ease of retrieval. Most of the IVC filters on the market can only be retrieved from one direction. “We designed a symmetrical device that could be removed in either direction,” says Schatz. With a class II medical device (a 510(k) product requiring an IDE), Schatz says the company’s pivotal study is 80% complete, the primary endpoint of which is related to pulmonary embolism prevention. The company anticipates it will enter the US market in early 2012, at which point a partnership or acquisition will be a logical strategy. Schatz says, “We didn’t set up the company to be a commercial organization,” pointing out that Crux Biomedical runs

a lean operation with fewer than 20 people. The start-up has gotten to this point on $15 million in three financing rounds provided by Thomas Fogarty, Alloy Ventures, and Emergent Medical Partners and will soon raise its last round. This is Schatz’s second start-up in deep vein thrombosis, having been brought in to lead Fogarty’s previous DVT start-up Bacchus Vascular, before its acquisition by Covidien. Schatz describes the venous disease opportunity as somewhat of a sleeper. Despite the lack of attention to the space, there are enormous numbers of patients with vein disease, he notes. Schatz says that in early February 2011 he was at a presentation at the iCON (International Congress for Endovascular Specialists) meeting sponsored by the Arizona Heart Foundation in early February, during which vascular surgeon Allan Lumsden, MD, of Methodist Hospital, Houston, said that in his practice, venous disease is three to four times more prevalent than arterial disease. “The venous market is underdeveloped,” says Schatz, “but if you start to explore the dissatisfaction that physicians have with the

COmPreSSIOn DeVICeS fOr DVT PreVenTIOn

FlowMedic Ltd.

company claims world’s smallest leg compression device for DVT prevention in surgical patients, Aviafit, is pulsating leg band.

Medical compression systems

Portable ActiveCare device delivers continuous DVT prevention suitable for step-down and home environments; identifies patient’s venous flow pulses and synchronizes to them. The only company to successfully conduct head-tohead clinical trial of its device against a drug, Lovenox (enoxaparin).

Venous health systems

Vasculaire Compression System is FDa-cleared portable pneumatic device featuring a fully portable pneumatic controller attached to a patented multi-cell compression sleeve. When the compression sleeve is placed on the patient’s calf and foot and the controller is activated, the cells promote circulation with a sequential rapid inflation wave-like motion.

OTher DVT PreVenTIOn

sky Medical

OnPulse is adhesive strip that sits behind the knee and stimulates the muscles in the calf and foot.

Chronic Venous Insufficiency

24 million in the us suffer with varicose veins. 10 million, us, with chronic venous insufficiency (cVI). 500,000 (us) suffer with venous ulcerations.3 300,000 procedures in the us; vein stripping and endovenous ablation.4 after age 50, nearly 40% of women and 20% of men have significant vein problems.2

enDOVenOuS AblATIOn

angioDynamics

VenaCure eVlT (endovenous laser treatment) for varicose veins.

covidien (Vnus Medical Technologies)

Closure procedure uses rF generator and single-use disposable catheter to close off damaged vein.

Vascular solutions

Vari-lase endovenous outpatient laser procedure.

Veniti

(See above.)

Xo Thermix Medical

spun out of the university of Minnesota to offer cost-effective vein ablation alternative based on chemical-based heating.

VenOuS VAlVeS

Deep Vein Medical

DVm Sail Valve is minimally-invasive, sutureless PTFE leaflet with niTi scaffold. replaces incompetent venous valves for the restoration of normal flow dynamics and a curative, rather than palliative effect.

SOurCeS: 1T. c. Engelhardt, MD, presentation 2/2011 icon meeting; 2Vascular Disease Foundation; 3Deep Vein Medical Inc.; 4Vnus annual report, 2009 ©

2011 Windhover Information Inc., an Elsevier company. | sTarT-uP | March 2011

VEnous DEVIcEs current products used to treat vein diseases, there is a large demand for improvements. At some point, this market will explode.”

DVT preVenTIon In a MoBIle WorlD Hospitals routinely place pneumatic compression sleeves on the legs of patients to prevent deep vein thrombosis following certain lengthy surgeries. The use of these products is well accepted, since the risk of DVT following a prolonged surgery has been established to be in the 10 to 15% range, and post-surgical DVT is one of the most common causes of pulmonary embolism (as in the case of Ms. Williams, who had foot surgery last year). The market is mature and served by market leaders Covidien (through its Kendall product line), ArjoHuntleigh Getinge Group and DJO Global Inc. in the orthopedics space, as well as many other companies serving surgical specialties. The goal of building a better compression device has attracted start-ups to the area as well; these companies hope to play in a segment of the venous space where the technological and market hurdles of non-invasive and well-accepted products aren’t quite as high as in the deep vein treatment space. (See Exhibit 3.) Conventional pneumatic compression technology is getting on in years now, and it hasn’t kept pace with the demands of hospital economics and efficiencies, nor do these products properly serve the patients who must remain tethered to them when, in many cases, for their good health, they should be ambulating as soon as possible after surgery. The products’ limitations leave the door open for innovation. With a long-standing acquaintance with venous disease as a vascular surgeon, Thomas Fogarty observed that clinical pathways in the hospital were changing and that the pneumatic compression technologies used to prevent DVT weren’t keeping up. Patients are now moved out of hospitals – and secondary facilities – and returned to their homes much more quickly than ever before, and in settings outside of the hospital they’re not well served by the conventional, large, 5- to 15-pound capital equipment units. At the same time, the need to prevent DVT has become even more important for hospitals, for economic reasons. The Medicare Cost Reduction Act of 2005 established a DVT that occurs in a patient within 30 days of surgery as a “never” event – a complication not paid for by Medicare and consequently an expense absorbed by the hospital. Dr. Fogarty founded Venous Health Systems Inc. in 2009 (with funding from Emergent Medical Partners) on the concept of a device that would give patients mobility in hospitals and that would be able to follow them into the step-down facility and then home. Venous Health Systems’ Vasculaire Compression System, which gained FDA clearance in February 2011, is a device that is small enough to be worn under a pair of slacks, weighs less than a pound, has no protruding power cords or tubes, and might even improve upon the standard of care with a novel way to deliver compression. The company plans to provide an advantaged alternative to a reimbursable product the clinical benefits of which have been understood for 30 years. Vasculaire somewhat resembles the kind of shin guard that soccer players wear, although in the case of the compression device, the padding is on the back of the leg instead of the front. Whereas market-leading products are segmented to deliver pressure in, at most, three zones, Vasculaire is made up of more than

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25 cells that are like the individual air bubbles on a sheet of bubble wrap. The cells activate sequentially, with the cells most distal from the heart activating first, in a wave-like motion. CEO Rich Lotti says the economics of the device allow it to be sold for a price that is competitive with that of current devices. Thus, Lotti says, Vasculaire offers advantages to hospitals, physicians, nursing staff, and patients. The patient recuperating in the hospital from surgery is today tethered to a conventional bedside pneumatic compression device; if he or she needs to take a walk or use the bathroom, a nurse is required to disconnect and reconnect the system. Considering a case load of 10 patients with compression devices, that’s a lot of nursing time, and it’s a nuisance for the patients. The treating physician benefits, if the Vasculaire device spares the use of anticoagulants, which interfere with wound healing. Finally, the hospital benefits, because of the aforementioned savings in terms of nursing time, but also because patients are likely to be more compliant with the Vasculaire device, because it is unobtrusive and doesn’t restrict their mobility, and this will decrease the odds of the “never” event. The home market for compression devices is a new, undeveloped one, notes Lotti. In that setting Vasculaire may have a role to play in wound healing, as an alternative for non-healing wounds after pressure bandages, compressions stockings and other options fail. (There is another potential quality-of-life market for DVT prevention devices in air travel; simple, small, low-cost devices like those of venture-backed Sky Medical Technology Ltd., described in Exhibit 3, might be able to play a role there, in addition to operating in medical markets.) Venous Health Systems intends to launch its product through partners that already sell pneumatic compression devices, offering them a next-generation product with obvious advantages. The start-up has operated on a low-cost model with just five employees and was not built to operate indefinitely as a stand-alone company, says Lotti. “Dr. Fogarty is a prolific inventor and has many ideas in the venous space. This product is so disruptive it is likely to be acquired by one of the players already in the DVT market.” Lotti notes that Venous Health Systems has the right product for the laptop/cell phone generation, which expects products to allow mobility. Besides, he says, “For health reasons, it is better for patients to keep moving.”

VenITI puTS IT all TogeTher By now it is evident that the venous device industry is a complicated, fragmented market served by a variety of clinicians and product categories. Is this fragmentation merely a stage in the evolution of a field that will one day be much more consolidated and cohesive? Covidien clearly thinks so. In bringing together under one roof most of the major categories of products for deep vein disease, Covidien has raised the profile of a field that is at a very early stage of development. To the extent that a major company like Covidien has articulated a strategy for venous disease, that can only help the field grow. Covidien isn’t the only company to think this way. In early March 2011, Veniti Inc. simultaneously announced its $13.5

VEnous DEVIcEs million series A financing round (co-led by Baird Venture Partners, H&Q Healthcare Investors, and H&Q Life Sciences Investors, which were joined by Prolog Ventures, St. Louis Arch Angels, and individual investors) and the roll-up of three separate vein technologies into a single entity. With its therapeutic focus, Veniti perhaps goes one step further than Covidien. The large company’s focus on veins fits within a larger overall focus on peripheral vascular disease. Veniti will be unique in its singleminded focus on venous disease. Founder and CEO Sean Morris was formerly in sales, marketing and business development at AngioDynamics Inc., which serves interventional radiologists with a number of technologies in several clinical segments, including veins. Morris says he began to notice a trend in companies organizing around a therapeutic focus in order to go to the next level, and he and his marketing team developed such a business plan for AngioDynamics. “We spent a lot of time talking about how AngioDynamics could own the vein space by developing or bringing in new technologies. We had a great foundation with our varicose vein ablation offering [laser product VenaCure EVLT]; we were the number two player in the market.” Seeing the emerging opportunity in venous, Morris decided to go out on his own, founding Veniti with the purpose of creating products designed specifically for the venous anatomy. Morris’ initial goal was to develop the first stent designed specifically for a venous application, so he partnered with a couple of thought leaders in venous stenting, vascular surgeons Sehadri Raju, MD, and Peter Neglén, MD, PhD, of the Rane Center for Venous and Lymphatic Diseases, in Flowood, MS. Morris says he raised $1 million to fund early R&D of the venous stent. In the late summer of 2010 he began to look for complementary technologies to fold into a comprehensive play in venous, when he met Michael Liang, PhD, at Baird Venture Partners. Liang says Baird was already looking seriously at the peripheral vascular space, and he was intrigued by Morris’ idea. In the process of doing due diligence, Liang says he talked to scores of physicians – interventional radiologists, vascular surgeons and interventional cardiologists. Liang says, “This is such a large market, and it is not talked about that much. People often talk about heart valves, cardiac rhythm monitoring, things like that, but there has been a surprising lack of focus on venous disease, given its prevalence and size and the fact that it is growing. I think that is changing, which is obviously part of our thesis.” As noted, Veniti has products in three major venous categories. The first product that will hit the market, an endovenous ablation product for varicose veins, was gained by acquiring Varix Medical Corp. Varix uses steam to ablate veins and potentially offers the ability to ablate a broader range of veins while using less heat. According to Morris, the product provides the potential upside of less pain and bruising than current modalities. Morris anticipates that the Vapor Vein Treatment System will be on the market by the end of the year. (See “Varix Medical Corp.,” START-UP, November 2009.) The second product is an inferior vena cava filter, acquired from Teneo Medical Development Inc., which attempts to correct the deficiencies, noted above, of current filters. According to Morris, “The Teneo product is a disruptive technology. While there are many vena cava filters on the market, for the most part, they

are very similar in design. The Teneo vena cava filter technology is truly unique and one that will potentially be game-changing.” The third product, the venous stent, will be an important and high profile product. There are no stents specifically designed for the venous anatomy; stents, when needed, are borrowed from peripheral artery tool sets. These are less than ideal, because a vein is very different from an artery. It is too early for Veniti to reveal the specifics about its stent in development, but in an interview, Frank Arko, MD, a vascular surgeon at University of Texas Southwestern Medical Center in Dallas, outlined for START-UP the ways in which venous stents have unique requirements. Arko explains that veins are challenging because the amount of change in diameter and the sizes of veins are significantly greater than those attributes of arteries. “On the arterial side, the cyclical change within an artery may be as small as 2 to 3% or perhaps 17 to 18% in the ascending aorta. But the venous system is very compliant; it is affected by the respiratory system and the volume status of the patient, so you get greater changes in diameter.” Arko says that venous stents need to have other attributes that separate them from their arterial counterparts. “Because a vein is a very thin-walled vessel, you can’t have too much radial force. If you have too much radial force with hooks and things, the hooks can actually erode through the vein. If you put in a stent that is too small, it has a risk of embolizing to the heart. There are specific challenges to developing devices on the venous side.” Other products that could be included in the overall venous opportunity include devices for thrombectomy, thrombolysis, venous valves, venous angioplasty, and venous ulcer wound care, says Morris. Today, it’s tough to get a handle on the markets for venous disease. Although many in industry have described them as enormous, now they’re scattered across different devices for particular indications in specific markets. Does it make sense for one company to call itself a vein company? In the current market, it’s not an obvious argument to make. However, the vascular surgery and interventional radiology communities are pulling for more cohesion in vein care. Anthony Comerota, MD, a vascular surgeon and a thought leader in the space believes that a company with a therapeutic focus on veins “is the company that’s going to be the most successful.” Comerota is director of the Jobst Vascular Institute in Toledo, and has an integral involvement in the ATTRACT trial. Comerota says, “What a company gains is an efficiency of scale and an efficiency of expertise. If you are expert in one venous area, it is easier to become an expert in another; there is a compounding factor. And you can have a sales force that can sell two, three or four products for venous disease. It just makes good sense.” [A#2011900052] E-MAiL tHE AutHoR At: M.Stuart@Elsevier.com

related reading Varix Medical Corp., START-UP, November 2009 [A#2009900247] Covidien Set to Compete in Vascular Business, IN VIVO, May 2009 [A#2009800084] Ekos’ Long, Hard Road, N VIVO, March 2005 [A#2005800060] access these articles at our online store: www.windhover.com/article

2011 Windhover Information Inc., an Elsevier company. | sTarT-uP | March 2011

PROFILES Antidepressants:

Emerging From Their Funk? Forest’s acquisition of Clinical Data to get its just-approved antidepressant signals continuing strong demand. But better, and much needed, treatments remain elusive.

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26 28

Euthymics Bioscience Naurex

Could antidepressants be on the verge of snapping out of a multiyear case of the blues? Despite worldwide sales topping $20 billion for existing products – $12 billion in the US alone – the field is crowded with generic agents, and other blockbusters are about to lose their patent protection. That has dramatically reduced investment and progress in development of new therapeutics over the past decade. However, several companies, including those profiled in this issue, think that despite the market’s maturity, there’s ample opportunity yet to be mined. Recent dealmaking news gives some evidence to support their optimism. Even a drug that won’t make much difference in patients’ lives can bring substantial rewards to investors. Part of the challenge is that for a substantial percentage of patients, available treatments are already pretty good. Virtually all major depressive disorder patients must fail an initial course of a generic selective serotonin reuptake inhibitor (SSRI) like fluoxetine or citalopram or a serotonin-norepinephrine reuptake inhibitor (SNRI) such as venlafaxine before going on a branded pharmaceutical. Thus, elbowing any new drug into the primary care field can be very tough, even for a topflight commercial organization. Evidence in point: Pfizer Inc.’s Pristiq (desvenlafaxine), approved in 2008 as a follow-on to Effexor (venlafaxine), generated sales of $466 million in 2010 – despite the company having reportedly spent more than $112 million last year advertising the medication to physicians and consumers. Pivotal trials for novel antidepressants are very expensive, particularly given the need to contend with strong placebo effects. As such, few companies are willing to advance compounds demonstrating any less than entirely clear results in clinical testing. For instance, in May 2009 SanofiAventis killed the highly anticipated latestage beta 3 agonist amibegron, intended as a high-value add-on therapy to SSRIs. Though it had what the firm termed “really spectacular” efficacy, hepatic toxicity signals made it clear getting market traction

PharmaNeuroBoost

would be impossible. That the decision was based on commercial concerns and not just regulatory worries about risk-benefit highlights the great challenge for novel antidepressants. Sanofi also halted the NK2 antagonist saredutant (SR 48968) in association with escitalopram when it failed to beat placebo. (Other studies of saredutant as an adjuvant therapy continue.) In light of development and regulatory hurdles, the few early stage investors in the field now tend to come from strategic venture funds. But private VCs may want to reconsider their hesitation to jump in. The market remains enormous and even a mediocre drug’s approval can drive high returns, particularly with mounting patent expiries sparking existing players’ pursuit of other agents to cover their impending losses. At the same time, patient advocates beg for real improvements to treatment response time, efficacy and side effect profiles. Successful new therapies could radically alter the presently stale treatment landscape. First the mediocre drug tale: on February 22, Forest Laboratories Inc. announced its acquisition of Clinical Data Inc., forking over up to $1.1 billion – $30 a share – plus up to $6 per share based on additional milestones. Forest acted quickly after Clinical Data won FDA approval for its antidepressant Viibryd (vilazadone) a month earlier. (See “Forest Buys Clinical Data And Extends Its Antidepressant Portfolio,” “The Pink Sheet” DAILY, February 22, 2011.) Clinical Data’s shares were valued at about $11 just six months ago. (The actual purchase price was a little under a 7% premium to Clinical Data’s share price, but the stock had already plumped up based on the company’s announced intention to find a buyer.) Vilazadone is a dual-acting SSRI and 5-HT1A receptor partial agonist, a combination physicians already regularly prescribe as separate medications to improve treatment response and reduce side effects. The pill’s near term launch will help Forest pad next March’s patent expiry of its blockbuster antidepressant Lexapro (escitalopram). The high premium to likely sales Forest paid shows that even

PROFILES | Antidepressants a drug with little hope for blockbuster status can reward investors. One analyst projects peak sales of just $600 million – and nobody figures Viibryd to recapture all of Forest’s $2.27 billion in 2010 Lexapro sales. However, Forest will study Viibryd as a treatment for anxiety disorders, perhaps one day justifying the purchase price. Viibryd’s precedented mechanism of action, coupled with what the companies tout as a favorable side effect profile, may help differentiate it; specifically, placebocontrol data show that Viibryd is less likely to hinder patients’ sex lives or cause weight gain than SSRIs and SNRIs. Up to 60% of patients experience sexual dysfunction while on antidepressants. That leads patients to churn through medications – there were some 250 million scripts written in the US alone last year – in search of an agent, or combination of meds, that provides efficacy with acceptable side effects. The various side effects also lead to enormous compliance problems: about 70% of patients stop taking their medication. All this comes at a huge cost to the health care system. In seeking to help unhappy patients, physicians can prescribe two drugs, but they worry about their interactions and also prefer to avoid the complexity of multiple drug titrations and multiple prescriptions or co-pays. Instead, they like to switch their patients to another single agent. That logic has made Cymbalta (duloxetine) Eli Lilly & Co.’s second most valuable product. Reaping $3.481 billion in 2010 revenue, a 13% increase from the previous year, Lilly’s drug combines serotonin and norepinephrine reuptake inhibition in a capsule. So Forest may well find a market for Viibryd. Nonetheless, some observers – Harry Tracy, PhD, publisher of NeuroInvestment, among them – view Viibryd’s approval and the high-price Clinical Data acquisition as “steps backward for the FDA and the industry.” Viibryd managed to win approval without an active comparator arm in its data package, giving little direct validation for switching patients. Also disappointing, Clinical Data, which got the drug via its 2005 acquisition of Genaissance Pharmaceuticals Inc. for $55 million, did not fully execute on the original premise for its development: it was intended to be developed with a phar-

macogenetically based biomarker, to direct the drug to an enriched patient population for which it would show a more favorable risk/benefit profile. (See “Biomarkers for Psychiatric Drugs: Outlier or Opportunity?,” IN VIVO, July 2008.) At this point Forest has spent well over a billion dollars for a drug that’s unlikely to do much to make a genuine advance in the treatment of depression. However, it shows just how valuable the field remains and how far those with existing commercial muscle will go to stay in the game. The existing market size and growth and the known weaknesses in the most widely used treatments are powering the companies profiled here – and should encourage investors looking for CNS opportunity. The lack of innovation in antidepressants in recent years belies the market need; there’s plenty of room for improvement. Based on the influential 4,000-patient National Institute of Mental Health Sequenced Treatment Alternatives to Relieve Depression (STAR*D) study, only 63% of patients treated with the SSRI citalopram alone experience even a limited therapeutic response. Even after multiple steps of antidepressant treatment, augmentation with an additional antidepressant and switching among drugs, a significant portion of patients failed to respond. And patients often take several days to weeks before they respond to treatment. Some of that time is spent in the hospital, at great cost. Suicide remains a major lethal risk from treatment-resistant disease. Several biotechs see faster response time as the key to capturing a place in the antidepressant market. Numerous clinical studies over the last decade confirm the antidepressant effects of modulators of the glutamate receptor subtype known as NMDA, such as ketamine, in use as an anesthetic in humans and animals for about 50 years. Studies show that NMDA modulators have dramatic efficacy in patients with treatment-resistant depression, demonstrating response rates greater than 50%, plus astonishingly fast onset of action – within hours of a single dose – and a long duration of effect. But ketamine and other known NMDA receptor (NMDAR) blockers are also associated with significant toxicities at or near their therapeutic doses. These side effects include hallucinatory schizophrenialike effects and sedation plus abuse and ©

addiction potential, greatly limiting their therapeutic potential. (See “New Findings About The Ketamine Effect And Treating Depression,” START-UP, September 2010.) Chosen as a “Top 10 Most Interesting Neuroscience Projects to Watch” at Elsevier Business Intelligence’s Therapeutic Area Partnerships meeting last October, Naurex Inc., profiled here, is developing novel therapies for depression and other CNS disorders based on a new mechanism of action for modulating the NMDAR in a safe way – glycine-site functional partial agonists (GFPAs), which only partially activate the NMDAR, versus fully antagonizing it as ketamine does, with evidence that such agents can benefit CNS disorders like depression without the typical bad side effects. The injectable Naurex medication could prove valuable for treatment-refractory patients in the inpatient setting. Although SSRIs have been around a long time now, the millions of SSRI antidepressant medications taken daily, even when effective, don’t relieve all symptoms of the disorder and often have serious associated side effects such as cognitive impairment including apathy, inattentiveness, and mental slowing; fatigue; weight gain; and anhedonia, especially the sexual dysfunction so common to SSRIs and SNRIs. The STAR*D study demonstrated that only about one third of depressed patients achieved remission with the first SSRI they took. The study then looked at the benefits of changing those patients to other neuromodulators, or failing that, adding two or even three differentially acting drugs. Patients taking two inhibitors acting on different neurotransmitter systems showed only moderate improvement in remission rates. But STAR*D patients who received a third differentially acting neuromodulator showed significantly higher treatment response rates and substantially fewer side effects. Coming up with a triple neuromodulator makes sense, but correctly tuning the combination has proven an elusive goal. Cardiovascular side effects and nausea have halted most programs – still several pharmas continue to pursue products. Profiled in this issue, Euthymics Bioscience Inc. thinks it has found the magic triple-combo ratio. The company’s formula, now in midstage clinical testing, combines serotonin, norepinephrine and dopamine

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARCH 2011

PROFILES | Antidepressants modulators in a way that results in a ratio of 1:2:8. The company plans to test its candidate against paroxetine to show improvement over a generic standard of care. If it succeeds, it could move to the front of the second line of antidepressant agents. Another company pursuing the combo route, Belgian firm PharmaNeuroBoost NV (also profiled here) will soon embark on a Phase III pivotal trial in Europe of its fixed dose combination of citalopram and low dose pipamperone, providing highly selective antagonism on the 5-HT2A and dopamine-4 (D4) receptors to boost both the speed of response and efficacy over citalopram and other SSRIs alone. Other combination drugs in advanced testing could soon perk up the field, or drive it deeper into its funk. Two antidepressant-development partnerships should

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report out data sometime later this year. Takeda Pharmaceutical Co. Ltd. and partner H. Lundbeck AS aim to submit Lu AA21004 and Lu AA24530 for US FDA approval in 2012. According to Lundbeck’s published information, the drugs combine antagonism and agonism at relevant 5-HT receptors as well as inhibition of 5-HT reuptake – again searching for the right combination that can tune the neurotransmitter system to beat depression without making the rest of life miserable. AstraZeneca PLC is Targacept Inc.’s key partner, as the companies await Phase III data late this year for TC-5214, a novel nicotinic channel blocker designed as an adjuvant treatment of refractory depression. The companies are also looking at TC-5214 as a second-line monotherapy, but that will be wishful thinking if it

Euthymics Bioscience Inc. Triple reuptake inhibitors for depression

As the song goes,

two heads are better than one. The neuroscience-focused startup Euthymics Bioscience Inc. aims to coin a new verse: three reuptake inhibitors are better than one. There’s nothing new to the notion of combining central nervous system modulators to create synergistic formulations, especially for major depression and relief of treatment side effects. Serotonin is not the only neurotransmitter implicated in depression, but the selectivity that bestows safety to selective serotonin reuptake inhibitors (SSRIs) may limit their antidepressant effect in some patients. Just 63% of patients treated with antidepressants experienced therapeutic response even after multiple steps of antidepressant treatment, augmentation with an additional antidepressant, and switching among drugs, as shown by the National Institute of Mental Health’s Sequenced Treatment Alternatives to Relieve Depression (STAR*D) trial. STAR*D did demonstrate a significantly higher treatment response for those patients who took multiple, broader spec-

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trum medications that selectively blocked reuptake of neurotransmitters in all three monoamine systems – serotonin, dopamine and norepinephrine. A triple reuptake inhibitor formulation might have synergistic effects that could go beyond those of an SSRI or other reuptake inhibitors alone or even augmented. Even when effective, the millions of SSRI antidepressant medications taken daily don’t relieve all symptoms. Moreover, they have unpleasant side effects, like cognitive impairment including apathy, inattentiveness, and mental slowing; fatigue; weight gain; and anhedonia. The latter is particularly distressing for the up to 60% of patients who experience sexual dysfunction. Psychiatrists frequently prescribe bupropion, a dopamine and norepinephrine reuptake inhibitor developed as an antidepressant, to improve sexual function. Doctors hesitate to mix neuromodulators. Although dopamine and norepinephrine reuptake inhibitors may alleviate the weight gain, cognitive impairment and anhedonia, too much of them induces

doesn’t work as an adjuvant. If it does, look for more combination therapy candidates to emerge. It’s now a proven pathway to regulatory approval that looks like a way to bring investors returns and, when novel mechanisms are involved, real improvements in patients’ lives. [A#2011900053]

– Marc WortMan

RelATed ReAding Forest Buys Clinical Data And Extends Its Antidepressant Portfolio, “The Pink Sheet” DAILY, February 22, 2011 [A#14110222001] New Findings About The Ketamine Effect And Treating Depression, START-UP, September 2010 [A#2010900191] Biomarkers for Psychiatric Drugs: Outlier or Opportunity?, IN VIVO, July 2008 [A#2008800121] Access these Articles At OUr Online stOre: www.windhover.com/article

43 Thorndike STreeT SuiTe S1-3 Cambridge, ma 01241 Phone: (617) 758-0300 Web Site: www.euThymiCS.Com Contact: Anthony A. McKinney, President

& CeO Business: drugs for depression, AdHd and other psychiatric disorders Founded: March 2009 Founders: Anthony A. McKinney; Franklin P. Bymaster, CSO; gary Tollofson, Md, Phd Employees: 9 Financing To Date: $28 million Investors: novartis Venture Funds; Venture investors llC; Hambrecht & Quist; Capital Management llC; gBS Venture Partners Board of Directors: Campbell Murray, Md (novartis Venture Funds); Paul Weiss, Phd (Venture investors llC); Frank gentile, Phd (Hambrecht & Quist Capital Management llC); Andrew Baker, Phd (gBS Venture Partners); Timothy Barberich (formerly Sepracor)

tachycardia and hypertension, along with nausea. Physicians may also want to avoid the complexity of multiple drug titrations and multiple prescriptions or co-pays.

PROFILES | Antidepressants They would prefer to switch their patients to a single agent. But tuning the balance among three reuptake inhibitors has so far eluded all attempts. “The long history of attempts to modulate three neurotransmitters has set the stage for our much needed progress,” says Euthymics’ president and CEO Anthony A. McKinney. One of the investigators who tried longest to develop a triple was the late Gary Tollefson. He retired as president of the once legendary Eli Lilly & Co.’s Neuroscience Group, which under his leadership brought forward products that include Prozac (fluoxetine), Cymbalta (duloxetine), and Zyprexa (olanzapine), among others. He is also personally credited with co-inventing the norepinephrine reuptake inhibitor Strattera (atomoxetine) for attention-deficit hyperactivity disorder (ADHD). But the Lilly group couldn’t surmount the triple antidepressant wall. “The interaction of the molecules has to work, and the ratio has to work,” McKinney says. “We believe we’ve found the key, but the road to this point has not been easy.” For instance, in 2009 NeuroSearch AS and GlaxoSmithKline PLC halted work on NS2359 (GSK372475), a triple monoamine reuptake inhibitor, after two Phase II studies failed to meet their endpoints. However, AstraZeneca PLC, BristolMyers Squibb Co. and Roche all appear to be moving forward with their own triples. After leaving Lilly, Tollefson wasn’t done. McKinney was then COO at Orexigen Therapeutics Inc. He helped hire Tollefson as that company’s president and CEO. They took Orexigen public and brought forward a combination of naltrexone and bupropion (Contrave) for weight loss. (In late January, the FDA issued Orexigen a Complete Response Letter calling for a major additional clinical trial to investigate Contrave’s cardio-safety, almost certainly killing the program.) McKinney was previously VP, drug development at Novazyme Inc. and then SVP and general manager at Genzyme Corp. after it acquired Novazyme for $137 million. Tollefson, McKinney and a 33-year Lilly veteran neuroscientist, Franklin P. By-

master, a VP of neuroscience at Orexigen, departed the company together in 2008 when they saw potential in salvaging a triple reuptake inhibitor, DOV-21,947, from Dov Pharmaceutical Inc. The former high flier was folding up shop after the failure of insomnia drug indiplon, licensed to Neurocrine Biosciences Inc., and a number of other neuroscience agents in clinical trials. In 2004, Dov had licensed out rights to 21,947 for all indications to Merck & Co. Inc. Two years later, Merck gave back the drug for unspecified reasons. It had gone through the early stages of a Phase II study in depression, but Dov ran short of money to move the drug any further along, despite the fact that, according to McKinney, a review of the data show “the trial actually worked.” With Dov unable to find financing, its assets, including other pipeline programs, were available at the firesale price of $2 million. Novartis Venture Funds committed the largest portion of an initial $24 million Series A financing – since augmented by the investment syndicate with an additional $4 million. Tollefson, who had leukemia, died just two weeks after the March 2009 launch of Euthymics. In July 2010, the company completed a reverse merger, taking Dov private. According to McKinney, the redesignated EB-1010 has a ratio of serotonin, norepinephrine and dopamine modulation very similar to the triple combination given as multiple medications that was shown to improve outcomes in the STAR*D trial. He compares the balance of the first two elements to that of Cymbalta, Lilly’s nearly $3.5 billion dual-acting neuromodulator. As a serotonin-preferring triple reuptake inhibitor, EB-1010 demonstrates greatest affinity for the transporters that inhibit serotonin reuptake, half as much against norepinephrine reuptake, and one-eighth as

According to McKinney, the redesignated EB1010 has a ratio of serotonin, norepinephrine and dopamine modulation very similar to the triple combination given as multiple medications that was shown to improve outcomes in the STAR*D trial.

much against dopamine reuptake, resulting in a ratio of 1:2:8. The company will soon begin TRIADE, or the Triple Reuptake Inhibitor Antidepressant Effect trial, a 25-site Phase IIb/IIIa study looking at EB-1010 against both paroxetine and placebo, including outcomes in sexual dysfunction and weight gain in major depressive disorder patients not responding to one course of an SSRI or serotonin-norepinephrine reuptake inhibitor (SNRI). Maurizio Fava, MD, professor of psychiatry at Harvard Medical School and executive vice chair of the department of psychiatry at Massachusetts General Hospital, will serve as principal investigator. He’s a leading expert in reducing placebo effects, which run extremely high in trials of antidepressants. Assuming TRIADE’s success, McKinney expects to begin discussion with the FDA in the middle of 2012 on a pivotal trial design. At that point, says McKinney, the company will be well-positioned “for a number of different forms of discussion” about its future direction. “Our goal is to be the first of the second-line drugs” – after patients fail a round of SSRI or SNRI generics, with a better side-effect profile than the generic drugs that might eventually move it to the front of the line. Coming up with the right ratio is also driving Euthymics’ second clinical program, EB-1020, another triple, this one for adult attention deficit-hyperactivity disorder. Also bought in the Dov deal, the agent has an affinity ratio of one for inhibiting norepinephrine reuptake, to one-sixth against dopamine, to one-fourteenth against serotonin. According to McKinney, this ratio has the potential to treat ADHD but without the stimulant addictive properties that lead to abuse and to the reluctance of doctors to treat the disorder in adults. He says the additional $4 million recently added to the Series A round will enable Euthymics to complete preclinical work on the compound and carry out a Phase I study beginning in the first quarter of 2012. And having the leadership of the Lilly Strattera team on board, he says, means “we know how to develop ADHD medications.” With the company’s expertise in tuning the three neuromodulators, McKinney believes that other neurological and psychiatric disorders, including pain and anxiety, could become targets. “It’s really a question of finding the right ratio,” he says. [A#2011900054]

– Marc WortMan

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARCH 2011

PROFILES | Antidepressants

BIOtEchnOLOgy

Naurex Inc.

Prepping a peptide as an antidepressant Scientists have known

for decades that many types of brain activity are mediated through a glutamate receptor subtype called the N-methyl-D-aspartic acid receptor (NMDAR). Expanding understanding of the receptor’s structure and function is making it a hot target for drugs meant to influence a range of disorders involving the central nervous system, from mood and personality disorders such as depression and schizophrenia to neuropathic pain, learning disabilities and memory loss. Researchers have had some success, but not a lot, creating chemicals that interact with the NMDAR. Drugs that antagonize, or inhibit, this receptor are known for a tendency to cause psychological symptoms such as hallucinations and dissociative states. These very properties have made even approved drugs in this class popular for recreational use. Ketamine, used as a veterinary tranquilizer and in human anesthesia, is prized on the street as well as in hospitals for the speed with which it takes effect. Dextromethorphan, a cough suppressant found in over-the-counter medicines such as Robitussin, gives a hallucinatory high when consumed in quantities exceeding the therapeutic dose. Phencyclidine, better known as PCP or angel dust, was once marketed as an anesthetic. But its medical use in humans was halted in 1965 because patients became disoriented and agitated – just like James Brown, the Godfather of Soul, arrested for driving under the influence of PCP in 1988. Despite the widely known side effects and abuse potential of NMDAR antagonists, scientists in academia and industry have never stopped studying this important receptor, and seeking ways to modulate it for therapeutic benefit. Recent years have seen growing enthusiasm for the idea that compounds that only partially activate the NMDAR, versus fully antagonizing it as ketamine does, can benefit CNS disorders without the typical bad side effects.

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Researchers point out that memantine, still the only drug approved in the US for treatment of moderate to severe dementia, is a moderate-affinity antagonist of the NMDAR. Lately, the spotlight has turned to the old antibiotic cycloserine, a secondline treatment for tuberculosis observed to also relieve depression in some TB patients. It turns out that the antibiotic is a partial agonist of NMDAR. Cycloserine is now the subject of nearly 60 clinical trials in the US, for CNS disorders ranging from major depression to schizophrenia, alcoholism, autism, chronic low back pain, cocaine addiction, combat-related psychological trauma, phobias, obsessivecompulsive disorders, anorexia and more. The promising early data coming out of CNS-oriented trials of cycloserine are clearly encouraging the executives and investors of Naurex Inc. The company, based in Evanston, IL, was founded as Nyxis Neurotherapeutics Inc. in 2000 to develop a drug candidate as an enhancer of learning and memory that is a partial agonist of the NMDAR glycine site. The drug candidate then called NT-13 and now known as GLYX-13 is a peptide comprised of four amino acids: threonine-prolineproline-threonine. It was discovered by company founder Joseph Moskal, currently director of the Falk Center for Molecular Therapeutics and professor of biomedical engineering at Northwestern University. Nyxis was re-christened as Naurex in November 2007, and GLYX-13 re-envisioned as a potential treatment for depression and other CNS disorders. Moskal remains chief science officer of Naurex and in mid-2008 entrepreneur Derek Small became acting CEO of the recapitalized company. Small holds concurrent executive positions with other start-ups funded by Luson Bioventures, the “venture creation” firm he heads. Small anticipates that GLYX-13 can become an approvable drug that will relieve treatment-resistant depression within hours of patients receiving a single dose.

1801 maple avenue SuiTe 4300 evanSTon, il 60201 Phone: (212) 918-4650 Web Site: www.naurex.Com Contact: Ashish Khanna, VP, Business development Business: neurotherapeutics development Founded: January 2000; Re-start november 2007 Founder: Joseph R. Moskal, Phd, CSO Employees: 6 Financing to Date: $4 million Investors: luson Bioventures; Private individuals Board of Directors: edward Chandler (Portage Ventures); Bert Atwater getz, Jr. (globe Corporation); Jan edward leestma, Md; Joseph R. Moskal; derek A. Small (naurex Acting CeO); J. Stark Thompson, Phd (Ore Pharmaceutical Holdings); david C. U’Prichard, Phd (Red Abbey Venture Partners) Scientific Advisory Board: Ronald M. Burch, Md, Phd; John F. disterhoft, Phd (northwestern University institute for neuroscience); John Krystal, Md (Yale University School of Medicine, US department of Veterans Affairs); J. david leander, Phd; george Miljanich, Phd (Airmid inc.); Joseph R. Moskal; Patric K. Stanton, Phd (new York Medical College); david C. U’Prichard; Paul l. Wood, Phd (Phenomenome discoveries)

Usually, people prescribed antidepressants are told it may take weeks after beginning treatment to see relief of symptoms. Naurex is basing its positive predictions of efficacy on animal studies that showed GLYX-13 capable of quickly producing antidepressant-like effects in rats. Preclinical data presented by the company at the American College of Neuropharmacology meeting in 2009 showed that in rats, GLYX-13 started working in just 20 minutes, and the effect of a single dose lasted at least 96 hours. In June 2010, Naurex reported acceptable safety data from a Phase I trial. Adverse events from the compound and placebo were both deemed “mild,” and no trial participants demonstrated the schizo-

PROFILES | Antidepressants phrenic-like symptoms commonly caused by NMDA antagonists. Naurex expects to begin a Phase II dosing trial in the second quarter of 2011. Although growing numbers of researchers are now pursuing the potential of partially agonizing the NMDAR, Small is convinced that Naurex will remain in a good competitive position. “The science behind GLYX-13 is completely differentiated from any other approach to this target, to date,” he declares. Calling Moskal “a pioneer,” Small explains that Moskal began his research in learning and memory at the National Institute of Mental Health in the laboratory of Julius Axelrod, PhD, who had won a Nobel Prize in 1970 for his work with neurotransmitters. Moskal was given a lot of latitude to be creative, Small says, and began experimenting with “monoclonal antibodies when people were just figuring them out.” Moskal created a MAb that could enhance synaptic plasticity associated with learning and memory in hippocampal slices made from rat brain. He confirmed the in vitro results by directly injecting the antibody into the brains of rabbits, showing that this also enhanced their learning and memory, and he published the work in 1992. Recognizing that antibodies cannot cross the blood-brain barrier, Moskal made the effort to translate his lab experiment in a way that might yield a drug candidate that could be given systemically. So he cloned and sequenced the hypervariable regions of his antibody, then tested stretches of amino acids derived from those regions. GLYX-13 is the peptide that emerged as the best drug candidate. The possibility that it might have beneficial effects in depression and other CNS disorders was recognized later. Naurex scientific advisor J. David Leander says the story behind the discovery of GLYX-13 reminds him of gabapentin, which went on to become Pfizer Inc.’s blockbuster neurology drug Neurontin. “Big Pharma could never have created this candidate through straight chemistry. You could only get to it by pursuing a functional point of view,” he declares. He notes that Naurex’s due diligence shows that “all other glycine-site ligands developed over the past 30 years are derivatives of glycine or serine, and this is not an analog of those.” The company says composition-

of-matter patents have been issued on GLYX-13 and related molecules, and that more recently “patents covering this novel chemical space have also been filed.” Naurex’s lead compound may be a unique pharmacophore, but still Small says the wealth of published data on molecules such as ketamine and dextromethorphan have made the company “comfortable pursuing a new mechanism of action” for treating depression via the NMDAR. Knowing, for instance, that ketamine’s half-life is 17 minutes when given by IV administration, but that its effects can persist for a week or more, provides some parameters that help define the development opportunities and challenges for Naurex. Advisors to the company are certainly contributing pertinent expertise: Leander ran a research program at Eli Lilly & Co., working on NMDA antagonists for many years. Paul Wood was one of the first researchers to take an NMDA competitive antagonist into human trials. Ron Burch became very familiar with NMDA as a drug target when he headed the CNS group at Zeneca. “We are building on the shoulders of existing molecules and previous work in the field,” Small asserts. Because safety has been such a problem for drugs targeting the NMDAR, Small says much of Naurex’s work has been carried out in animal models, versus in vitro receptor assays. “We need to know more about the therapeutic effect in different indications,” he says. Neuropathic pain is another possible indication for GLYX-13 and follow-on molecules, as are learning and memory, the company’s original aim. But Naurex is now focusing on depression, Small explains, “because there is a perfect storm of interest in the psychiatric field for rapid-acting ketamine-like molecules. There have been lots of papers published by NIH, Yale University and other investigators, all saying we need ketamine-like compounds without the baggage.” While Naurex has already demonstrated in animals that GLYX-13 produces positive behavioral effects, Small intends for the company to track biochemical markers related to those effects. So far, he says markers that seem relevant to ketamine’s efficacy are also present in animal tests of Naurex’s peptide, “but the safety index of our candidate is several-hundred-fold better than ketamine.” Naurex commissioned ©

animal abuse liability studies of GLYX-13 at the Medical College of Virginia, which Small points out has investigated “the abuse potential of all the NMDA channel blockers and competitive blockers now or recently in development,” GLYX-13 was not identified as having ketamine-like effects in the animals. In the Phase I trial of GLYX-13, Small notes that none of the investigators, all of whom are experienced anesthesiologists, reported any ketamine-like dissociative effects among the healthy trial participants. Naurex has not evaluated abuse liability in humans. Even as positive preclinical and clinical data accumulate for GLYX-13, Small and Leander acknowledge they had initially encountered skepticism from a few venture capital contacts about the feasibility of developing a peptide as a CNS therapeutic. Yet the men insist their candidate’s properties are more like those of a small molecule than a typical peptide. “Its attributes fit within Lipinski’s Rule of Five,” Leander asserts, adding, “This molecule passes the blood-brain barrier with greater efficiency than morphine and 80% of the efficiency of water.” Naurex aims to develop GLYX-13 in a parenteral formulation, though whether it will be given by intravenous or intramuscular injection remains to be seen. The company also envisions developing an intranasal formulation. This much is clear: Naurex is using the rather rigid beta turn in its threonine-proline-proline-threonine peptide as the template for small molecules the company intends to develop as orally active drugs. Naurex expects to finance development of GLYX-13 through Phase IIb trials at least, though company executives are speaking with potential partners and will be open to collaborative opportunities sooner. The company has already agreed to put the peptide in the hands of at least one respected academic investigator, who plans to test its efficacy in bipolar disorder through a grant. Small and Leander say they don’t foresee a problem with publishing data from academic studies; they figure the alliance can only enhance understanding and validity of the NMDAR glycine-site mechanism. Clinical development of antidepressant drugs is typically a very expensive

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARCH 2011

PROFILES | Antidepressants endeavor, requiring multi-center, multicountry Phase III trials that can run up a $300 million bill. But Naurex thinks it can bring GLYX-13 along for far less. Small suggests that “a drug candidate with this profile, heading down a development path for patients with treatmentresistant depression, and where a low placebo effect is likely, looks a lot more like a targeted anti-cancer therapy than a traditional antidepressant.” Although pharma execs considering GLYX-13 as a licensing opportunity may tend to over-estimate development costs, Small is concerned they may also underappreciate the market value of an IV treatment for severe depression. As Naurex sees it, the base-case scenario for the market potential of an IV antidepressant meant only for use in a hospital setting is strong. Small cites statistics compiled

BIOtEchnOLOgy

by the Centers for Disease Control and Prevention to make his case. There were close to 500,000 hospital discharges for depression in the US in 2006, he says, noting that the true figure is higher, because the CDC does not track patients treated through Veterans Administration hospitals. On top of this were 120,000 discharges for suicide attempts. Back in the days when insurance reimbursement was less of an issue for hospitalized patients, there might have been less perceived need from payors for a fastacting antidepressant, Small suggests. But these days, when even hospitals with psychiatric wards generally have to send patients admitted for mental disturbances home within seven days, he figures such a product would be welcomed. The average stay for a patient hospitalized with depression is now 6.7 days, Small points

PharmaNeuroBoost NV Boosting the benefits of CNS drugs

out, adding, “sometimes people are sent home in just as bad shape or worse.” If GLYX-13 turns out to be as fast-acting as Naurex anticipates, Small suggests that FDA might be willing to consider its use for hospitalized patients newly diagnosed with depression, not just those known to be treatment resistant. Naurex received $2 million shortly after its founding in 2000 as Nyxis and an additional $2 million since re-launching as Naurex in 2007. The company is presently organizing another infusion to support the new development focus. A representative of Portage Ventures, which specializes in funding Midwest companies, and one from Red Abbey Ventures, already sit on the board of directors with Acting CEO Derek Small of Luson Bioventures. [A#2011900055]

alkerSTraaT 30 a 3570 alken, belgium Phone: +32 11 480 750 Web Site: www.pharmaneurobooST.Com Contact: erik

Major psychiatric disorders are areas of high unmet need, with many patients either not responding to or not adhering to existing therapeutics. The Belgian company PharmaNeuroBoost NV, founded by CEO and Managing Director Erik Buntinx and Brian Elliott in December 2006, creates NCEs out of existing therapeutics combined with the company’s proprietary boosting technology. PharmaNeuroBoost’s platform technology is based on Buntinx’s discovery of the boosting capabilities of highly selective serotonin 2A and dopamine-4 receptor antagonists. Buntinx is a psychiatrist, and previously founded the Anima Center, an outpatient psychiatric clinic and integrated clinical research unit. Through the Center, he has been involved as an investigator in patient recruitment and assessment in a number of Phase IIa and Phase III trials. The company currently has a core group of six specialists: Buntinx; Ludo Haazen, MD, chief medical officer; Remi 30

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Van Den Broeck, MD, chief development officer; Didier de Chaffoy, PhD, chief science officer; Philippe Lemmens, PhD, director of clinical development; and Lieven Baert, PhD, director of CMC. It uses a virtual model, contracting drug development people in as required, with an aim to remain dynamic and efficient. The most advanced product in PharmaNeuroBoost’s pipeline, PNB01, is a fixed dose combination of a low dose (15 mg) of pipamperone, a selective antagonist of the 5-HT2A and dopamine-4 (D4) receptors, with 20 mg or 40 mg of the SSRI citalopram for the treatment of major depressive disorder. Pipamperone has been used at higher doses as an antipsychotic since the 1960s. Buntinx filed both compositionof-matter (CoM) and method-of-use patents for the technology in 2003, and has granted CoM and use patent coverage in different countries around the world for the individual compounds in the company’s pipeline.

– Deborah erickson

Buntinx, Md, CeO & Managing

director Business: CnS

drug discovery and develop-

ment Founded: december 2006 Founders: erik Buntinx; Brian elliott Employees: Undisclosed Financing: €25 million Investors: KBC Private equity nV; KBC

ARKiV; Saffelberg investments; Biovest Board of Directors: Peter Verhaeghe, Chair-

man (Vermulst Verhaeghe graafsma & Bronckers); erik Buntinx; John Fullen; Roger M. Pinder; Floris Vansina (KBC Private equity); Ruth devenyns (KBC Private equity); Jos Sluys (Saffelberg investments); Rudi Mariën (Biovest) Scientific Advisory Board: Charles nemeroff, Md, Phd (University of Miami, Miller School of Medicine); Alan F. Shatzberg, Md (Stanford University); Thomas Schlaepfer, Md (University of Bonn)

PROFILES | Antidepressants The pipamperone component of PNB01 enhances the onset of action and efficacy of the antidepressant by blocking the serotonin negative feedback loop and so improves the serotonin and dopamine balance in the brain. Because these components of the combination were known compounds, PharmaNeuroBoost was able to complete preclinical, Phase I and Phase II proof-of-concept trials quickly, and is preparing for Phase III trials. Based on results of the proof-of-concept trial, PNB01 has a higher early and sustained response rate compared with active comparator citalopram and shows fewer side effects compared with citalopram, including lower levels of gastrointestinal effects, insomnia and appetite effects, Buntinx says. The company approached regulatory authorities to discuss clinical development in the US and Europe. “As PNB01 was regarded as a new drug entity [NDE] in the US, we applied and were granted an IND in 2010. We went ahead with the Phase II trials in 165 patients and were granted approval for our Phase III program. We submitted the Phase III protocol in February 2011, and expect to begin those trials in the US and Europe in September 2011, comparing in major depressive disorder,” says Buntinx. He describes PharmaNeuroBoost’s Phase III trial for major depressive disorder as innovative, “because it is comparing a new therapeutic compound with standard of care rather than placebo, which we regard as a new clinical paradigm. If we can show that significantly more patients show an early sustained clinical response from week two, we could receive approval on a new label,” says Buntinx. “We believe that this will be the first pivotal trial in depression designed to show superiority over an active agent, rather than just non-inferiority.” The company’s second candidate, PNB02, is a fixed dose combination of low dose pipamperone with risperidone, and has been designed to improve the risk/benefit ratio and reduce the side effects associated with the treatment of schizophrenia, by mimicking clozapine’s receptor occupancy profile without histaminic and muscarinic antagonism. The company has carried out preclinical and

Phase I studies, and believes that PNB02 could be superior to risperidone alone. A Phase II proof-of-concept trial is planned for the second half of 2012. Further down the pipeline, PNB03 is in preclinical development for the treatment of Parkinson’s disease, and PNB04 is at concept stage for Alzheimer’s disease, with the company looking at the combination of a number of antipsychotics with low dose pipamperone. PNB05, a combination of citalopram and low dose pipamperone, is in very early development for the treatment of obsessive-compulsive disorder, and the company will advance this project based on results from the Phase III trial of PNB01. The market for major psychiatric disorders is worth around €1 billion, and PharmaNeuroBoost has many competitors, including a few that are developing fixed dose combinations. For example, Eli Lilly & Co. has developed Symbyax, a fixed dose olanzapine and fluoxetine combination for people who do not respond to fluoxetine. Targacept Inc., in partnership with AstraZeneca PLC, is looking at combining its neuronal nicotinic receptor modulator TC-5214 with SSRIs or SNRIs in fixed or flexible dose combinations, and the Phase III clinical trials involve starting a patient on the SSRI or SNRI alone, before adding in the neuronal nicotinic receptor modulator. In contrast, PharmaNeuroBoost’s approach involves using the combination from the beginning, rather than bringing in a second agent after treatment has started, which has potential to improve the tolerance (and therefore the adherence), as well as speeding up the antidepressant response. In treatment with citalopram alone, around 20% of patients drop out in the first four weeks, whereas

the Phase II trials showed virtually no patient withdrawals with PNB01. The Phase III trials will also look at whether PNB01 has any effect on citalopram’s withdrawal effects. “What sets us apart? We have a unique approach, our combinations are oriented to show superior efficacy, and our experience with the FDA shows us that we have an understanding from what regulators want, even at this early stage,” says Buntinx. “If we can continue to get results like these, PNB01 could become a first-line treatment, and give us access to a huge market.” While the aim is to take its products as far into development as possible, PharmaNeuroBoost doesn’t currently plan to commercialize them but will seek partners with experience in the primary care and secondary care markets. Over its first five years of life, PharmaNeuroBoost has proved its innovative fixed dose combination concepts in preclinical and clinical proof-of-concept trials, and has shown support from the FDA for a trial that uses a new endpoint. During 2011, the company will initiate Phase III trials for PNB01 and Phase IIa trials for PNB02. “In 10 years’ time, we would like to be a CNS drug development company with a proven track record in developing products that make it to the market,” Buntinx says. Like any drug development company, PharmaNeuroBoost needs to show the efficacy of its products, and in this case, it faces the additional challenge of PNB01 needing to demonstrate superiority over standard of care, rather than placebo. However, if the product can achieve this, it could have a potential step-up into a large and lucrative market.

The pipamperone component of PNB01 enhances the onset of action and efficacy of the antidepressant by blocking the serotonin negative feedback loop and so improves the serotonin and dopamine balance in the brain.

[A#2011900056]

– suzanne elviDge

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARCH 2011

Start-ups

across health care Specialty pharmaceuticalS

32 Edge Therapeutics 34 Ensemble Therapeutics 36 Magnetecs

Edge Therapeutics Inc.

Local drug delivery for acute brain injury Acute brain injury

is a vexing problem for physicians. Therapeutic agents are available to treat bleeding and other complications resulting from head trauma, intracerebral hemorrhage and ruptured brain aneurysms. However, the effectiveness of these systemic agents is limited because while they may indeed stop bleeding in the brain by promoting therapeutic clotting, these drugs can also cause clotting in the rest of the body, resulting in heart attack or stroke. Similarly, vasodilators given systemically to dilate brain arteries after ruptured brain aneurysms can lead to dangerously low blood pressure. Edge Therapeutics Inc. is working to address this problem by developing novel formulations of existing drugs that allow these agents to be delivered directly to the brain. Once applied, the bioabsorbable microparticle formulations slowly degrade, releasing drugs locally and avoiding systemic side effects. “The whole premise is that we take off-patent and already FDA-approved medicines that we know have some effect, and reformulate them to deliver a higher concentration that is sustained for the period of time in which the medicine is needed in the brain while simultaneously avoiding systemic side effects,” says R. Loch Macdonald, Edge’s chief scientific officer. He notes that the approach has been used in other indications, such as delivery of anti-cancer drugs to prostate tumors via injection. “The carrier we use is made of FDAapproved materials, so we believe the regulatory pathway will be well defined, with fewer risks than many other development programs.” adds Brian Leuthner, the company’s president and CEO. Edge has an exclusive worldwide licensing agreement with SurModics Inc.,

March 2011 | START-UP

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which manufactures and licenses a variety of sustained-release biopolymers for use in drug formulations. “Because these components are known to the FDA, the clinical development path should be more streamlined. Our research focuses on showing that the new route of administration and dosing is both effective and safe,” says Leuthner. The company’s lead product, NimoGel is aimed at a delayed effect after brain trauma or a ruptured brain aneurysm. These conditions cause subarachnoid hemorrhage (SAH), a type of bleeding into the fluid around the brain, which can lead to delayed cerebral ischemia (DCI), typically within three to 21 days after the injury. The cause of spontaneous SAH, which usually is a ruptured brain aneurysm, can be readily treated with surgery, but the delayed effect of DCI has been more difficult to control. Annually, about 40,000 people in the US and 750,000 worldwide are at risk for ruptured brain aneurysms, striking at an average age of 50, according to the World Health Organization. “Within 30 days, more than 75% of victims will be brain damaged or dead. These are people who are healthy and all of the sudden the next day they’re fighting for their lives,” Leuthner adds. But much of the damage occurs days after the initial rupture. “The aneurysm ruptures, they get it treated, and they’re okay. And then days later they have another stroke. So there’s this window of opportunity in which an effective therapy can make a difference,” says Leuthner. The generic calcium channel blocker nimodipine, which dilates blood vessels, is FDA approved for prevention of DCI. When given orally or intravenously, however, nimodipine causes blood pressure to go down, limiting the dose that

37 Mederi Therapeutics 40 Surefire Medical

211 Warren Street neWark, nJ 07103 Phone: (800) 208-3343 Web Site: WWW.edgetherapeuticS.com Contact: Brian A. Leuthner, President & CEO Business: Repurposing approved drugs to

treat acute brain injury Founded: February 2009 Founders: Brian A. Leuthner; R. Loch Macdonald, MD, PhD, CSO; Carl Soranno Employees: 5 Financing to Date: $2 million Investors: New Jersey Economic Development Authority; Individual investors Board of Business Advisors: Geert Cauwenbergh, PhD (formerly Barrier Therapeutics, formerly BioNJ); Kurt Conti (The Conti Group); Eric Hatzimemos (Hatzimemos Partners); Mike Ferguson (Ferguson Strategies); Arthur Klausner; Scott Pallais (Sentinel Hydrosolutions); Joseph C. Sanginiti (Asher Investments); Jordan Warshafsky (formerly TYRX Polymer Delivery) Scientific Advisory Board: Francois Aldrich (University of Maryland Medical System); Bernard Bendok, MD (Feinberg Northwestern School of Medicine); Gretchen M. Brophy, PharmD (Virginia Commonwealth University); Fady T. Charbel, MD (University of Illinois, College of Medicine at Chicago); Sander Connolly, Jr., MD (Columbia University Medical Center); Joseph Dasta (Ohio State University); Daniel Hanggi, PD, Dr. med. (Heinrich-Heine-University); Neal F. Kassell, MD (University of Virginia Health Sciences Center); Hidetoshi Kasuya, MD (Tokyo Women’s Medical University); Peter D. LeRoux, MD (University of Pennsylvania); Stephen A. Mayer, MD (Columbia University Medical Center); Paul Muizelaar, MD, PhD (University of California at Davis); J. Javier Provencio, MD (Cleveland Clinic Lerner College of Medicine); Charles Prestigiacomo, MD (University of Medicine & Dentistry of New Jersey); Jose I. Suarez, MD (Baylor College of Medicine); Denise Rhoney, PharmD (Detroit Receiving Hospital/Wayne State University); Paul M. Vespa, MD (David Geffen School of Medicine, UCLA); Bryce Weir, OC (University of Chicago Pritzker School of Medicine); Howard Yonas, MD (University of New Mexico University Medical Center); John H. Zhang, MD, PhD (Loma Linda University Medical Center); Gregory Zipfel, MD (Washington University, Barnes–Jewish Hospital)

prOFileS | Start-Ups Across Health Care can be administered. Edge’s NimoGel is a combination of nimodipine and a biodegradable polymer. The biopolymer slowly degrades when placed in the head, releasing nimodipine over the course of about two weeks. Placed at the site of the injury caused by the brain trauma or ruptured aneurysm, the drug is at its highest concentration where it’s needed most. “The concentration of nimodipine is highest next to the injured brain and then becomes progressively lower as distance from the brain increases, so complications in the rest of the body, such as hypotension, do not occur,” says Macdonald. In a preclinical study in dogs, NimoGel formulation prevented DCI while being associated with no systemic side effects. “That’s not achievable if you give the drug orally or by injection into a person’s veins,” says Macdonald. The drug does not require a separate procedure to apply because it can be administered during surgery to repair the initial trauma. Though the exact mechanism behind DCI isn’t entirely understood, it appears to be a result of multiple pathways that all share a common denominator: blood vessel constriction. Nimodipine reduces constriction by blocking calcium from entering cells through calcium channels that mediate the effect. Some existing efforts to treat DCI have been too narrowly focused, says Macdonald. “They’ve singled out one pathway.

But if you can block multiple pathways that contribute to poor outcome, it should increase the chances for success. Several of the pathways go through vasoconstriction.” Patients with SAH due to brain trauma and ruptured aneurysms are increasingly being treated using endovascular procedures that are less invasive than open surgery. These patients have a drainage tube and Edge has developed a formulation called NimoVent that could be administered through that device. The company is also developing drugs to stop spontaneous and trauma-induced brain hemorrhages. Surgeries to remove blood clots can also cause ongoing or recurrent bleeding. Systemically delivered clotting drugs can lead to clot formation elsewhere in the body that causes death or disability that counterbalance the benefits that occur in the brain. “Instead of suffering consequences from bleeding in the brain, the patient gets side effects from stopping blood flow in the body, like a heart attack or a stroke. So we’re developing drugs to stop bleeding in the head using localized delivery,” says Macdonald. EG-1964 is designed to treat chronic subdural hematoma, or bleeding between the brain and the skull. Like NimoGel, it is a sustained-release formulation. It contains the FDA-approved antifibrinolytic drug epsilon aminocaproic acid that is released over 21 days to prevent resump-

tion of bleeding. The company’s EG-1960 is designed to prevent secondary brain damage following intracerebral hemorrhage, a result of bleeding within the brain. It is made up of a hemostatic agent that is released over three to five days. All four products have potential sales of more than $500 million annually in the US, according to the company. NimoGel has little competition. Oral nimodipine is now generic in the US and Europe. Eril (fasudil hydrochloride) is a vasodilator marketed by Eisai Co. Ltd. and Asahi Kasei Corp. in certain Asian countries. EG-1964 has no competitive treatment. The only competitive treatment for EG-1960 is supportive care, and about 90% of patients die or have permanent brain damage following intracerebral hemorrhage. To date, Edge has raised about $1 million in Series A financing and nearly $1 million in non-dilutive funding. It just opened a Series B for $2 million, which will fund scaling up of NimoGel production for clinical trials and preparation for an NDA. The company expects to conduct a safety and toxicity study, followed by a dose escalation Phase IIa study, in 2012. Edge is focusing on NimoGel and NimoVent, and will develop EG-1964 and EG-1960 when it secures additional financing. [A#2011900062]

– Jim Kling

2011 Windhover Information Inc., an Elsevier company. | STarT-UP | March 2011

prOFileS | Start-Ups Across Health Care

BiOtechnOlOgy

Ensemble Therapeutics corp. Making mid-sized macrocyclic molecules, en masse

Major pharmaceutical manufacturers have been plied with many, many kinds of drug discovery technologies over the past 15 years: randomly mutated mice and zebra fish, assorted antibody production methods, combinatorial chemistries, bioinformatics, high-throughput screening, massive arrays of DNA, crystallized protein structures and exotic natural compounds are but some of the temptations offered by wave after wave of fresh young biotech companies. Some of the methods have proved to be useful tools, others disappointments, and a few have emerged as powerfully enabling platforms. Ensemble Therapeutics Corp. believes it is one of the rare outfits whose discovery methodology will come to be recognized as highly productive. The firm was founded in 2004 as Ensemble Discovery, but was re-christened in mid2010 to emphasize the promise that its large-scale libraries of chemicals with macrocyclic structures will yield worthy drug candidates and ultimately marketable therapeutics. Macrocycles are chemicals that contain a closed ring of 12 or more atoms. This distinctive structure occurs sometimes in nature and is a trait of numerous marketed drugs; potent oral medicines such as cyclosporine, erythromycin and rifampicin are all macrocycles. Although medicinal chemists have long appreciated the appeal of the ring structure, most have found macrocycles difficult to synthesize and thus not ideal candidates for commercial research that must eventually be scaled up. In some labs, macrocycles were avoided because they do not meet all of the drug candidate selection criteria widely observed in the drug industry and known as the “Rule of 5.” The relatively large size of macrocycles is the attribute most out of keeping with convention: typically, a molecular weight of 500 daltons is 34

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considered the maximum acceptable for a chemical meant to be administered orally. By contrast, macrocycles tend to weigh in at 500 to 2,000 daltons. The hefty size of macrocyclic compounds is the key characteristic that Ensemble and other companies are betting will make certain of them valuable drugs. Whereas small molecules generally interact with their targets by binding to them, a matter of both fit and electric charge, the thinking goes that macrocycles will be big enough to spread across the surface of disease-relevant proteins and so physically disrupt interactions that smaller molecules are too puny and weak to influence. If so, macrocycles could hit targets that only protein therapeutics can address now, and potentially do so orally. Because the ring structure of macrocycles can help the chemicals move across cell membranes, compounds of this class may also be able to address intracellular targets that proteins such as antibodies can never reach. Ensemble’s method for making macrocyclic compounds entails tethering chemical domains to unique sequences of DNA that not only function like bar codes to identify the individual components, but also influence the synthesis of progressively complex molecules. As tagged reagents hybridize to a template DNA strand, their close proximity forges new covalent bonds; repeating the process several times allows novel molecules to grow piece by piece. The final step of the synthesis is closing the macrocyclic ring, by adding compounds that induce classic chemical reactions such as the Wittig reaction. This synthesis method, called DNA-Programmed Chemistry was devised by Harvard University chemist David Liu. Liu was just 30 years old when he became a co-founder of Ensemble along with two VCs taken with his idea to harness molecular machinery to drive the synthesis of organic molecules.

99 erie Street cambridge, ma 02139 Phone: (617) 492-6977 Web Site: WWW.enSembletx.com Contact: Michael D. Taylor, PhD, CEO Business: Drug discovery technology Founded: January 2004 Founders: Douglas Cole, MD; Noubar

Afeyan, PhD; David Liu, PhD Employees: 35 Financing to Date: $38.5 million Investors: Flagship Ventures; ARCH Venture Partners; CMEA Capital; Boston University; Kisco Ltd.; Harris & Harris Group Board of Directors: Noubar Afeyan (Flagship Ventures); Douglas Cole (Flagship Ventures); Robert Nelsen (ARCH Venture Partners); Anna Protopapas (Millennium Pharmaceuticals); Michael D. Taylor Scientific Advisory Board: David Liu (Harvard University); David Armistead, PhD (Oxford Bioscience Partners); Francis Barany, PhD (Weil Cornell Medical College); Simon Campbell (former SVP, Pfizer); Pat Confalone, PhD (DuPont Crop Protection); Gerard Evan, PhD (University of California San Francisco); Gerald Joyce, MD, PhD (Scripps Research Institute); Mark Murcko, PhD (Vertex Pharmaceuticals); Craig A. Smith, PhD (VLST Corp.); Michael E. Weinblatt, MD (Brigham and Women’s Hospital and Harvard University)

The company’s focus on building macrocycles and developing them as therapeutics has evolved over time. When Michael Taylor, formerly an SVP in Pfizer Inc.’s global R&D division replaced Richard Begley as CEO in 2007, the company was still publicly emphasizing the method’s ability to create numerous classes of compounds and its relevance for diagnostics. A research alliance with Roche in July 2007 was geared to detecting protein complexes that might serve as companion diagnostics to drugs already on the market. These days, Mike Taylor is emphasizing recent improvements in the company’s ability to make macrocyclic compounds in quantities far beyond the capacity of other companies, like Tranzyme Pharma Inc., that are also offer-

prOFileS | Start-Ups Across Health Care ing libraries of molecules in this class. Whereas Ensemble’s first significant library reportedly contained about 20,000 compounds, in 2010 the company says it made a million. Taylor declares: “2011 will be a tipping point for us. We have made improvements in yield and cost, so we can make more libraries on diverse macrocyclic scaffolds.” Roughly doubling the size of its collections every six months, Ensemble now has 1.6 million compounds aliquotted out and ready for selections. Describing Ensemble as a tool company would be far too narrow, Taylor asserts: “We are an enabling platform company. We consider ourselves like an antibody company, because our technology can be applied against numerous targets.” Ensemble will not be following the model previously favored by companies offering large-scale compound libraries, Taylor states. “We do not intend to enter a large number of alliances, where we are merely paid for our library.” Ensemble entered a discovery-oriented alliance with Bristol-Myers Squibb Co. (BMS) early in 2009 and with Pfizer as 2010 began, and would like to do at least one more. Ensemble’s deal with BMS called for it to develop candidates against up to eight targets for which therapeutic rationale exists, but which have previously been considered “undruggable.” Deal terms were announced as including an upfront payment of $5 million and up to $7.5 million to fund R&D, with development milestones of up to $29.5 million per compound plus royalties on sales. No terms were disclosed for the Pfizer arrangement. Although Taylor concedes “there is not a lot of transparency into the status of the collaborations,” he says Ensemble has made “exceptional progress on a number of BMS targets.” Ensemble has permission from its partners to reveal that it has “identified the first small-molecule inhibitors of an important cytokine/receptor interaction,” Taylor announces. His company has also, he says, “identified compounds that inhibit an intracellular target by hitting two related binding sites.” This news about disrupting protein-protein interactions with something other than a protein is noteworthy, Taylor asserts,

“because both Big Pharma and biotech companies have tried to do this and failed.” In fact, he recalls that when he joined Ensemble in mid-2007, “BMS was one of the few companies that recognized the value of going after protein targets with small molecules. Other companies had kind of written it off.” The information that Ensemble gets about structure and activity when its compounds bind targets is “much more intense and rich than the old yes/no data you could get in the past,” Taylor claims. “We can do a single experiment, and often get hundreds of millions of sequences back. We immediately see families of active compounds and can rank them.” The macrocyclic compounds that can be seen to be interacting with protein targets do not necessarily become candidates that go straight on for optimization, but they can provide “a rich starting point for medicinal chemists to look at and see patterns and new variants,” Taylor says. X-ray crystallographic data from the literature or a partner’s proprietary information can further enhance Ensemble’s discovery efforts, he notes. “We have had a couple of successes where we have designed libraries with structural information in mind.” Taylor says Ensemble has been assembling some internal tools and capabilities over the past couple years that are allowing it to leapfrog other discovery methods. “There were lots of platforms in the past that could identify hits based on affinity binding, but then it could take months to produce compounds for further testing. We have been able to do that often in a matter of weeks,” he says. The company has built some pharmacogenomic capacities, to understand targets that exist within certain cells, Taylor notes. Although there are thousands of protein-protein interactions known to be medically relevant, many considered undruggable, Taylor says Ensemble has been focusing primarily on proteins pertinent to oncology and inflammation, such as interleukin (IL)-6 and IL-15, TNF, and Notch DLL4. Taylor says he is optimistic that Ensemble is and will increasingly be perceived as creating value in a number of areas: “We have now shown our ability to generate macrocyclic compounds against ©

partners’ targets, and produced some pharmacokinetic data to show that these are or can be orally active. We feel that even over the last year, we have developed a more demonstrable and proven value proposition.” Ted Hibben, who joined Ensemble as SVP, corporate development in September 2010, says he, too, is optimistic that the company’s recent achievements will attract a third discovery partnership to bring additional early-stage, near term funding. “We have the capacity to handle that with our current staff,” he says, adding, “Our ideal new collaborator would have biological sophistication, be trying to find compounds against nettlesome targets, and think macrocycles are good bets.” Hibben most recently served as chief business officer of Cequent Pharmaceuticals, a company focused on RNAi therapeutics, and has guided business development and managed alliances at a number of biotech firms. Intent as Taylor is on finding a new partner and pleasing existing ones, it is never too early to consider the company investors’ exit strategy. Ensemble’s could come about, Taylor muses, by “a company wanting to enter this space and offering us to be incorporated.” Or, like the heads of just about every other platform-based company operating these days, Taylor would not be averse to a deal such as the one that Celgene Corp. signed with Agios Pharmaceuticals Inc. in April 2010: Celgene paid $130 million up front in exchange for the option to license compounds after Phase I, and agreed to fully fund development of any projects it takes over and to pay Agios for each up to $120 million in milestones and royalties. All while permitting Agios to co-promote some products in the US. Nice work if you can get it. Until a deal like that comes along, Ensemble will continue applying what it learns in partnerships to build value in its own pipeline. To date, Ensemble has received financing of $38.5 million from investors including Flagship Ventures, ARCH Venture Partners, DMEA Capital, Boston University, Kisco Ltd., and Harris & Harris Group. [A#2011900061]

– Deborah ericKson

2011 Windhover Information Inc., an Elsevier company. | STarT-UP | March 2011

prOFileS | Start-Ups Across Health Care

carDiOVaScular DeViceS

Magnetecs corp.

Robotic catheterization for cardiac arrhythmias Check off electromagnetism

as another in a long line of technologies used extensively by the defense industry that has now found favor in medical application. The Catheter Guidance Control and Imaging (CGCI) system from Magnetecs Corp. navigates a catheter tip via electromagnetic technology to better target radiofrequency (RF) ablation therapy during cardiology-electrophysiology procedures. “This is a real-time navigational system that offers a rapid, safe and accurate means of treating cardiac rhythm disturbances in a manner that heretofore has not been available,” says company chief medical officer Eli Gang, clinical professor of medicine at the University of California, Los Angeles’ medical school. Any patient with a cardiac rhythm disturbance who requires catheter ablation is a potential candidate for CGCI, according to Gang. This currently represents in excess of over 200,000 surgical cases annually in the US alone, with a potential market of roughly $15 billion, and over five million cases globally. Magnetecs’ co-founder, Josh Shachar, who serves as company president, CEO and chief technology officer, has worked with the US Department of Defense since 1981, interacting with aerospace and military suppliers that use electromagnetic products. “With the end of the Cold War, I was looking for an area in which military capabilities could be expanded to civilian use,” says Shachar, who was intrigued by minimally invasive cardiac procedures using catheters. “I thought there was a better way to perform these procedures than simply pushing catheters manually within the heart, and I believed using electromagnetic forces would be an improvement.” By coincidence, Gang met Shachar in 2003 when Gang was taking care of one of Shachar’s family members with a cardiac condition at a Los Angeles hospital. Gang and Shachar discussed the possibility of using Shachar’s expertise in magnetics to navigate

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catheters for electrophysiology procedures. Previously, Shachar had founded Engineered Magnetics Inc. (a military aerospace company) and subsequently, in 2005, Pharmaco-Kinesis Corp. (advanced drug-delivery systems). Magnetecs has 52 patents, 17 of which are issued. A substantial portion of the company is also owned by an undisclosed strategic partner who is a major player in electrophysiology. The CGCI system is composed of an array of eight electromagnets mounted on a steel frame that the patient’s bed slides into, positioning the frame to surround the torso. The frame provides a focused distribution of the magnetic field within the appropriate heart chamber. Separately, a magnetically protected, integrated x-ray unit is housed within the system’s steel framework. Once the patient is properly positioned, the disposable catheter with a magnetic tip is inserted into the heart chamber. The CGCI system is able to robotically guide the catheter in real time to map and ablate the patient’s heart. A remote joystick connected to powerful computers enables the clinician in the control room to manipulate the movement of the catheter, relative to the joystick’s movement. Says Gang, “The dexterity of the physician using a joystick has been demonstrated one-to-one in real time to the movement of a catheter within the heart of the patient.” “Our catheter is identical in size and length to catheters used today by physicians for the manual nonrobotic approach,” Gang says. “The major difference is that the terminal 20 centimeters of our catheter are extremely floppy and soft, so it can be instantaneously manipulated by external electromagnetic forces.” The tip of the catheter is embedded with small permanent magnets used to provide torque, force and rotation. Once the catheter is placed inside the appropriate heart chamber, it is moved around by the external magnetic forces and creates a three-dimensional image of the cardiac structure of interest. “This

10524 South la cienega boulevard ingleWood, ca 90304 Phone: (310) 670-7700 Web Site: WWW.magnetecS.com Contact: Josh Shachar, President, CEO & CTO Business: Robotics for minimally invasive

cardiovascular procedures Founded: March 2003 Founders: Josh Shachar; Eli Gang, MD, CMO Employees: 35 Financing to Date: $15 million Investors: Josh Shachar; Engineered Magnetics Inc.; Undisclosed strategic partner; Individual investors Board of Directors: Josh Shachar; Frank Adell; Eli Gang; Eytan Lombroso; William van Wagner Scientific Advisory Board: Eli Gang (University of California, Los Angeles); Jose Merino, MD, PhD (Hospital General Universitario La Paz, Madrid, Spain); Vivek Reddy, MD (Mount Sinai Medical Center); Nicholas Peters, MD (St. Mary’s Hospital, London); Nicholas Cheshire, MD (St. Mary’s Hospital, London); Peter Neuzil, MD (Na Homolce Hospital, Prague, Czech Republic); Bich Lien Nguyen, MD (Sapienza University, Rome); Moussa Mansour, MD (Massachusetts General Hospital); Andre D’avila, MD (Mount Sinai Medical Center); Thomas Chen, MD, PhD (University of Southern California); Jacob Chodakiewitz, MD (University of California, Irvine)

image is integrated into our system and becomes part of the CGCI navigation capability,” Gang says. The physician directs the catheter again using the joystick and directs the robotic external electromagnets to the desired portion of the heart where the therapy needs to be delivered. Once the targeted treatment area has been identified and mapped, the console in the control room is able to create the lesion characteristics on the screen. “The CGCI robotic system can automatically acquire the selected targets and perform surgical procedures,” he says. “The location is preserved dynamically as the catheter moves in and out.” The procedure varies in length from one to five hours, depending on the par-

prOFileS | Start-Ups Across Health Care ticular rhythm disorder being treated. “Our hope is that by using this very precise robotic system, we will be able to significantly shorten these lengthy procedures,” states Gang. He also points out that the precision of the robotic system would replace the current steep learning curve and eye-hand coordination required to move a catheter manually. Later this year, Magnetecs will release results of the first human clinical study of the CGCI system, conducted at La Paz Hospital in Madrid, Spain. The system’s two major competitors are the Niobe magnetic navigation system from Stereotaxis Inc. and the Sensei X robotic catheter system from Hansen Medical Inc., which use passive magnets and an electromechanical system, respectively.

gaStrOinteStinal DeViceS

“Although both of these systems are considered robotic, they lack the intuitive relationship between the system and its operator, whereas with CGCI, the system reduces the dexterity of the physician to machine language,” Shachar says. CE mark for CGCI is expected in the third quarter of 2011, followed by 510(k) in late 2012. The system will begin selling in Europe and the Far East in late 2011, at a price of around $1.5 million, through a network of distributors, for which no new insurance reimbursement schedule is needed. US sales will be delayed until 2013, in concert with the undisclosed strategic partner, again with no need for a new reimbursement code. Magnetecs has raised $15 million in two completed rounds of financing. A Series C,

Mederi Therapeutics Inc.

RF energy for treating digestive disorders Two distinct and effective radiofrequency (RF) medical devices to treat two prevalent digestive system disorders have been resurrected in an improved configuration, after the bankruptcy of their original manufacturer. Stretta for gastroesophageal reflux disease (GERD) and Secca for bowel incontinence were first launched in 2000 and 2003, respectively, by Curon Medical Inc., which went out of business in 2006. The following year, Respiratory Diagnostics Inc. (RDI), a subsidiary of Bio-Rad Laboratories Inc., acquired Curon’s assets at an auction held by Curon’s bankruptcy trustee. Then in 2008, RDI partnered with newcomer Mederi Therapeutics Inc., which is once again offering these two therapies using a new RF generator and redesigned disposables. “Stretta and Secca had been proven clinically, but unfortunately Curon ran out of money before the devices could be proven successful commercially,” says Mederi’s founder Steve Novak. For bowel incontinence, Secca bridges the gap between biofeedback/diet modifi-

cation/pelvic floor exercise and expensive, invasive and disfiguring surgery with high complication rates. For GERD, standard first-line therapy is systemic medications: acid-blocking proton pump inhibitors with multiple side effects. The second line of defense has similar downsides as those for bowel incontinence: expensive, invasive and/or disfiguring surgery with high rates of complications. Both Secca and Stretta target patients who fail first-line treatments, representing tens of millions of people worldwide and with a market opportunity of billions of dollars. In the US, one in 10 people suffer from GERD, and for bowel incontinence, a conservative estimate is one in 13, “because most who suffer from bowel incontinence will not admit it, even to their doctors. They are too embarrassed,” says Mederi’s CEO and president Will Rutan. Rutan held a variety of marketing, sales and management positions at United States Surgical from 1986 to 2000, and then was president and CEO of Healthcare at Itochu (a worldwide distributor of ©

in the amount of roughly $10 million, is expected to close in June, funded by high-networth individuals and institutional firms. A D round of $25 million should close by the end of 2011, targeting the undisclosed strategic partner and institutions. The company is pursuing other strategic partnerships in the fields of gastroenterology (diagnostics and therapeutics) and neurology (removal of solid tumors, intractable epileptic seizures). “We are also developing a variety of microelectromechanical tools to allow for cutting and sewing during minimally invasive procedures,” Shachar says. [A#2011900063]

– bob Kronemyer

8 Sound Shore drive Suite 304 greenWich, ct 06830 Phone: (203) 930-9900 Web Site: WWW.mederitherapeuticS.com Contact: Will Rutan, President & CEO Business: RF treatment for digestive system

disorders Founded: September 2008 Founder: Steve Novak, Chairman Employees: 9 Financing to Date: $20.1 million Investors: Acadia Woods Partners LLC; Respiratory Diagnostics Inc. (a subsidiary of BioRad Laboratories, Inc.); Steve Novak Board of Directors: Jeffrey Samberg (Acadia Woods Partners LLC); Steve Novak; Will Rutan

high-tech medical devices) and president and CEO at Mini-Lap Technologies (minimally invasive and natural orifice surgery). Novak is a veteran investor in both publicly traded companies and private firms. He currently serves on the boards of TICC Capital and Aperio Technologies (digital pathology). Mederi received a CE mark in October 2010 and 510(k) clearance in January for a compact, portable second-generation RF generator that powers both Secca and

2011 Windhover Information Inc., an Elsevier company. | STarT-UP | March 2011

prOFileS | Start-Ups Across Health Care Stretta. The company has over 80 issued patents and does not share royalties/revenues with another entity. Secca for bowel incontinence consists of a single-use disposable handpiece that connects via a power cable to the generator. The handpiece contains four fine nitinol needles that apply RF energy to the target tissue. In the tip, as well as at the base of each needle, resides a small thermocouple that reports key readings to the physician during treatment. The handpiece is inserted endoluminally through the anorectal canal and is positioned adjacent to the muscle of the internal anal sphincter. The needles are then serially inserted into the muscle by repeated placements in the four quadrants of the sphincter muscle. RF energy delivery is then initiated for one-minute cycles. A total of 20 cycles are necessary for a complete treatment. “RF energy heats up the needle, which in turn provides a thermal effect on the tissue and results in changes at the cellular level,” Rutan explains. “Only the deep muscle is treated. Secca is designed to prevent any heat delivery to the surface tissue of the anorectal canal.” Secca takes one hour to administer and is done in an – outpatient setting with anesthesia. One treatment session is all that is required. “Secca therapy improves the function of the sphincter muscle,” Novak says. “In its relaxed state, the sphincter is closed; when the nerves are stimulated the sphincter opens. Someone suffering from bowel incontinence does not have a sphincter that functions properly. In studies of Secca, patients have reported restored sensation that alerts them that they need to find a bathroom, whereas before they may have had no warning. Patients may notice improvement as soon as 10 days after the procedure, and studies indicate continuing improvement in symptom relief for as many as 90 days post-procedure, depending on the individual patient’s physiology.” Several follow-up

physician visits are also scheduled, but patients typically resume normal activities within three to four days. Secca is being marketed to colon and rectal surgeons, as well as to urogynecologists. “This is a relatively straightforward procedure,” Rutan conveys. “All the relevant information is displayed on the screen of the generator. Measurements are calculated multiple times per second and displayed in real time. There are preset parameters for energy delivery and tissue temperature. If any of these parameters are exceeded, the generator will automatically cease power delivery to that channel for the remainder of that treatment cycle. Due to this tight control, Secca has a very low complication rate.” Stretta for GERD is also an endoluminal procedure, whereby a disposable catheter is inserted transorally and down Steve Novak the esophagus via endoscopy. The catheter is positioned adjacent to the lower esophageal sphincter (LES) and a balloon is inflated to hold the catheter in the proper position. As with Secca, nitinol needles are inserted, this time into the LES, and RF energy is then delivered to the deep muscle layer. There is also repeated treatment during a single session that treats the entire sphincter, plus the very top of the stomach. The procedure takes one hour in an outpatient setting under anesthesia. “The mechanism of action is the same for both Secca and Stretta,” Rutan states. “The two sphincter muscle tissues are quite similar. These two sphincters – or two valves – control the opposite ends of the gastrointestinal [GI] tract.”

“Patients may notice improvement as soon as 10 days after the procedure, and studies indicate continuing improvement in symptom relief for as many as 90 days post-procedure, depending on the individual patient’s physiology.”

March 2011 | START-UP

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With Stretta, the functionality of the esophageal sphincter is improved by reducing tissue compliance, which results in fewer unexplained sphincter openings. “A properly functioning LES opens and closes when it is supposed to, and prevents the regurgitation of digestive stomach contents into the esophagus or mouth,” Rutan says. Patients usually can return to normal activity the following day and schedule follow-up visits with either a surgeon or a gastroenterologist. A similar, procedure-specific, intuitive generator screen conveys all relevant information and analogous preset parameters “ensure safe and proper treatments,” Rutan notes. “Like Secca, Stretta has a very low rate of complications.” When Mederi Therapeutics acquired the assets of Curon Medical in 2008, there had already been about 9,000 Stretta and 1,500 Secca procedures performed. “Published results to date show that both devices are highly effective treatments in properly chosen patients,” Rutan says. “Importantly, neither Secca nor Stretta prevents the patient from receiving any other alternative treatment, should the patient not respond to our therapy.” Significant clinical data exist for both devices, and additional clinical trials are currently underway. Rutan says there are no other competitors to Secca or Stretta that address second-line therapy for bowel incontinence and GERD. Second-generation versions of both products debuted in January in the US and internationally, through a combination of direct sales and independent sales agents in the US and a network of distributors elsewhere. An insurance payment code exists for both products. Reimbursement efforts are underway for both devices worldwide. To date, Mederi has raised just north of $20 million in a $16.6 million Series A round, plus a $3.5 convertible debt placement that closed in February, with the same original investors. “Future funding will occur as necessary,” Novak says. He notes that Mederi also has an extensive IP portfolio for treating other diseases of the GI tract. [A#2011900064]

– bob Kronemyer

prOFileS | Start-Ups Across Health Care

interVentiOnal OncOlOgy

Surefire Medical Inc.

Novel embolotherapy catheter for treating liver cancer With increasingly potent

therapeutics being employed in interventional oncology, it becomes more critical that these agents be delivered directly into the diseased tumor rather than to non-targeted tissues. The problem with current therapy, however, is that when embolic medications (beads containing chemotherapy or radiation that lodge in tumor blood vessels) are introduced into a vessel through a catheter, reflux often occurs along the catheter, thus the medication moves backward into another vessel and into non-targeted tissue. The safety of these embolic procedures could greatly improve with the Surefire Infusion System from Surefire Medical Inc., because the novel catheter’s design keeps the therapeutics flowing smoothly through the intended vessel to the targeted site, and minimizes reflux. “By stopping reflux, you stop injury to non-targeted organs, and therefore you improve the safety profile of the procedure,” says company co-founder and chief scientific officer Aravind Arepally. Surefire Medical is initially targeting primary and secondary liver cancer, which represents a combined total of about 150,000 cases a year in the US and approximately 850,000 worldwide. In Asia, primary liver cancer is more prevalent, whereas in the US and Europe secondary liver cancer dominates. “In the US, there are about six times as many secondary liver cancer patients as there are primary liver cancer patients. But we believe every patient can benefit from our technology,” says Arepally, director of interventional radiology at Piedmont Healthcare in Atlanta, who pegs the addressable market in the US at $580 million annually and $2 billion globally. Arepally, who performed more than 500 embolotherapy cases while on faculty at Johns Hopkins Medical Institutes from 2000 to 2008, felt there was a growing clinical need to devise a better way to deliver therapeutic agents for interventional oncology. In May 2009, Arepally met Surefire’s future CEO Jim Chomas, an engineer with 10 years’ experience in developing medical devices from initial concept through clinical

March 2011 | START-UP

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trials. The two entrepreneurs assessed each other’s strengths and passions, and decided they would be a good match to start a medical device company. Chomas was director of research at Cabochon Aesthetics (noninvasive treatment for cellulite) from 2007 to 2009, preceded by his role as a senior engineering manager at Siemens Ultrasound (Acuson) from 2002 to 2007. The greatest obstacle in designing the unique catheter “was to create a really dynamic flexible system,” Chomas says. “It had to be very soft to allow for forward blood flow, but then stop reflux quickly.” Together with Miami-based device incubator Innovia LLC, Chomas and Arepally developed polymer stent graft technology that allowed for the necessary flexibility of the catheter. Surefire Medical has four pending patents (none issued) and will not be sharing any royalties/revenues with another entity. The Surefire Infusion System consists of two main components: the infusion microcatheter, which is made of standard catheter materials, and a high-tech polymer expandable tip, both of which are single-use, disposable items. “Because our infusion system is very similar to other devices being used, there is not much of a learning curve for the interventional radiologist or the interventional oncologist,” Arepally says. The Surefire Infusion System is first advanced to the target vessel (the hepatic artery) under fluoroscopy. The expandable tip is then deployed and the embolic agents infused. Arepally notes that many clinicians told him originally that such an expandable tip would not be possible with a microcatheter. After early prototypes failed, the team moved to an all-polymer design, enabling the microcatheter’s performance. “It is important that as you are infusing embolic agents, the expandable tip collapses in forward flow, thereby allowing the normal blood flow to carry the embolic beads downstream to the target vessel,” Arepally explains. “However, at the moment of reflux, the expandable tip automatically opens up to seal the vessel and stop backward flow.” Once infusion is complete (less

8601 turnpike drive Suite 206 WeStminSter, co 80031 Phone: (303) 426-1222 Web Site: WWW.Surefiremedical.com Contact: Jim Chomas, PhD, CEO Business: Infusion catheter for targeted drug

delivery Founded: July 2009 Founders: Jim Chomas; Aravind Arepally,

MD, FSIR, CSO Employees: 13 Financing to Date: $1.95 million Investors: Partisan Management

Group Inc.; Individual investors Board of Directors: Norman Weldon, PhD (Partisan Management Group); Karen Cassidy (Partisan Management Group); Jim Chomas; Aravind Arepally Scientific Advisory Board: Daniel Sze, MD, PhD (Stanford Medical Center); Kelvin Hong, MD (Johns Hopkins Medical Institutes); Robert Lewandowski, MD (Northwestern University); Charles Nutting, DO (Sky Ridge Medical Center, Lone Tree, CO); James Benenati, MD, FSIR, (Baptist Cardiac and Vascular Institute, Miami); Leonard Pinchuk, PhD (Innovia LLC)

than five minutes), the expandable tip is retracted and the catheter removed. “It is that simple,” Arepally states. The embolic payload consists of drugeluting beads (doxorubicin for primary liver cancer or irinotecan for hepatic colorectal metastasis) and radioembolization beads (the radioisotope Y-90). The total procedure takes between 60 and 90 minutes in an outpatient setting with no anesthesia. The three major competitors in the infusion microcatheter market are Boston Scientific Corp., Terumo Medical Corp. (a divison of Terumo Corp.), and Cook Inc. (part of Cook Group Inc.) “These are all standard infusion microcatheters that are poorly differentiated in function,” Chomas says. “Our infusion system, in contrast, is highly differentiated in that it allows for forward flow, while minimizing reflux. We estimate that reflux occurs in about 80% of procedures using competing microcatheters, and 5 to 20% of patients treated end up with severe complications from non-tar-

prOFileS | Start-Ups Across Health Care get embolization, ranging from intense pain to stomach ulcers. You can also damage the gallbladder or pancreas, or other parts of the liver that are healthy.” Surefire Medical expects to receive CE mark for the Surefire Infusion System in May, followed later this year by FDA 510(k) clearance. The company plans to initiate a market evaluation of the Surefire Infusion System in Europe in June, followed by a formal launch in both Europe and the US in the fourth quarter of 2011. It will use a direct sales force in the US and a network of distributors in Europe and Asia. No new reimbursement code needs to be generated, and the product is covered under existing European insurance reimbursement. “Our biggest challenge is increasing awareness of

the complications from reflux that often arise with standard infusion microcatheters,” Arepally says. “We offer a viable solution.” Of the nearly $2 million raised to date by the company, $1.75 million has been angel money and the other $245,000 has come from a Qualifying Therapeutic Discovery Project Grant. A Series A round in the amount of $3 million should close in March, targeting strategic partners, super angels and venture capital firms. Surefire Medical also has nondisclosure agreements with five strategic companies in the interventional radiology space for the marketing and sales of its catheter. “This is a result of our enabling infusion technology, which we view as escalating the adoption rate of embolic beads to treat

cancer,” Chomas says. Moreover, Surefire has a second-generation device in prototype stage, which is a smaller and more trackable version. There is also potential application in pancreatic cancer, which to date has proved difficult to treat effectively. Chomas points out that the interventional radiology market “is growing significantly, primarily because they are minimally invasive procedures, with double-digit growth for each of the past five years posted by the three leading embolic bead companies. Two of these three bead companies – Biocompatibles International PLC and BioSphere Medical Inc. – were acquired for substantial premiums in 2010. Efficacy of treatment continues to improve.” [A#2011900049]

-bob Kronemyer

2011 Windhover Information Inc., an Elsevier company. | STarT-UP | March 2011

PROFILES

Emergings in Brief

2C TeCh Corp. InC.

ATherolysIs MedICAl InC.

AxenA TeChnologIes InC.

prevenTIon phArMACeuTICAls InC.

15615 Alton Parkway Suite 450 Irvine, CA 92618 Phone: (949) 271-6381

2200 Zanker Road Unit F San Jose, CA 95131 Phone: (408) 731-6580

19 Preston Street Suite 3 Providence, RI 02906 Phone: (440) 759-3735

300 George Street Suite 561 New Haven, CT 06511 Phone: (215) 262-0375

rrao@mail.com www.2ctechcorp.com

gary@atherolysismedical.com www.atherolysismedical.com

info@axenatechnologies.com www.axenatechnologies.com

Management: Ram Rao, CEO; Naresh Mandava, MD, Cofounder; Jeffrey Olson, MD, Co-founder & CTO; Robert Armstrong, CFO

Management: Gary Saxton, CEO; Kusai Aziz, MD, Founder & CMO

Management: Jonathan Brown, CEO; Joseph Ramos, Lead Scientist; An Son Leong, Director of Technology & Business Development; Rehim Popatia, Operational Support

info@prevention pharmaceuticals.com www.prevention pharmaceuticals.com

Company Launched: July

Investors: Undisclosed Employees: Undisclosed

Capital

Partners/Alliances: NA

Employees: Undisclosed Partners/Alliances: University

Industry Segment: Cardiovascular

Colorado Industry Segment: Nanotechnol-

ogy Business: 2C

Tech Corp. Inc.’s SeeQ technology for treating blinding diseases involves intraocularly delivered photoactive nanoparticles that electrically stimulate photoreceptor cells in the retina, thus preventing them from degeneration. The start-up’s platform was developed by Naresh Mandava and Jeffrey Olson, professors of ophthalmology at the University of Colorado. CEO Ram Rao previously founded and led AcuFocus.

2010 Financing to Date: Undisclosed

2008

Financing to Date: Undisclosed Investors: Mantucket

Company Launched: September

march 2011 | START-UP

Company Launched: October

2010 Financing to Date: Undisclosed Investors: Undisclosed

Devices

Employees: 4

Business: Atherolysis Medical Inc. aims to remove atherosclerotic plaque through chemical means, using a multi-lumen, dual-balloon catheter that will deliver chemical agents to a specific lesion in the vasculature and maintain perfusion as the dissolved plaque is aspirated. CEO Gary Saxton was most recently the president and CEO of FlowMedica.

Partners/Alliances: Brown

www.ElsevierBI.com

Management: Terrence O. Tormey, President & CEO; Harry Penner, Jr., Chairman; Scott Kozak, Vice Chairman & CBO; Albert Piechotta, VP, Sales & Marketing Company Launched: November

2008 Financing to Date: $700,000 Investors: Angel

Uni-

versity Industry Segment: Health

careassociated infection control Business: Axena Technologies Inc. is developing nano-TEC coatings to prevent bacterial attachment and proliferation on implanted medical devices, with an initial focus on endotracheal tubes. The company says that in preliminary tests, its technology was six times more effective than silver in preventing bacterial growth on medical tubing. Axena’s technology comes from Brown University’s nanomedicine lab director, Thomas Webster, PhD.

investors

Employees: 6 Partners/Alliances: New

Haven Pharmaceuticals; Cenestra Health; Yale University

Industry Segment: Consumer

Health Care Business: Prevention Pharmaceuticals Inc. acquires and commercializes evidencebased consumer health products, all of which are proprietary and patent protected. It currently markets Omax3, a pharma-grade omega-3 fatty acid for heart, mood, joint and eye health that is derived from a technology platform licensed from Yale University physicians. President and CEO Terrence Tormey has been a senior sales and marketing executive with J&J, Whitehall and Innovex, and was president and COO of Publicis Selling Solutions.

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Health News Daily is a 24-hour resource that provides online daily coverage of a broad spectrum of health care issues, from prescription pharmaceuticals, medical devices and diagnostics, to OTC pharmaceuticals and dietary supplements, to federal health policy and Medicare/Medicaid. Drawing on the knowledge and experience of Elsevier’s global editorial staff of more than 50 editors and reporters, Health News Daily keeps the world’s top executives on top of fast-moving developments across the entire health care industry, from the booming Asian marketplace to the halls of Congress. Health News Daily delivers first-hand reporting and expert analysis of the headlines, including regulatory and legislative developments, R&D, reimbursement and dealmaking.

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SCIENCE

MATTERS by Mark L. ratner

A New Genetic Connection In Liver Cancer – As Powerful As Her2/neu In Breast?

Liver cancer is one of the leading causes of cancer death worldwide and one of the most common malignancies, with increasing incidence and mortality and only very limited – and general – treatment options. Now, a research program spearheaded by the Human Cancer Genome Center at the Cold Spring Harbor Laboratory (CSHL) has uncovered a correlation between amplification of a growth factor gene and overexpression of the gene’s protein product that could offer up a new way to treat a significant portion of these carcinomas. The scientists validated their findings with an antibody against the protein, fibroblast growth factor 19 (FGF19), which inhibited tumor growth in vitro. These data, published in Cancer Cell in mid-March, point to a targeted treatment strategy for treating a significant subset of liver cancers and importantly, provide a biomarker for identifying patients who could benefit from the therapy. FGF19 is produced in the small intestine and regulates bile acid production. The factor has long been associated with processes such as cell growth and tissue repair. But the link the CSHL team showed between FGF19 gene amplification and FGF protein overexpression in liver cancer is new. The phenomenon is similar to the way in which amplified Her2/ neu gene expression promotes breast cancer, which led to the development of Herceptin (trastuzumab) by Genentech Inc. (now a unit of Roche). And given the Herceptin paradigm and its long interest in targeted cancer therapies, Genentech, which provided the antiFGF19 antibody used in the experiments, is likely to be interested in the result. Genentech has been studying FGF19 on its own since at least the early 2000s for other things. At one point, company scientists observed that when the growth factor was expressed ectopically into muscle cells in mice, many of them formed liver tumors. But when they looked at a small panel of liver cancer cell lines, none had FGF19 amplification, and their interest in FGF19 in cancer didn’t go any further. Coincidentally, around the same time, the CSHL researchers had begun their

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work. They were evaluating many different small groups of genes that are amplified in liver tumors, seeking to test the effect each of these “amplicons” had on normal liver cells. Working in mice, they forced overexpression of the proteins encoded by each amplicon to see which amplicons promoted tumor growth in the animals. This large-scale screen identified several well established oncogenetic players, including cyclin D1 and MET. It also showed that an amplicon containing both cyclin D1 and the FGF19 gene was oncogenic in this model system. When liver cells overexpressing either FGF19 or cyclin D1 were transplanted into the livers of mice, tumors developed within 8 weeks. Overexpression of both was even more tumorigenic. Although the cyclin D1 gene is often amplified in tumors, cyclin D1 itself is a difficult target for therapeutic intervention using current technology. But the researchers established that FGF19 functions upstream of cyclin D1 and regulates cyclin D1 levels in human liver cancer cells. “This result supports our model that the tumor-promoting effects of FGF19 are mediated by its ability to increase cyclin D1 protein levels,” they state in the Cancer Cell paper. Human liver cancer cell lines that did not contain the cyclin D1/FGF19 amplicon did not show a significant response when exposed to the FGF19 neutralizing antibody, while two of the four containing the amplicon did. Plus, this activity of FGF19 seems to be specific to liver tumors. “That was a surprise,” says Scott Powers, PhD, of CSHL, because FGF19 gene amplification does not lead to overexpression of FGF19 protein in other cancers including breast, lung, or melanoma. Powers began discussing these findings with Genentech a year and a half ago, at the suggestion of liver cancer specialist Richard Finn, MD, of the Jonsson Comprehensive Cancer Center at the University of California, Los Angeles, also an author on the FGF19 amplification paper. Finn trained with UCLA’s Dennis Slamon, MD, PhD, who discovered the Her2/neu link to breast cancer, and was involved in that early work. Like Powers, Finn was interested in FGF19 am-

plification in liver cancer: he had approached Genentech about using its antibody with his own preclinical models when he met Powers and heard of the work ongoing at CSHL. There’s definite interest now in pursuing an anti-FGF19 antibody therapy in the clinic. “We’d be very interested in conducting such a trial,” says Finn, who is developing an assay for FGF19 amplification that could be used to select patients for trials. “I think an antibody approach is very attractive in liver cancer because so many patients have underlying cirrhosis and competing risk factors,” he says. “An antibody is a very specific molecule with hopefully a predictable and minimal toxicity profile.” (In response to an inquiry for this article, Genentech would only say that “we are not disclosing development plans for FGF19 at this time.”) The Genentech antibody itself could well be a clinical candidate, says Finn. There are also other FGF pathway targeting compounds in development, mostly kinase inhibitors that target the FGF receptor. For example, Bristol-Myers Squibb Co. is testing brivanib, a small molecule that targets both VEGF and several FGF receptor subtypes, in four Phase III trials in liver cancer. Novartis AG also has an FGF inhibitor, TKI258, in clinical development. But these molecules are non-specific, hitting several FGF receptor subtypes, and FGF19 has one specific ligand, FGF receptor 4. Current estimates are that 10 to 15% of liver cancer patients may have FGF19 amplification. “I’m sure after this paper there will be a flurry of research on FGF19 alterations in liver cancer,” Finn says, which will better pinpoint the percentage. “This is the first preclinical work which looks at a subtype of liver cancer based on a molecular alteration and shows that a therapeutic strategy may have potential,” he adds. “The data are not much different from the Her2 story: a molecule’s been found that’s a potential driver, and we have a specific therapeutic that seems to have activity only in those cell lines that have the alteration.” [A#2011900057] e-mail the author at: m.ratner@elsevier.com

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On the Move Start-Up ExEcS

Centinel spine inC.

AiCuris GMBH & Co. Marie-Paule richard, Md to CMO (January) from VP, Clinical Dev. & Ops., Pharmacovigilance & Medical Affairs, Crucell NV +49 202 317630

AirXpAnders inC. Scott dodSon to Pres. & CEO (February) from Pres. & CEO, Avantis Medical Systems Inc. 650-390-9000

Alios BiopHArMA inC. carol l. BroSgart, Md to CMO (February) from SVP, CMO, Children’s Hospital & Research Center 415-309-2739

AlloCure inC. Kevin J. heyecK to CBO (February) from VP, Bus. Dev.,Vitae Pharmaceuticals Inc. 801-583-8450

BAXAno inC.

CArMAt sAs valerie leroy to Dir., Mktg. & Investor Relations (February) from Dir., Mktg., Heart Valve Therapy, Europe, Edwards Lifesciences Corp. +33 139 456 450

ConCert pHArMACeutiCAls inC. JaMeS e. ShiPley, Md to CMO (January) from SVP, Clinical Dev., Medical & Regulatory, Invendus Pharmaceuticals Inc. 781-860-0045

intreXon Corp. cary P. MoxhaM, Phd to VP, Alliance Mgmt., Human Therapeutics (February) from Senior Dir., Alliance Mgmt., Gilead Sciences Inc. 540-961-0725

KArunA pHArMACeutiCAls ed harrigan to CEO (January) from Chief of Licensing, Pfizer Inc. 617-482-2333

nAnostrinG teCHnoloGies inC.

Katherine WeBSter to VP, Worldwide Sales (February) from Senior Sales Dir., Life Science, Qiagen NV 206-378-6266

otonoMy inC. cindy BereJiKian to VP, Program Mgmt. (February) from Principal, Biopharmaceutical Consulting, DrugDevPM 858-768-7823

CAyenne MediCAl inC. david B. SPringer to Pres. & CEO (February) from Pres. & CEO, CHF Solutions Inc. 480-502-3661 March 2011 | START-UP

Bill PfoSt to National VP, Sales (January) from VP, New Bus. Dev., Lanx 952-885-0500

chriS griMley to VP, Mktg. (February) from Senior Dir., Genomics Mktg., Agilent Technologies Inc. 206-378-6266

george a. harter, Jr. to CFO (February) from CFO, Acclarent Inc. 408-514-2200

Who’s going where in biopharma and medtech start-ups

www.ElsevierBI.com

g. Michael Wall, Phd to VP, Product Dev. (February) from Senior Dir., Phamaceutical Dev., Alcon Research Ltd. 858-768-7823

Myopowers MediCAl teCHnoloGies sA Stefan K. WidenSohler to Director (January) +41 41 32400 587

peArl tHerApeutiCs inC. charleS (chucK) BraMlage to Pres. & CEO (February) from Pres., Pharmaceutical Products, Covidien Ltd. 650-305-2600

sArCode Corp. todd a. creech to CFO & VP, Bus. Dev. (February) from Consultant 650-416-7560

tetrApHAse pHArMACeutiCAls inC. PatricK horn, Md, Phd to CMO (January) from VP, Clinical & Medical Affairs, Dyax Corp. 617-715-3600

Start-Up DirEctOrS 2p2d solutions ltd. tovi Bachar to Director & Chmn. (February) +972 52 654 5558

CoGnition tHerApeutiCs inC. MarK Breedlove to Director (January) 412-481-2210 nada Jain, Phd to Director (January) 412-481-2210

proGnosdX HeAltH inC. garry P. nolan, Phd to Vice Chmn. (January) 650-566-5068

Start-Up aDviSOrS proGnosdX HeAltH inC. JoSePh c. PreSti, Jr., Md to Scientific Advisor (January) 650-566-5068

Start-Up prOMOtiOnS 3-V BiosCienCes inC. StePhen r. Brady to CBO (February) from VP, Corp. Dev., Strategy & Ops. 650-320-1760

FrAzier HeAltHCAre Ben Magnano to Principal (February) from VP 206-621-7200 Brian Morfitt to Partner (February) from Principal 206-621-7200

DEALS

The Deals column is a survey of recent financings of emerging health care companies and recent alliances between academia and industry. The deals are listed by relevant industry segment—In Vitro Diagnostics, Pharmaceuticals, and Medical Devices. Elsevier’s Strategic Transactions database provides comprehensive deal coverage from 1991-present, with weekly deal updates and full search capabilities. For

JANUARY – FEBRUARY 2011

information about online access, contact James DeFalco

Recent Financings of Start-Ups... PharMacEuTIcals n

hDAc inhibitor developer Acetylon raises $12.4mm in Series B round

at +1 203-451-6269, or J.Defalco@Elsevier.com

MEDIcal DEVIcEs n

Glaukos brings in $29.5mm through its Series E round

Impeto Medical raises £5mm in Series B financing

Antabio initiates seed financing round

Microvisk rights offering brings in €6mm

Series A generates $9.6mm for Arsanis

NeoVista brings in $33.8mm through its Series E venture round

Series F generates $45mm for Chimerix

Ocular Therapeutix brings in $14mm through its Series D round

Series A1 round brings $2.5mm to Cognition Therapeutics

Series D leads to $22mm for Sonoma Orthopedic Products

Series B brings in $20mm for Conatus

Series E leads to $17.5mm for Spine Wave

Diartis raises Series A money to support development of Type II diabetes compound gained from Versartis

Spiracur raises $35mm in third round

Promosome’s Series c generates $4.1mm

Ulthera brings in $10.6mm through its Series c round

Scil Proteins raises €24mm in first official round

VertiFlex generates $14mm via late-stage funding round

n n

Two investors buy $15mm in Supernus debt

Series B for Versartis raises $21mm

Pharmaceuticals Financings

NDM-1 strains. The company will use the seed funds to support selection and optimization of lead compounds using its technology that can isolate, identify, and screen bioactive molecules. Early-stage pipeline candidates are aimed at nosocomial infections (E. coli and K. pneumonia) and biological threats (Y. pestis).

Acetylon Pharmaceuticals Inc.

Arsanis Inc.

hDac inhibitor developer Acetylon raises $12.4mm in series B round

series a generates $9.6mm for Arsanis

Acetylon Pharmaceuticals Inc. (targeting class II-selective histone deacetylases for the treatment of cancer, inflammation, neurodegeneration, genetic protein disorders, and infectious diseases) has raised $12.4mm towards a Series B financing that could total as much as $30mm according to the Form D filing. A group of 23 backers participated. (Feb.)

Start-up infectious disease firm Arsanis Inc. brought in $9.6mm via its Series A equity financing to Polaris Venture Partners, SV Life Sciences, OrbiMed Advisors--each contributes one board member--and four undisclosed backers. (Jan.)

/Pharmaceuticals

Antabio SAS Antabio initiates seed financing round Infectious disease-focused start-up Antabio SAS has raised €309k ($412k) in its seed financing round, which is expected to generate €1.09mm for the company by mid-2011. (Feb.)

Arsanis was founded in 2010 by fellow antibody developer Adimab’s Tillman Gerngross and Errik Anderson, now Arsanis’ CEO and COO respectively. The company, which was started with yeast-based drug discovery technology from Adimab, is developing fully human monoclonal antibodies against infectious diseases for which currently available therapies are ineffective. It is focused on creating compounds for antibiotic-resistant pathogens and patients with compromised immune systems. The company has its headquarters in New Hampshire and a research facility in Austria. Arsanis raised $400k in its late-2010 seed round.

Founded in 2009, Antabio seeks to create new antibacterials that block the virulence of gram-negative pathogenic bacteria, including multiresistant

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DEALS | Recent Financings of Private Companies

chimerix Inc. series F generates $45mm for Chimerix Antivirals developer Chimerix Inc. has raised $45mm in its Series F financing led by New Leaf Venture Partners, which was joined by fellow first-time backers Pappas Ventures and Morningside Group, and returning shareholders Canaan Partners, Sanderling Ventures, Alta Partners, Asset Management, and Frazier Healthcare Ventures. Funding from the round will support ongoing clinical development of Phase II CMX001 and Phase I CMX157. A member from New Leaf Ventures and Pappas Ventures will join Chimerix’s board. (Feb.)

cognition Therapeutics Inc.

Amylin/Eli Lilly’s Byetta (twice-daily injection exenatide). VRS859 incorporates Amunix’s XTEN half-life extension technology, which offers benefits such as reduced dosing regimens, fewer side effects, and decreased immunogenicity.

Promosome LLc Promosome’s series c generates $4.1mm Protein synthesis firm Promosome LLC has closed its Series C round, bringing in $4.1mm from undisclosed investors. The funding will support its Translational Enhancing Elements (TEEs) and Reengineering of the Primary mRNA Structure (RESCUE) protein expression technologies. The company’s late-2008 Series B raised $9.6mm. (Jan.)

series a1 round brings $2.5mm to Cognition Therapeutics Angel fund Golden Seeds was the lead investor on a $2.5mm Series A1 round for Cognition Therapeutics Inc. (Alzheimer’s candidates that inhibit the toxic oligomeric form of amyloid-beta). The financing, which included equity and the conversion of debt, was syndicated with Tech Coast Angels and had additional backing from the Breedlove Ltd. Family Partnership, TMC Investment Co., and returning shareholders Ogden CAP Associates, M5Invest, the Pittsburgh Life Sciences Greenhouse, and Innovation Works. Members of Golden Seeds and Keystone Profiles joined the company’s board. The money will help pay for preclinical studies needed to select a lead candidate for IND filing. Cognition completed a $1.2mm Series A round in July 2009. (Jan.)

conatus Pharmaceuticals Inc. series B brings in $20mm for Conatus Conatus Pharmaceuticals Inc. raised $20mm in its Series B financing round of preferred shares. Lead and new backer AgeChem Venture Fund adds a board member and was joined by returning investors Aberdare Ventures, Advent Venture Partners, Bay City Capital, Gilde Healthcare Partners, and Roche Venture Fund. The funds will support ongoing development of its CTS1027, a Phase II hepatitis C candidate that was in-licensed from Roche in late-2006. Concurrent with the round, Conatus converted promissory bridge notes into Series B preferred stock. (Feb.)

Diartis Pharmaceuticals Inc. Versartis Inc. Diartis raises series a money to support development of Type II diabetes compound gained from Versartis Therapeutic protein developer Diartis Pharmaceuticals Inc. has raised an undisclosed sum in its Series A round from Index Ventures, protein therapeutics developer Amunix Inc., and undisclosed private backers. (Feb.) Versartis Inc. spun off Diartis in late-2010 to develop the former’s Phase Ia VRS859 (exenatide) for Type II diabetes. Versartis had been working on the once-monthly GLP-1 analog, as well as the human growth hormone VRS317. But now that both compounds are in human testing, they require different clinical strategies and varying amounts of funding. So Versartis will exclusively focus on VRS317, and the company has just closed a $21mm Series B from Index Venture and Amunix to support the program. Diartis plans to use the money it raised for further development of VRS859; a Phase Ib trial--scheduled to begin later this year--will compare VRS859 to

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Scil Proteins GMBh Scil Proteins raises €24mm in first official round Scil Proteins GMBH (protein therapeutics and diagnostics) raised €24mm ($33mm) through its first formal financing round. The company’s sole investor BioNet Holding (which has been with Scil since its 1999 inception) provided the funds. (Feb.) Proceeds will be used to advance two cancer candidates into Phase I trials during the next three years. Scil’s Affilin technology generates high-affinity and target-specific molecules based on a scaffold from the human protein ubiquitin. The company’s main focus is cancer, though the platform is also applied to inflammation and infectious disease indications. In addition to in-house discoveries, Scil partners Affilin with other biopharma companies. Notable collaborations include Novartis, Cambridge Antibody Technology (before it was acquired by AstraZeneca), Human Genome Sciences, and Sanofi. Prior to this financing, the company received undisclosed investments from BioNet as well as over €2mm in grants.

Supernus Pharmaceuticals Inc. Two investors buy $15mm in Supernus debt Just about a month after filing for its initial public offering, Supernus Pharmaceuticals Inc. (epilepsy candidates) has turned to two undisclosed investors for additional financing--it raised $15mm (out of a potential $25mm) by selling debt and other rights. (Jan.)

Versartis Inc. series B for Versartis raises $21mm Versartis Inc. (developing drugs for endocrine disorders) raised $21mm in its Series B financing round to lead and new backers New Leaf Venture Partners and Advent Venture Partners, which each add a board member, and returning shareholders Index Ventures and protein drug company Amunix. The funds will support early clinical trials of its lead compound VRS317 for growth hormone deficiency. The company’s mid-2009 Series A brought in $11mm. (Feb.)

DEALS | Recent Financings of Private Companies Medical Devices

NeoVista Inc.

Financings

NeoVista brings in $33.8mm through its series E venture round

/Medical Devices

Glaukos corp.

Ophthalmic device maker NeoVista Inc. has raised $33.8mm through its Series E venture round from 19 undisclosed investors. According to the company’s Form D filing, it may raise another $4.1mm before closing the financing. (Jan.)

Glaukos brings in $29.5mm through its series E round Glaukos Corp. (ophthalmic device for glaucoma) has raised $29.5mm through its Series E venture round. Meritech Capital Partners led the financing ($16mm) and was joined by current shareholders Versant Ventures, Domain Associates, Frazier Healthcare Ventures, InterWest Partners, Montreux Equity Partners, OrbiMed Advisors, and 11 other undisclosed investors. (Jan.)

Impeto Medical SAS Impeto Medical raises £5mm in series B financing Impeto Medical SAS (noninvasive diagnostic devices) has completed a £5mm ($8mm) Series B financing from first-time backers Seventure Partners and Oddo & Cie. (Jan.) The six-year-old company has invented a technology that measures skin conductance response in order to evaluate a patient’s sudomotor function. By analyzing sweat composition (from the hands, feet, or forehead) over a three-minute period, the Sudoscan platform determines if a patient has an eccrine sweat gland dysfunction. The technology is incorporated into two devices, one of which has the same name. Sudoscan+ uses reverse iontophoresis and electrochemistry to measure galvanic skin response and diagnose small nerve fiber diabetic neuropathy. The FDA approved the 510(k) in June 2010. Impeto’s other product eZscan can evaluate, early on, the risk for developing Type II diabetes. The company markets the device in Europe, Asia, the Middle East, and China. After pocketing the Series B money, Impeto plans to expand its presence in France, Germany, the US, China, and India.

Microvisk Ltd. Microvisk rights offering brings in €6mm Microvisk Ltd. (Microvisk Technologies; developing portable diagnostics) raised €6mm ($8.2mm) through an oversubscribed rights offering to existing investors. Porton Capital, Oxford Technology Management, New Hill, Midven, the Rainbow Seed Fund (managed by Midven), Finance Wales, and private backers participated. (Jan.) Microvisk was spun out of the Science and Technology Facilities Council in 2004 and has raised €4.5mm in two previous venture rounds. The company’s Smartstrip will enter the UK market later this year as what the company claims is the world’s first diagnostic strip based on a micro-electro-mechanical system. (US and German trials will begin within six months.) Smartstrip is a handheld at-home device that monitors the blood clotting status (coagulation speed) of patients taking the blood-thinner warfarin. Proceeds from the rights offering will be used to continue clinical trials and expand the company’s manufacturing and research facilities.

Ocular Therapeutix Inc. Ocular Therapeutix brings in $14mm through its series D round Ocular Therapeutix Inc. (focused on the delivery of ophthalmic drugs using hydrogel technology) has raised $14mm through its Series D venture round. New investor Ascension Health Ventures led and was joined by current shareholders including Polaris Ventures, SV Life Sciences, and Versant Ventures. The company will use the proceeds for Phase II trials of its sustained drug delivery system--a moxifloxacin-loaded punctum plug-later this year to reinforce safety and test efficacy, and to study the punctum plugs in the future for glaucoma, dry eye, and allergies. (Feb.)

Sonoma Orthopedic Products Inc. series D leads to $22mm for Sonoma Orthopedic Products Sonoma Orthopedic Products Inc. (minimally invasive implants for fracture repair) raised $22mm in its Series D financing led by Ascension Health Ventures, which adds a board member and was joined by Split Rock Partners, Legacy Life Sciences, EDF Ventures, MedVenture Associates, DFJ InCube Ventures, Emergent Medical Partners, and Asset Management Partners. The company will use part of the proceeds for product launches, clinical trials, and to acquire key assets from NovaLign Orthopaedics. Sonoma’s last round, a March 2009 Series C, brought in $12mm. (Feb.)

Spine Wave Inc. series E leads to $17.5mm for Spine Wave Spinal device firm Spine Wave Inc. brought in $17.5mm in what looks to be its fifth financing round. Returning shareholder New Enterprise Associates led and was joined by other existing investors Morgenthaler Ventures, Compass Global Fund, Canaan Partners, and Foundation Medical Partners, and new backers New Leaf Venture Partners and Memphis Implant Partners. Funding will support further commercialization and expanded clinical trials for Spine Wave’s NuCore injectable nucleus. (Feb.)

Spiracur Inc. Spiracur raises $35mm in third round In what appears to be its third round, Spiracur Inc. (developing a portable negative pressure wound therapy device) has raised $35mm. New investor Maverick Capital led (and takes a seat on the company’s board) and was joined by Pinnacle Ventures and returning backers De Novo Ventures, Kleiner Perkins Caufield & Byers, and New Leaf Venture Partners. Spiracur’s last-announced fundraising was a $20.3mm Series B round in July 2009. (Feb.)

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DEALS | Recent Financings of Private Companies

2011

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CONfERENCE SCHEDulE CHEDulE CHEDul ulE March 30-April 1, 2011 • Grand Hyatt, New York, NY

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May 23-25, 2011 • Hilton Arc de Triomphe, Paris, France

Ulthera Inc. Ulthera brings in $10.6mm through its series c round Ulthera Inc. (markets a medical device that uses ultrasound to rejuvenate skin) has raised $10.6mm through its Series C venture round. There were 12 investors, including New Enterprise Associates (lead) and Apposite Capital, which contributes one board member. According to the company’s Form D filing, it could bring in another $51k before closing. (Jan.)

VertiFlex Inc. VertiFlex generates $14mm via late-stage funding round Windhover’s Euro-Biotech Forum’s most exclusive 1:1 partnering meeting for American and European life science companies. www.EuroBiotechForum.com

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Spinal surgery device developer VertiFlex Inc. raised $14mm in a late-stage equity financing to first-time backer Thomas, McNerney & Partners (which adds a board member) and returning shareholders Aberdare Ventures, Alta Partners, and New Enterprise Associates. The company may receive an additional $14mm over the next 12 months. The funds will support an IDE trial of its Superion interspinous spacer. VertiFlex’s last round was three months ago when it received $8.4mm in debt and other rights. (Feb.)

DEALS |

Tech Transfers between Academia and Industry...

In VITro DIagnosTIcs n

Akonni gets patents from USAMRIID

Becton Dickinson, University College London enter test development deal

PharMacEuTIcals

DEALS | Recent Alliances between Academia and Industry

BD has been building its testing portfolio steadily following its 2006 acquisition of cancer diagnostics company TriPath. The company now sells a variety of cervical cytology and molecular oncology products including the BD SurePath liquid-based pap test and other diagnostics for breast, ovarian, and cervical cancers.

Pharmaceuticals

Lilly and the JDRF fund Type I diabetes research

UMass Medical School, Lundbeck develop RNAi treatments for hD

/Pharmaceuticals

J&J’s Ortho-McNeil-Janssen Pharmaceuticals teams with Sanford-Burnham Medical Research Institute

NuVax gets immune technology from Univ. of FL

Eli Lilly & co. Juvenile Diabetes Research Foundation

Sanofi and UCSF research cancer and other conditions

In Vitro Diagnostics Alliances

/In Vitro Diagnostics

Akonni Biosystems Inc. US Army US Army Med. Research Inst. of Infectious Diseases Akonni gets patents from USAMRIID Molecular diagnostics developer Akonni Biosystems Inc. has licensed rights from the US Army Med. Research Inst. of Infectious Diseases to patents related to nucleic acid sequences, primers, and probes for key biological agents. (Feb.) Akonni plans to create cost-effective multiplex tests for research and in vitro diagnostics applications to help identify biological threats such as anthrax, vaccinia virus, and Yersinia pestis. Until now, the company had been primarily focused on antibiotic-resistant pathogens including MRSA, MDR-TB, and antiviral-resistant influenza. Akonni will use the IP in its TruTip kits for ultra-rapid DNA and RNA extraction, TruDx 2000 optical detection platform, and TruSentry ultra-high-throughput screening system. The company hopes to launch the products, which will be able to identify multiple organisms simultaneously in both clinical and environmental samples, in 2012.

Becton Dickinson & co. University college London UCL Business PLC Becton Dickinson, University College London enter test development deal Becton Dickinson & Co. has licensed exclusive rights from UCL Business PLC, the tech transfer arm of the University College London, to develop new biomarker tests for ovarian and breast cancers. (Feb.) The agreement centers around UCL’s “biobanks,” which are data and specimen repositories of over 200k patient samples. BD will develop new molecular diagnostics or immunoassays and validate them against UCL’s samples.

Alliances

University of Geneva Lilly and the JDRF fund Type I diabetes research Eli Lilly & Co. has entered into an agreement with the Juvenile Diabetes Research Foundation to fund early research into regenerative medicines for Type I diabetes. (Feb.) The partners will together study how insulin-producing beta cells that have been destroyed by diabetes can possibly be reprogrammed and regenerated. They will fund a $1.4mm preclinical research program led by the University of Geneva’s Dr. Pedro Herrera, who has found that pancreatic alpha cells can spontaneously convert into beta cells, providing credence to the idea that the beta cells in fact could be completely regenerated. The ultimate goal of all parties is to translate the research into drug development efforts and potentially the discovery of new diabetes therapies. The deal comes a month after Lilly signed a collaboration with Boehringer Ingelheim to co-develop and commercialize late-stage Type II diabetes candidates. When all is said and done, that deal could be worth over $2bn.

h. Lundbeck AS Lundbeck Inc.

University of Massachusetts University of Massachusetts Medical School UMass Medical School, Lundbeck develop rnai treatments for hD H. Lundbeck AS’s US subsidiary Lundbeck Inc. has teamed up with the University of Massachusetts Medical School to identify siRNA therapeutics that will slow or stop progression of Huntington’s disease. (Jan.) Led by the university’s Neil Aronin, MD, a group of scientists from UMass, Massachusetts General Hospital, the University of Pittsburgh School of Medicine, and UCLA’s Neuropsychiatric Institute will work together on a two-year preclinical study. They hope to identify a treatment that knocks out a gene (in which the CAG sequence is repeated) that encodes an abnormal form of the protein huntingtin, which causes degeneration of nerve cells in the brain. The therapeutic will aim to restore neuronal function. This hypothesis has been tested in mice, but the current agreement hopes to advance the research closer to getting a medicine into Phase I. Specifically the partners will evaluate safety and dosing regimens of siRNA, which will be packaged as short hairpin RNA and delivered via an adeno-associated virus (AAV). One goal of the study is to produce an ideal brain distribution pattern for these drugs. The investigators will analyze the volume of distribution and correlate that with the dosing results, achieving a spread throughout the striatum and cortex. The deal is part of Lundbeck’s initiative to collaborate with other companies or academia to select innovative HD ©

2011 Windhover Information Inc., an Elsevier company. | START-UP | MARch 2011

DEALS |

Tech Transfers between Academia and Industry...

candidates for eventual marketing. Lundbeck already has experience with the disease through its Xenazine (tetrabenazine), which was launched in the US in November 2008 for Huntington’s-related chorea (abnormal involuntary movement). UMass Medical has worked with several companies in the RNAi space, including Sirna Therapeutics (now part of Merck). Most recently, the school licensed Intradigm (acquired by Silence Therapeutics in 2009) patents to improve siRNA efficacy.

Lung-Ji Chang and acquired by Radient in 2001. The technology involves incorporating two genes directly into a patient’s cancer cells to boost the immune system’s natural cancer-fighting reaction. Under the current deal with NuVax, Dr. Chang is licensing NuVax rights to develop and commercialize four immune-gene tools and systems. It is expected that the company will use the in-licensed IP to work on three distinct candidates for multiple myeloma, pancreatic cancer, and lung cancer.

Johnson & Johnson

Sanofi-Aventis University of california

Ortho-McNeil-Janssen Pharmaceuticals Inc.

Sanford-Burnham Medical Research Institute J&J’s Ortho-McNeil-Janssen Pharmaceuticals teams with Sanford-Burnham Medical Research Institute Sanford-Burnham Medical Research Institute has agreed to help Johnson & Johnson’s Ortho-McNeil-Janssen Pharmaceuticals Inc. discover drug candidates for Alzheimer’s disease and other psychiatric disorders. (Jan.) SBMRI gets an up-front and annual access fees, discovery research funding, milestones based on successful drug development, plus royalties on resulting products. Officials at the non-profit have indicated that the transaction could be worth more than $85mm at a time when federal grants have been severely limited. SBMRI will lend to the collaboration its drug discovery platforms including ultra high-throughput-, high content-, and phenotypic screening, and target deconvolution technologies located at the Conrad Prebys Center for Chemical Genomics, which is a robotic screening facility formed by the National Institutes of Health to speed up the commercialization of research. (It is estimated that it takes about 15 years and $1bn to get a drug from discovery to market.) Although Ortho-McNeil-Janssen will fund a drug discovery team at CPCCG, the J&J division will handle development of the compounds. For three years, OMJP gets exclusive access to a team of researchers and a translational infrastructure to work on discovery activities. This is the second deal SBMRI has penned with a Big Pharma in about a month’s time; its first was with Takeda to identify new obesity targets.

University of California, San Francisco Sanofi and UCSF research cancer and other conditions Sanofi-Aventis has committed to provide funding and research support to the University of California, San Diego and UCSF’s Program for Breakthrough Biomedical Research (PBBR) through two new deals. (Jan.) The collaborations are the first time the PBBR has partnered with an industry leader instead fellow academia. The initial deal focuses on research in pharmacological science in the areas of cancer, aging, inflammation, and diabetes. The second is strictly an oncology alliance that will be centered on one project from the research stage through proof-of-concept. A joint steering committee will choose from UCSF proposals for which Sanofi will provide up to five grants. The Big Pharma will also fund a yearly forum bringing together researchers from both partners to go over project progress. Sanofi has remained on a steady path of partnering with institutions as a way to gain insight into new developments. Other similar set-ups include a 2010 deal with Harvard University in which the company is funding research and development of therapeutics and diagnostics in the areas of cancer, diabetes, and inflammation. It also works with Dana-Farber’s Belfer Institute and MIT.

Let us mine our vast transactions database

Radient Pharmaceuticals corp. NuVax Therapeutics Inc.

University of Florida University of Florida College of Medicine NuVax gets immune technology from Univ. of FL NuVax Therapeutics Inc., a new division of in vitro diagnostics company Radient Pharmaceuticals Corp., has licensed exclusive rights to immune-gene therapy technologies developed at the University of Florida College of Medicine. (Jan.) NuVax was formed in December 2010 by Radient and its partner Jaiva Technologies to develop new cancer treatments. NuVax was granted exclusive rights to Radient’s Combined Immunogene Therapy (CIT), which had originally been developed by the university’s Dr.

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fUll ARTIClE pAgE 10

Investing À La Carte: Making Separate Bets On Discovery And Development To Boost Near Term Returns By ChriStopher MorriSon

As costs and risk mount, a few small biotechs are avoiding drug development work altogether, instead focusing on drug discovery and enabling others with their tools at the earliest stages. Not every platform is cut out for this particular brand of early-stage emphasis, but a handful of capital-efficient companies have emerged to build potentially profitable businesses out of discovery. Such platform-only-no-development opportunities may be rare, but a successful play can enable investors to make multiple, distinct bets along the drug discovery and development continuum. The duo of platform-focused Adimab and infectious disease specialist Arsanis is a pioneering experiment in the dis-integration of discovery and development risk. Structured appropriately, even as this dis-integrated biotech model avoids having to predict the appetites of pharmaceutical acquirers, it also can draw for investors a dotted line from investment to exit – or at least to a trickle of an early return. The expectation of returning cash to shareholders before an exit presents itself has led to a raft of new biotechs being structured as limited liability corporations – LLCs – which confers certain tax advantages to investors. In addition to Adimab, companies like Ablexis and Nimbus Discovery are also emerging LLCs, and alongside other biotechs are pursuing business models that can reward shareholders well before their drugs reach the clinic.

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fUll ARTIClE pAgE 16

Vein Device Companies Dig Deeper By Mary Stuart

For the past two decades, arteries have outshone veins as a source of inspiration for clinicians, investors and entrepreneurs. Interventional cardiology now stands as a paradigm of innovation and adoption of dramatic new technologies capable of treating the deadliest of disease. Veins, meanwhile, although serving an equally integral responsibility within the circulatory system, have been designated as a place where technologies, start-ups and the capital that has funded them go to die. The venous device industry is a complicated, fragmented, somewhat confusing space held by a variety of clinicians – interventional radiologists, vascular surgeons, interventional cardiologists, and even wound healing specialists, with a number of different products for distinct applications that just happen to share, at their root, venous disease. But the walls may be coming down, allowing the era of venous technology to be upon us. Just as interventional cardiology took a full decade to gather speed after its start 30 years ago, the past 10 years have served as a long runway for veins and peripheral artery disease. Now may be the time for takeoff. The movement’s lift is coming from several sources. First, individual clinicians and clinical societies like the Society of Interventional Radiology and the American Venous Forum are working to raise the profile of venous diseases. Three publicly supported clinical trials on venous disease are pitting devices against drugs: TORPEDO, ATTRACT and CAVA. The first randomized clinical trials to ever compare medical therapy with mechanical approaches for the lysis of clots in DVT patients may change medical practice in a field that is still largely left to medical management. Finally, the investment climate seems to be improving, both in the number of investors interested in venous devices and the establishment of at least one interested acquirer, Covidien, which has made three major acquisitions in the venous device space since 2009. Now venture capitalists are returning, albeit slowly and cautiously, to fund devices for deep vein thrombosis, pulmonary embolism, and chronic venous insufficiency.

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2011 Windhover Information Inc., an Elsevier company. | START-UP | MARCh 2011

Company InDEX 2c Tech corp. Inc. ....................... 42

cook Inc. ..................................... 40

Magnetecs corp. ......................... 36

Senorx Inc. ................................... 1

abbott Laboratories Inc. ......... 12, 14

cook Medical Inc. ........................ 19

Masimo corp. ................................ 1

Sky Medical Technology Ltd. ........ 22

ablexis LLc ........................... 10, 12

covidien Ltd. ......................... 7, , 17

Mederi Therapeutics Inc. .............. 37

accuray Inc. .................................. 1

cr Bard Inc. ............................ 1, 19

Medical college of Virginia............ 29

Sonoma Orthopedic Products Inc. ............................. 49

acetylon Pharmaceuticals Inc. ...... 47

crux Biomedical Inc. .............. 17, 19

Medrad Inc. ................................. 18

Sova Pharmaceuticals Inc. .............. 8

adimab LLc..................... 10, 11, 12

cytos Biotechnology aG................ 14

Medtronic Inc................................. 7

Spine Wave Inc. ........................... 49

afraxis Inc. .................................... 8

Daiichi Sankyo co. Ltd. ................ 14

Merck & co. Inc. .......... 6, 11, 12, 27

Spiracur Inc. ................................ 49

agios Pharmaceuticals Inc. ........... 35

Diartis Pharmaceuticals Inc..... 12, 48

Microvisk Ltd. .............................. 49

Stereotaxis Inc. ............................ 37

akonni Biosystems Inc.................. 51

DJO Global Inc. ............................ 22

Supernus Pharmaceuticals Inc. ..... 48

albireo Pharmaceutical................... 3

Edge Therapeutics Inc. ................. 32

Millennium: The Takeda Oncology co. ............................... 8

altura Medical Inc. ......................... 7

Edwards Lifesciences corp. ............ 7

MorphoSys aG ............................. 14

SurModics Inc.............................. 32

amgen Inc. ................................ 4, 9

Eisai co. Ltd. ............................... 33

amunix Inc. ................................. 10

Ekos corp........................ 17, 18, 20

Nabriva Therapeutics Forschungs GMBh ....................... 3

Takeda Pharmaceutical co. Ltd. ................................. 8, 26

angioDynamics Inc....................... 23

National Institute of Mental health ................ 25, 26, 29

Targacept Inc.............................. 31,

antabio SaS ................................ 47

Eli Lilly & co. ................ 3, 5, 27, 29, ..................................... 30, 31, 51

aptus Endosystems Inc. ................. 7

Endologix Inc. ................................ 7

Naurex Inc. ............................ 25, 28

Terumo Medical corp. .................. 40

aratana Therapeutics Inc. ............... 9

Ensemble Therapeutics corp. ....... 34

NeoVista Inc. ............................... 49

Theraclone Sciences Inc. .............. 14

arjohuntleigh Getinge Group ......... 22

EnteroMedics Inc. .......................... 1

Neurocrine Biosciences Inc. .......... 27

TomoTherapy Inc. .......................... 1

arsanis Inc. ........................... 10, 47

Euthymics Bioscience Inc. ...... 25, 26

NeuroSearch aS .......................... 27

TranS1 Inc..................................... 1

asahi Kasei corp.......................... 33

ev3 Inc. ......................................... 7

Nimbus Discovery LLc...... 10, 12, 14

Tranzyme Pharma Inc................... 34

astraZeneca PLc .......... 3, 6, 27, 31,

Exelixis Inc..................................... 5

Northwestern University ................ 28

TriVascular Inc. .............................. 7

atherolysis Medical Inc. ................ 42

Forest Laboratories Inc. ............ 3, 24

Novartis aG ......................... 3, 5, 44

UcL Business PLc ....................... 51

auxogyn Inc. ................................ 32

Genentech Inc. ........................ 5, 44

NuVax Therapeutics Inc. ............... 52

Ulthera Inc. .................................. 50

axena Technologies Inc. ............... 42

Genzyme corp. ............................ 27

Ocular Therapeutix Inc. ................ 49

University college London ......... 4, 51

Bausch & Lomb Inc. ....................... 2

Gilead Sciences Inc. ....................... 5

OncoMed Pharmaceuticals Inc. ....... 3

University of california .................. 52

Bayer aG ....................................... 5

Glaukos corp. .............................. 49

Oncothyreon Inc............................. 6

B. Braun Melsungen aG ............... 19

GlaxoSmithKline PLc .................... 27

Orexigen Therapeutics Inc. ........... 27

University of california, Los angeles ......................... 36, 44

Becton Dickinson & co. ................ 51

hansen Medical Inc. ..................... 37

Biocompatibles International PLc........................ 41

harvard University ........................ 34

Ortho-McNeil-Janssen Pharmaceuticals Inc. .................. 52

University of california, San Francisco ........................ 5, 52

Otonomy Inc. ................................. 8

University of Florida ...................... 52

Biogen Idec Inc. ........................... 12

Impeto Medical SaS ..................... 49

Paratek Pharmaceuticals Inc. .......... 3

Bio-rad Laboratories Inc. ............. 37

Infinity Pharmaceuticals Inc. ........... 5

Pfizer Inc. .......... 4, 5, 11, 24, 29, 34

University of Florida college of Medicine................................ 52

BioSphere Medical Inc. ................. 41

Innovia LLc.................................. 40

PharmaNeuroBoost NV ........... 26, 30

University of Geneva ..................... 51

BioVex Inc. .................................... 9

Insulet corp. .................................. 1

Possis Medical Inc. ...................... 18

University of Massachusetts.......... 51

Boston Scientific corp. ....... 7, 19, 40

Intellikine Inc. ................................ 5

Prevention Pharmaceuticals Inc. ... 42

University of Massachusetts Medical School .......................... 51

Bristol-Myers Squibb co. .. 27, 35, 44

Invatec SPa ................................... 7

calistoga Pharmaceuticals Inc. ....... 5

Johnson & Johnson ........... 3, 19, 52

celgene corp............................... 35

Jonsson comprehensive cancer center............................ 44

chimerix Inc. ............................... 48 chroma Therapeutics Ltd. .............. 3 clinical Data Inc. .......................... 24 cognition Therapeutics Inc. .......... 48 cold Spring harbor Laboratory ...... 44 conatus Pharmaceuticals Inc. ....... 48 cook Group Inc. ....................... 7, 40

March 2011 | START-UP

h. Lundbeck aS ..................... 26, 51

Juvenile Diabetes research Foundation ................................ 51 KaloBios Pharmaceuticals Inc. ...... 14 Knopp Biosciences LLc ................ 12 Knopp Neurosciences Inc. ............ 12 Lundbeck Inc. .............................. 51

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Promosome LLc .......................... 48 radient Pharmaceuticals corp. ..... 52 reata Pharmaceuticals Inc. .......... 12 reVision Therapeutics Inc. .............. 8 roche ... 5, 6, 10, 11, 15, 27, 34, 44 Sanford-Burnham Medical research Institute ................ 51, 52 Sanofi-aventis .............5, 14, 24, 52 Scil Proteins GMBh ...................... 48 Semafore Pharmaceuticals Inc. ....... 6

Surefire Medical Inc. .................... 40

Terumo corp. .............................. 40

US army ...................................... 51 US army Med. research Inst. of Infectious Diseases ......... 51 Veniti Inc. .............................. 17, 22 Venous health Systems Inc. .... 17, 22 Versartis Inc. ......................... 12, 48 VertiFlex Inc. ................................ 50 Virtual radiologic corp. .................. 1 WL Gore & associates Inc............... 7 Zosano Pharma Inc. ....................... 3