The past week was lackluster in terms of dealmaking and capital raised in the life sciences industry. Among the bigger news in the industry was word that the California Institute for Regenerative Medicine—the Golden States’ agency focused on developing stem cell facilities and therapies—will begin funding work that translates basic research into clinical cures. At its board meeting on April 29, CIRM approved $67.7 million to fund 15 grants on moving basic stem cell research into the clinic.

Two biotech companies were among the 15 recipients of awards. San Diego, California-based NovoCell received $5.4 million to further its work on a potential treatment for diabetes. NovoCell is a stem cell engineering company that has successfully induced human embryonic stem cells into insulin-secreting pancreatic cells. BioTime, based in Alameda, California, received an award of $4.7 million. Its stem cell division, Embryome Biosciences, provides researchers with tools needed to advance research. The company launched a commercial database last year that provides the first detailed map of the embryome, a roadmap of the factors that push cells into desired lineages.

 

Venture financing of companies in the medtech arena has been fairly steady. Irvine, California-based Visiogen said that it had raised $40 million from new and current investors to support the global commercialization of its Synchrony dual optic accommodating intraocular lens, intended for use in cataract and refractive patients. Visiogen has completed a Phase III study and will submit the results to the U.S. Food and Drug Administration in 2009, with expected premarket approval in 2010. The company has also formed a European division to start commercialization abroad. Lead investor Novartis Venture Fund, was joined by Technology Partners, and by existing investors Three Arch Partners, New Leaf Venture Partners, Prospect Venture Partners, CMEA Ventures, and Foundation Medical Partners.

 

Austria's ProtAffin AG raised $18.4 million in a Series B round led by Atlas Venture and SR One Limited, GlaxoSmithKline's venture arm. Existing investors Aescap Venture, Entrepreneurs Fund, and Z-Cube also participated in the financing.

 

ProtAffin will use the new venture money to finish its pre-clinical work on its lead therapy and push through Phase I. The company is developing a platform for creating engineered versions of proteins that bind to cell surface glycans, or sugars. Specific glycans play a key role in inflammation linked to a variety of diseases, such as rheumatoid arthritis, COPD, Crohn's disease, and cancer. Its lead anti-inflammatory product is PA401, a modified form of the human chemokine IL-8/CXCL8. ProtAffin also plans to use its platform to advance new preclinical candidates for development, broaden its pipeline.

 

Partnership activity continues to be driven by pharma-biotech deals. San Diego, California biotech Ardea Biosciences and Bayer HealthCare entered into a global partnership to develop Ardea's MEK Inhibitors as cancer treatments in a deal that could net Ardea up to $407 million. The lead compound in this program, RDEA119, is small molecule mitogen-activated ERK kinase (MEK) inhibitors currently being evaluated in advanced cancer patients as a single agent in a Phase 1 study and in a Phase 1/2 study in combination with sorafenib (Nexavar from Onyx Pharmaceuticals and Bayer HealthCare).

 

Under the terms of the agreement, Ardea will grant Bayer a worldwide, exclusive license to develop and commercialize Ardea’s MEK inhibitors for all indications. Ardea will receive an upfront cash payment of $35 million, as well as additional cash payments up to $372 million upon achievement of certain development, regulatory and sales-based milestones. Ardea is also eligible to receive low double-digit royalties on sales of products under the agreement.

 

Ardea will be responsible for the completion of the Phase I and Phase I/II studies currently being conducted for RDEA119. Thereafter, Bayer will be responsible for the further development and commercialization of RDEA119 and any of Ardea’s other MEK inhibitors. The agreement announced today is subject to all necessary authorizations, consents or clearances of governmental authorities.

 

Long time partners Isis Pharmaceuticals and Alnylam Pharmaceuticals formed a new collaboration to develop single-stranded RNAi technology. Isis co-exclusively licensed its ssRNAi technology to Alnylam in exchange for upfront payments, research and development milestone payments, and royalties. The alliance provides Alnylam with access to Isis’ intellectual property and expertise regarding the development of ssRNAi antisense drugs, while both companies will have the opportunity to discover and develop drugs employing the new technology. In addition to the new collaboration, Isis and Alnylam also agreed to extend their broad cross-licensing arrangement regarding double-stranded RNAi that was established in 2004.

 

Under the terms of the licensing and collaboration agreement, Alnylam will potentially pay Isis up to $31 million in license fees payable in four tranches. Alnylam will also fund research activities at a minimum of $3 million each year for three years with research development activities conducted both at Isis and Alnylam. Isis is also eligible for royalties if Alnylam develops and commercializes drugs utilizing ssRNAi technology on its own or with a partner. Both Isis and Alnylam are eligible to receive royalties from each other on any ssRNAi products developed by the other company.

 

Many biotech companies are continuing to struggle. Seattle, Washington-based ZymoGenetics announced that it is reducing its workforce by approximately 32 percent, or 161 employees, as part of a corporate restructuring to focus resources on assets with the potential to generate the greatest value for shareholders. The company expects to realize a $30-million reduction in operating expenses beginning in the third quarter as a result of the restructuring. ZymoGenetics will discontinue ongoing research activities in oncology and focus its future research efforts in immunology, including its commitments to its PEG-interferon lambda development program in collaboration with Bristol-Myers Squibb, and its commercial activities related to its approved product, Recothrom Thrombin.

 

Finally, Genaera Corporation's board of directors decided to liquidate the company's assets and dissolve the company, pending approval of stockholders. Genaera was developing trodusquemine (MSI-1436) for type 2 diabetes and obesity and has a fully out-licensed partnership with MedImmune that is in Phase II clinical testing in asthma.