At the new online BioBeers home you will find, among many other bells and whistles, the 2010 BioBeers schedule (each quarter an event in Boulder AND Denver will be held), as well as view who will be attending, now that is cool and injects some serious efficiencies for those of you fixated on networking, and why shouldn’t you be?

For those Life Science Deal Flow readers outside of Colorado who may be interested in establishing your own local BioBeers chapter – shoot me an email [arubenstein@rnaventures.com] and we will get you set up with your own unique URL, e.g. http://www.BioBeers.com/YourLocalGroupName and other fun stuff.

And now for the details…Come Kickoff the 2010 BioBeers Season at BioBeers – Boulder.

Twisted Pine will once again play host (directions available at http://www.BioBeers.com) Note: please arrive promptly at 6:30pm. Feel free to arrive earlier and stay later however, the formal event kicks-off at 6:30 sharp and lasts for one hour.

SCHEDULE:

6:30 – 6:35 Welcome & News Announcements
6:35 – 6:40 Speed Intros
6:40 – 6:50 Presentation and Q&A | CID4 more info below
6:50 – 7:00 Presentation and Q&A | UCBC more info below
7:00 – 7:30 BioBeers schmooze-fest
7:30 – ?:?? BioBeers specials and programming end but feel free to stick around…

ABOUT PRESENTERS:

Colorado Institute for Drug, Device and Diagnostic Development

President and CEO of CID4 Rick Duke, Ph.D. and COO of CID4 Kevin Smith will be on hand to enlighten us about the recent CID4 launch as well as the RFP to help fund Colorado technologies in the gap-stage between proof-of-concept and first in (wo)man studies.

CID4 provides management expertise to efficiently transform emerging life science technologies into commercial successes. We do this by identifying and funding potential opportunities, and by utilizing an advanced leadership team to ensure speed to market, putting new products and services to work where they are needed.

University Colorado Bioengineering Center

Robin Shandas, Ph.D. head of the Bioengineering department with a joint appointment as research professor of mechanical engineering at CU-Boulder, and serial-entrepreneur will provide details about this recently launched program.

The University of Colorado Denver announced that it will be home to the first Bioengineering Department in the state, pending Colorado Commission on Higher Education (CCHE) approval on March 5. This new department aims to bring engineers, clinicians and medical researchers together.

SPONSORS:

Please support the entities who make our Meetups possible. Many thanks to:

• Diablo Sales
• Colorado Bioscience Association
• OnBioVC
• Biostarter Consulting

Additional sponsor opportunities still available.  Reach your target demographic by partnering with BioBeers!

BioBeers | Where Great Minds Drink Alike!

Bioscience venture capitalists invested $6.28 billion in 352 deals in 2009. Venture investments in 2009 represented a 3 percent increase in dollars and a 5 percent increase in deal volume from 2008. Investments in the fourth quarter of 2009 totaled $1.47 billion in 85 deals, a 13 percent decline in dollars and a 12 percent decrease in deals from the third quarter of 2009 when $1.66 billion went into 95 deals.

In a period where overall venture investments have declined to the lowest levels in more than a decade, bioscience investment activity in 2009 was less than 5 percent shy of the average annual investment totals for the last ten years. Given the challenging economic environment there was evidence of an insulated focus on continued investment in biomedical innovation. The 2009 OnBioVC Year-in-Review Trend Analysis presents details of the resilient 2009 bioscience venture capital market in addition to particulars on the thawing public markets and, information about twelve months of hyper-active biopharma M&A transactions.

Please feel free to share this document with peers and colleagues and do not forget to sign-up to receive OnBioVC, M&A and IPO updates at OnBioVC.com.

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We start our collection with a paper from our friends at NYC-based Thomson Reuters, a leading resource for intelligent information for businesses and professionals, download Biomarkers: An Indispensible Addition to the Drug Development Toolkit [HERE].

Biomarkers are becoming an essential part of clinical development. In this white paper, Thomson Reuters explores the role of biomarkers as evaluative tools in improving clinical research and the challenges this presents. The potential of biomarkers to improve decision making, accelerate drug development and reduce development costs is discussed with insight from experts in industry and academia.

An interesting resource to take a look at is the Thomson Reuters BIOMARKERcenter; I’m not certain what the subscription rate for access to this dBase is, nor can I think of another resource similar to this competitive intelligence offering.

Next up comes a paper from our friends at Denver, CO-based Ubiquity, a strategy and creative services company specializing in medical technology product launches, download Social Media Regulations: Not Your Father’s Media [HERE].

The current U.S. regulatory environment as it applies to social media advertising and marketing is a fluid and dynamic environment. In order to understand the current setting for social media as applied to the bioscience industry, it is useful to understand the existing regulations as they pertain to advertising and promotion. Medical devices and biologics are discussed separately, each section providing relevant regulatory background information, followed by a summary of current issues and implications for social media.

“Blow up the sales force. Replace the sales force model with something that adds more value to the process. Consider following the lead of the life insurance industry, which replaced captive sales forces with third-party agents that objectively represent multiple companies.” Deloitte Debates

Clearly the state-of-the-state is one that is undergoing some unique pressures; from impending patent expirations where approximately $60B in US drug sales will be lost between 2010-2012 (Source: Parexel Statistical Sourcebook), to the reduction of R&D productivity relative to an increase in expenditures as determined by the rise in R&D spend paired with the reduction in discovery of NME’s (Source: Parexel Statistical Sourcebook and Deloitte analysis). Add to these trends the anticipated yet amorphous health care reform; the increase in consumerism where customers are becoming more and more educated and active; a payor ecosystem undergoing a restructuring; an environment of pay for performance where treatment decisions may be increasingly influenced by quality measures; the delivery of care which is becoming more decentralized; and the accelerating march of health care related information technology innovation. These elements and beyond combine to impact the design of a go-to-market strategy.

Finite commercial resources that were once simply allocated to physicians, managed care and patients must now include planned spend on additional elements such as evidence generation, quality and clinical guidelines.

In order to build a competitive commercial market strategy it is important to:

1. Recognize that influence is consolidating as the needs of customers evolve and grow increasingly interdependent
2. Consider moving from a ‘Push’ to a consumer-centric model to create a dialogue, gather insights and translate customer needs into meaningful solutions
3. Leverage alternative channels to redefine reach and provide information the way customers want to consume it, and
4. Remain vigilant as the regulatory pendulum continues to swing and commercial practices become increasingly scrutinized

The general takeaway, courtesy of W. Scott Evangelista Principal with Deloitte, is that although companies do not necessarily need to blow up their sales forces today, a fundamental change to how products are sold is inevitable. Whether or not third-party independent representation becomes the sales model it is critical that action is taken now to become more customer-centric in the face of diminishing returns on commercial spend. Companies must put their products in a context that makes clinical sense for their customers. This requires a much deeper understanding of customers and the issues they face. Key focus areas to consider:

• Incorporate consideration for commercial implications early in product development. Collaborate early with payers and other key stakeholders to design studies and develop products, and then keep them involved throughout the product lifecycle. Enhance portfolio management to help assess the commercial viability of products in the pipeline and go/no-go decisions for moving forward. Focus on differentiated product value beyond safety and efficacy. Increase focus on health outcomes research and comparative effectiveness data to understand clinical differentiators and overall effectiveness. Incorporate focus on economic value and cost-effectiveness.
• Re-allocate resources to put more emphasis on meeting payer needs. Conduct research to gain insight about payers and appropriately segment and target key accounts. Enhance marketing and sales capabilities directed at payers. Improve the account management skills of individuals who interact directly with payers. Increase collaboration and use of payer partnerships to share risk, contain costs and create value.
• Use advanced analytics to optimize investments. Build superior data management and analytical capabilities to improve resource allocation and ROI. These advanced capabilities can be applied in a variety of ways, such as: enabling companies to better understand and optimize their marketing mix; extending physician targeting beyond top decile prescribers by incorporating other factors such as marketing mix, payer position and physician behavioral profiles; and reducing resources allocated to direct-to-physician sales and increasing the focus on non-personal promotion and new channels to boost ROI.
• Develop a more targeted approach to personal promotion. While the traditional product detail is no longer sufficient on its own nor valuable in many cases, it still has a place in the commercial toolkit. Build flexible field forces which can be leveraged across products and are deployed in a much more focused manner, based on physician preferences. These representatives can serve an important role in driving pull-through during specific inflection points in the product lifecycle such as launch and during competitive market events.

Some third-party life science sales orgs to keep an eye on include:

• Innovex (Quintiles)
• PDI
• inVentive Health

Movetis plans to raise up to $167M priced a 11.25€ – 14.25€ or as-of today 23 Nov, where 1 Euro equals $1.49 US, a range of $16.84 – $21.33.

The Company, a 2006 spin-off from Janssen Pharmaceutica (a Johnson & Johnson company (NYSE: JNJ)), is focused on the discovery, development and commercialization drugs for the treatment of gastrointestinal diseases with high unmet need. The lead product Resolor® (prucalopride) has recently received marketing approval from the European Commission for the symptomatic treatment of chronic constipation in women in whom laxatives fail to provide adequate relief. The expected launch of Resolor is 1Q10, and thus use-of-proceeds from the planned IPO will be allocated, in part, to the sales & marketing efforts.

The commercial-stage status of Movetis bodes well for a potential warm reception from investors relative to earlier-stage companies trying to come public these days.

In the US and Europe, an estimated 200 million people have some form of GI disorder, the segment has a number of disease areas where there is a high unmet medical need and this is where Movetis is focused, candidates in development address GI disorders such as severe chronic constipation, ascites, paediatric reflux, and severe forms of GI motility disorders such as refractory GORD (Gastro-Oesophageal Reflux Disease).

Movetis secured €60.8 million of funding in December 2006 from EU and US venture capital investors (Sofinnova Partners; Life Sciences Partners; Sofinnova Ventures, KBC GIMV; Quest for Growth; BIP) including €11.8 million from Johnson & Johnson. At the same time it entered into an intellectual property and rights transfer and license agreement with Johnson & Johnson that secured the rights to its current product portfolio. The Company has also received several grants totaling €3.45 million from the Flemish government as a part of collaborations with academic partners in Belgium and the Netherlands.

Taking a look at the LSDF – Class of 2009 Biopharma IPO Performance Watch List it makes me tingly all over to see the data begin to appear ‘crowded’, and more power to these management teams for electing to lead the market out of this two-year public offering trough. However, despite the all-inclusive class-wide cumulative market cap of $11.4 billion, back out Mead Johnson (NYSE: MJN) or 20% of the 2009 IPO class and then you are looking at a remaining $2.4 billion. Back out another 20% from the class in the form of Talecris (NASDAQ: TLCR) and you are now looking at $582M in market cap spread across the three remaining classmates. Then eliminate Cumberland Pharma (NASDAQ: CPIX) and AGA Medical Holdings (NASDAQ: AGAM) and you are left with $22.7M in market cap allocated to Omeros (NASDAQ: OMER). Omeros has been off oh maybe 30% from their first day offering price of $10, at last check they were trading at $7.70 per share. So obviously a rather brutal foray for Omeros, the Street has certainly not welcomed them warmly relative to their peers. Let’s see if we can spot a trend that may illuminate some rationale driving this negative outcome, shall we?

1. Mead Johnson – a commercial-stage entity
2. Talecris – a commercial-stage entity
3. Cumberland Pharma – a commercial-stage entity
4. AGA Medical – a commercial-stage entity

• Omeros – well…NOT a commercial-stage entity rather, clinical-stage with a Phase III asset

Now, I am no regulatory guru, nor to I even try to play one in the blogosphere, but I can tell you from some accumulated scars that there is a meaningful chasm between NDA submission and market approval. Not only temporally, yeah sure assume ten-months for a PDUFA date response, but do not forget to consider the time and heavy lifting required to get the document submitted following completion of the trial – drafting the NDA is not an immaterial endeavor. That work could easily require three to six-months. And why not book-end it with FDA often requesting “something” more often than not upon their PDUFA response; make it easy here and say another three to six-months for response to the FDA response.

So when an entity is pitching out on the road-show, proudly announcing positive Phase III interim data, keep in mind that they can very easily still be two to three years away from commercialization. And in this author’s humble and unsophisticated opinion believes that the Street is no longer rewarding development and clinical-stage entities, as can be observed with Omeros relative to their class peers.

That said and turning now to Trius Therapeutics, who is yes, to my understanding, a clinical-stage entity with their most advanced asset in Phase II – one may postulate then that in today’s market there will be no record setting capital raise transpiring. What exactly does Trius have cooking…

Trius Therapeutics is a biopharmaceutical company focused on the discovery and development of innovative antibiotics for serious, life-threatening infections, who is preparing to initiate (a) Phase III clinical trial(s) for torezolid phosphate, an IV and orally administered second generation oxazolidinone, for the treatment of serious gram-positive bacterial infections, including those caused by methicillin-resistant Staphylococcus aureus (MRSA).

PRODUCTS IN DEVELOPMENT

Torezolid phosphate (Phase II), a novel prodrug antibiotic, is cleaved in the blood stream to the active compound, torezolid. As a second generation oxazolidinone, torezolid phosphate shares the positive attributes of linezolid, including the availability of IV and oral dosage forms, highly efficient oral absorption, tissue penetration and distribution, and activity against MRSA. However, based on clinical and nonclinical data, it is believed that torezolid phosphate has significant potential advantages over linezolid, including the following:

• Greater Potency
• More Convenient, Shorter and Once Daily Dosing Regimen
• Bactericidal Activity In Vivo
• Activity Against Key Gram-Positive Drug-Resistant Strains and Select Atypical and Gram-Negative Bacteria
• Low Intrinsic Frequency of Resistance
• Favorable and Predictable Pharmacokinetics
• Fewer Drug-Drug Interactions
• Improved Safety Profile for Longer Term Dosing
• No other clinical-stage assets (please correct me if mistaken)

INDICATIONS AND MARKETS PURSUED

• Drug resistance is a key public health problem and also a problem for makers of branded antibacterial products. Traditional antibiotics: quinolones, cephalosporins, and penicillins, have seen their market share erode due to loss of effectiveness, while at the same time they are facing heavy generic competition. Growth is flat and in some cases, sales are declining, the total world market for antibacterial drugs, which represents almost half of the anti-infectives market (anti-fungals, anti-bacterials and anti-virals), is estimated at $24.5 billion for 2009, up 0.7% from 2008. (Source: Kalorama)

Methicillin-resistant Staphylococcus aureus is a bacterium responsible for several difficult-to-treat infections in humans. It may also be referred to as multidrug-resistant Staphylococcus aureus or oxacillin-resistant Staphylococcus aureus (ORSA). MRSA is resistant to a large group of antibiotics called the beta-lactams, which include the penicillins and the cephalosporins.

MRSA is especially troublesome in hospital-associated (nosocomial) infections. In hospitals, patients with open wounds, invasive devices, and weakened immune systems are at greater risk for infection than the general public. MRSA is often sub-categorized as community-acquired MRSA (CA-MRSA) or health care-associated MRSA (HA-MRSA) although this distinction is complex. Some have defined CA-MRSA by characteristics of patients who develop an MRSA infection while other authors have defined CA-MRSA by genetic characteristics of the bacteria themselves. The first reported cases of community-acquired MRSA began to appear in the mid-1990s from Australia, New Zealand, United States, United Kingdom, France, Finland, Canada, and Samoa. The new CA-MRSA strains have rapidly become the most common cause of cultured skin infections among individuals seeking emergency medical care in urban areas of the United States. These strains also commonly cause skin infections in athletes, prisoners and soldiers.

FINANCING (to date ~$50M, not including $27.7M NIAID contract)

The Company announced their first institutional financing in 2007, a $20M Series A round led by Sofinnova Ventures along with InterWest Partners, Prism VentureWorks and Versant Ventures. This was followed by a $30M Series B in 2008 led by Kleiner, Perkins, Caufield and Byers and new investor FinTech Global Capital along with participation from all earlier investors. Then in November of 2009 Trius announced the S-1 filing, this doc can be viewed [HERE]. The offering is led by Credit Suisse Securities, Piper Jaffray (NYSE: PJC), Canaccord Adams and JMP Securities (NYSE: JMP).

Over $1,663M flowed into early-stage biopharma, diagnostic and device companies in the third quarter of 2009 and over $4,806M year-to-date!

Headquartered in Boulder, Colorado, OnBioVC provides timely coverage and comprehensive analysis of global bioscience venture capital investment activity. At OnBioVC a free and easy to search database is provided where information queries may be indexed by therapeutic, diagnostic and medical device company, technology, indication, financing round, close date and geographic region. In addition to the web-based resource, regularly published OnBioVC Trend Analysis studies provide cumulative analytical color by month and quarter. All data aggregated at OnBioVC is also available for delivery to your inbox via a free email or RSS subscription.

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“You can accomplish anything in life, provided you do not mind who gets the credit.”
- Harry S. Truman

Apologies for the quiescent-state at LSDF this past week. While taking in some R&R in blissful Aspen, CO I found myself at one of my favorite bookstores, Explore Booksellers, on Main St. where an idea for a substantial work was catalyzed. Ideas, even great ideas are a dime-a-dozen – particularly in this entrepreneurially rich eco-system. It is impossible to walk into a café in Boulder, look around, and not see business models being passionately and feverishly scribbled out on latte stained napkins or hear terms like “fundraise”, “CEO”, “IP” and “Venture Capital” rise above the clanking of spoons on espresso saucers, the clicking away on laptops and the Pixies or Bach, Brahms or Rachmaninoff being played by baristas who are completing their graduate work in transcendental meditation or prose and poetry at Naropa University’s Jack Kerouac School of Disembodied Poetics, ahhh…I love this town!

Perhaps even more important than the spark and the idea is the ability to execute. Though I am intimately aware of this requirement I am frequently, subtly or not so subtly, reminded by a great friend and confidant, who is a successful entrepreneur in his own right, of the importance of execution. The bottom file cabinet at my desk is a constant reminder of the importance of execution…as it is now the final resting place for business plans, some rather excellent ones too, that for one reason or another have failed to launch, and I gotta say the drawer is near full.

It is easy to sit behind the big mahogany desk and rich leather chair (or in my case the aging Target computer desk and Herman Miller Aeron knock-off), shake your finger, and say young lass or lad, you must execute, execute, execute! What the heck does that really mean?

One interpretation of the meaning of execution is simply an extension of the people who become involved in the nascent endeavor. So now the conversation must inevitably choose to focus, and that spotlight will now shine on the first-time entrepreneur. The first-steps along the pathway to positioning an entity for success is sector agnostic, no matter if you are developing a superior photovoltaic cell, the ultimate in social media or a broad spectrum antibody fragment with limitless anti-infective uses – step number one is…surround yourself with a person or persons who have successfully traveled the path you are about to embark upon. In so doing, that is…asking for help, you are concurrently setting out upon a path of leadership. Boulder’s very own Jim Collins famously refers to Level 5 leaders, in part, as those who are focused upon channeling ambition into the company not into the self and one who looks out of the window and not into the mirror to apportion credit for success of the company. What are your honest ambitions?

What makes centers of innovation just that, among additional elements, is the presence of a pool of visible and active seasoned serial entrepreneurs. These folks are a critical component to the required nurturing of early-stage intellectual property and these stewards of development more often than not (from what I have observed) are available and eager to identify and connect with inventors anf first-time entrepreneurs. Such aid can take the form of simply shinning a light upon the path to illuminate impending and inevitable obstacles to fully taking the reigns in the form of Chief Executive Officer duties. So where can these resources be identified and connected with? Well it is easy to do if you find yourself in Silicon Valley or Boston or San Diego but elsewhere there is nothing quite like the resources and people who aggregate at and around University Technology Transfer Offices. No matter if your IP is born inside or beyond the walls of academia, do yourself the favor of connecting with your local TTO office.

Net – You have an idea, a passion, a blueprint, a prototype, be certain to ask for help. It could be the best business decision you will ever make.

My intentions were to begin writing about Trius Therapeutics, the latest company to file for a public offering (more on that to follow) and instead I became distracted with the idea of execution in and around my idea for a substantial work. I think I’ll take my own advice and see if I can muster some help, thanx Jeff.

Rather than a one-bug:one-drug tactic Pulmatrix’s technology is pathogen-independent so it has broad potential to treat a wide range of respiratory diseases, including respiratory infections such as influenza, ventilator acquired pneumonia and respiratory syncytial virus, as well as progressive respiratory diseases such as COPD, asthma, and cystic fibrosis.

The Pulmatrix drugs are potentially able to deliver this benefit through a dual mechanism of action which enhances and stimulites the inherent biophysical and biochemical properties of the airway:

• Biological: The drugs stimulate host defense mechanisms that prevent infection and enhance the clearance of pathogens and,
• Biophysical: The drugs activate the assembly of endogenous proteins into three dimensional matrices, resulting in enhanced barrier function in the lung and reducing the penetration of pathogens into the lung tissue.

This unique approach of enhancing the biophysical capabilities of the airway while augmenting host defense mechanisms potentially offers a novel approach to treat and prevent infectious and progressive respiratory diseases.

PRODUCTS IN DEVELOPMENT

PUR003 (Phase Ib/IIa initiated 3Q09) is the lead drug candidate and is designed to treat, prevent, and reduce transmission of a broad spectrum of airborne pathogens that pose community and public health risks. PUR003 is intended to demonstrate utility in the treatment, prevention, and control of respiratory infections including influenza and in the reduction of acute exacerbations of progressive respiratory diseases, including asthma, and COPD. In a 2008 Phase I double-blind, placebo-controlled, randomized study designed to evaluate the safety and tolerability of single ascending doses of inhaled PUR003, the drug was found to be well tolerated at all doses with no serious adverse events reported. In preclinical studies, PUR003 demonstrated significant efficacy in the treatment and prophylaxis of influenza across multiple strains and in multiple species, including swine.

INDICATIONS & MARKETS PURSUED

• The worldwide influenza market is estimated at $7.1 billion in 2010, up from $1.5 billion is 2004, with average annual growth estimate now at 19.8%. Annually, more than 3.5 million people die of influenza. The outbreak of H1N1 (swine flu) highlighted the public health importance of improved vaccines and testing techniques creating new market opportunities.

The two classes of antiviral drugs used against influenza are neuraminidase inhibitors and M2 protein inhibitors. Neuraminidase inhibitors are currently preferred for flu virus infections since they are less toxic and more effective. The CDC recommended against using M2 inhibitors during the 2005–06 influenza season due to high levels of drug resistance. As pregnant women seem to be more severely affected than the general population by the 2009 H1N1 influenza virus, prompt treatment with anti-influenza drugs has been recommended.

Neuraminidase inhibitors: Antiviral drugs such as oseltamivir (Tamiflu) by Roche (VTX: ROG.VX) and zanamivir (Relenza) by GlaxoSmithKline (NYSE: GSK) are neuraminidase inhibitors that are designed to halt the spread of the virus in the body. These drugs are often effective against both influenza A and B. Different strains of influenza viruses have differing degrees of resistance against these antivirals, and it is impossible to predict what degree of resistance a future pandemic strain might have.

M2 inhibitors: The antiviral drugs amantadine and rimantadine block a viral ion channel (M2 protein) and prevent the virus from infecting cells. These drugs are sometimes effective against influenza A if given early in the infection but are always ineffective against influenza B because B viruses do not possess M2 molecules. Measured resistance to amantadine and rimantadine in American isolates of H3N2 has increased to 91% in 2005. This high level of resistance may be due to the easy availability of amantadines as part of over-the-counter cold remedies in countries such as China and Russia and their use to prevent outbreaks of influenza in farmed poultry.

FINANCING (to date ~$43M)

It appears as though Pulmatrix may have got going back in 2004 with an $850K seed round followed by their first institutional financing in 2007 of $8M which an additional $4M was added to shortly thereafter. Participants in this Series A included Polaris Venture Partners and 5AM Ventures. In 2008 it looks like a $3.5M debt offering was put in place. The most recent Series B financing, announced in November, totals $30.2M with $15.4M of it closed as a B-1, and includes new investors ARCH Venture Partners and Novartis Venture Fund with participation from previous investors. In addition, a non-dilutive $2.2M grant from the National Institute of Allergy and Infectious Diseases, a component of the National Institutes of Health was received for the advancement of novel influenza therapeutics for the treatment of seasonal and pandemic influenza.

Intended use-of-proceeds from this new financing are to enhance Pulmatrix’s R&D capabilities and enhance the product pipeline, as well as the ongoing clinical program of PUR003.

Getting down to the details. The Aldagen technology is focused upon a potentially novel approach to isolating adult stem cells for therapy via the identification, selection and isolation of adult stem cells that express high levels of the enzyme ALDH. The ALDH enzyme plays an important role in controlling the developmental state of stem and progenitor cells by converting Vitamin A into retinoic acids, which are molecules that regulate genes and influence the differentiation of blood, neural, endothelial and other types of stem and progenitor cells. To identify ALDH cells a proprietary chemical compound is used that accumulates in cells with high ALDH levels and causes these cells to emit a green florescence that can be detected by a cell sorting device. The ALDH stem cell populations produced using the Aldagen technology are believed to have several potential advantages, including: A heterogeneous mix of stem cells and progenitor cells. The ALDH cell populations contain a heterogeneous mix of stem cells and progenitor cells, potentially including hematopoietic, mesenchymal and neural stem cells and endothelial progenitor cells. Other companies are pursuing stem cell therapeutic approaches to tissue repair that consist of homogeneous cell populations containing only one of these types of cells. Because of the diversity of the stem cell types included in the ALDH cell populations, this may promote repair in a variety of ways. Based on preclinical research, ALDH cell populations promote the formation of new tissue either because progenitor cells present in ALDH cell populations themselves differentiate into new tissue, or because ALDH cells induce the generation of new tissue from existing tissue or from other progenitor cells within the patient. Other potential advantages include:

• broad potential applicability promoting the regeneration of multiple types of cells and tissues and a variety of therapeutic uses
• well characterized stem cell lines having a high level of purity and a consistent set of physical and chemical characteristics, and
• a rapid manufacturing process

Aldagen is currently conducting a pivotal Phase III clinical trial of ALD-101 for improving umbilical cord blood transplants used to treat inherited metabolic diseases in pediatric patients. ALD-101 is the population of ALDH stem cells produced from a portion of a cord blood unit which is infused into a patient shortly after the transplant of the remaining portion of the cord blood. In a Phase I clinical trial a reduction in the time to platelet and neutrophil engraftment in patients receiving ALD-101 following their cord blood transplant, as compared to similar patients who had received a cord blood transplant without ALD-101 in an earlier independent clinical trial was observed. The reduction in engraftment time may reduce risks associated with cord blood transplants and decrease the length and cost of the related hospital stay. In March 2008 a pivotal Phase III trial of ALD-101 was initiated to further evaluate its ability to accelerate engraftment following cord blood transplants in pediatric patients with inherited metabolic diseases. Enrollment completion of this trial is expected in the 1Q11 efficacy results of the trial are expected in 2Q11. ALD-101 has received orphan drug designation from the FDA for improving engraftment times in patients with inherited metabolic diseases undergoing cord blood transplants.

Earlier clinical programs include ALD-301 to treat critical limb ischemia and ALD-201 to treat ischemic heart. Aldagen is planning to raise capital somewhere in the ballpark of $80M with the help of Cowen and Co. (NASDAQ: COWN) and Wells Fargo Securities (NYSE: WFC). Considering Aldagen is a best perhaps 20 months or so away from filing their NDA for ALD-101, with the acknowledgment of potential accelerated approval from FDA as a result of receipt of ALD-101 receiving orphan drug designation – the public markets appear to be demanding entities that are perhaps potentially closer to commercialization, therefore it will be very interesting to observe the reaction to the Aldagen issue from when initially floated to their first earnings call post approval.

Hang on for what is certain to be an interesting ride – and naturally it goes without saying but reckon will indeed say, do not consider any of these ramblings appearing anywhere on this blog, to be investment or any other type of regulated advice.

Our prediction then is that new issues in the coming year will be greater in aggregate than the 6 (or 7) 2009 market entrants, but just exactly where then does the “Pandemonium” part figure in figure in? Life Science Deal Flow is not releasing a forecast on the number of 2010 deals anticipated…yet…but let’s say for example it is 10X to this year. If 60 to 70 deals are in the queue well, naturally all of the traditional investments banks, the big boys like JP Morgan (NYSE: JPM), Citigroup (NYSE: C), Jeffries, Credit Suisse (NYSE: CS), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Piper Jaffray (NYSE: PJC) and Bank of America – Merrill Lynch (NYSE: BAC) just to name a few, will likely stand to make millions (and perhaps billions) in banking fees and capital appreciation from the anticipated tsunami of deal flow. However, it is the unique approach of the Open IPO dutch auction process that will enable the average (qualified) guy and gal on the street to get in the IPO game. As soon as these individual investors are able receive a multiple (or percentage) on their initial investment the enthusiasm and excitement will undoubtedly go viral, perhaps first from chat around the conference room or golf course, then the blogosphere, Facebook and Twitter, and finally the mainstream media will pick up on the story. Before you know it Main St. will be clamoring for their bio IPO access  (and naturally the other sectors will respond similarly), then the Charles Schwab’s (NASDAQ: SCHW), E*Trade’s (NASDAQ: ETFC) and TD Ameritrade’s (NASDAQ: AMTD) of the world will all want to cash in on this new opportunity by serving up some sort of tiered access to these once out of vogue, then in vogue, then out of vogue, then in vogue, etc., shares. Now that would be…Pandemonium.

Assuming the Life Science Deal Flow crystal ball is on the money let’s then get back to our example of how this Burrill & WR Hambrecht Open IPO dutch auction will work:

Click [HERE] for the example set-up from Part #1.

• As the bids are received Burrill & WR Hambrecht may reject certain requests that they believe may have a manipulative or disruptive affect on the offering. As the bids come in they are sorted and the number of shares at each price is calculated, once the bidding window is closed the Open IPO process will then determine the clearing price by tallying the bids, ranking them from highest to lowest and then will calculate the highest bid price that will sell all 10 million shares of ABCgen – this price also represents the maximum offering price for ABCgen shares.

• Then it is incumbent upon ABCgen to elect the final offering price of the shares, either at the maximum offering price previously determined or they may elect to apply some discount to the max – clearly a variety of elements both internal to the business as well as external macro economic considerations and other variables will impact the price setting decision.

• What happens when in total more shares are bid for than are offered? In this scenario shares will then be allocated to successful bidders on a pro rate basis. For example say ABCgen received bids for 11 million shrs at or above the offering price for $11, the calculation is 10 million shrs / 11 million shrs which means that 90% of the bid would be filled.

• Now the results are in and the actual offering price for ABCgen is set not at $11 but actually for $11.50, having received bids for 11.5 million shrs or an oversubscription of 1.5 million shrs. Those individuals or institutions who bid below the offering price are left out in the cold. In our example:

1. Mr. Sigma, the portfolio manager of the $20 billion Next Century Bio Fund, bid on 7,500 shrs @ $8 so he is allocated…nada, for coming in too low.
2. Mr. Alpha, my Subaru mechanic and repair shop owner requested 200 shrs @ $12. He is allocated 87% (10 millions shrs / 11.5 million shrs) or 174 shrs (which may be rounded up by blocks of 100).
3. Mrs. Beta, my neighbor the aerospace engineer requested 1,000 shrs @$13. She is allocated 870 shrs (which may be rounded up by blocks of 100).

In summary ABCgen ended up raising $115M on the sale of 10 million shrs and after deducting offering fees and expenses is now off to build its US commercial enterprise and bring its new large molecule to market, continue clinical development of their early-stage pipeline assets and fund operations. A collective sigh of relief can be heard coming out of the board room and the c-suite as ABCgen after about seven years as a development stage company, now with FDA approval in hand, can finally get down to the business of the business.

There are a variety of benefits to the Open IPO dutch auction. For the investors it truly levels the playing field between institutional big boy and the individual by providing equal opportunity access; a fair allocation of shares free from preferential treatment; flexibility in the bidding process – meaning request for any number of shares at any price may be submitted; and naturally, equal prices are paid by all successful participants and no investor pays over their bid. From the company’s perspective there is a belief that the stock is being allocated to institutions and individuals who are not simply planning to unload their shares to cash in for a quick buck on day 1; the cost of the process is reduced relative to the more traditional public offering process; the dillutive effective may be minimized as deal sizes are not determined by the economic needs of the underwriting investment bank; and, simply the market truly drives the price of the IPO.

So, are you ready to get in the IPO game slightly ahead of the curve? If so and a qualified investor click [HERE] to open an account with Burrill & WR Hambrecht and be ready to bid away for those life science IPO shares. Avoid the utter chaos, tumult and uproar of the impending 2010 Bio IPO Pandemonium – chance favors the prepared mind.

Note: I have no ties of any kind to Burrill & WR Hambrecht (other than having an opportunity to have met G. Steven Burrill at an FBBp deal screen mtg) however, I would like to say that I will now happily accept client referral fees from Burrill & WR Hambrecht as well as handsome thank you gifts to downstream investors who have been handsomely rewarded via this process…

The last deal done that year, in late October, was Nanosphere (NASDAQ: NSPH) who came public at $14 per share raising near $110M in the process – to the sector investors that may feel like it was floated back in the triassic period of the mesozoic era – followed by a 2008 common stock offering that raised an additional $37M; OK, now consider today’s market cap of only $148M, add a current price of $6.68, and sprinkle in some investor dilution, shake well and pour that combination over ice and it must make Nanosphere shareholders feel far from all warm and fuzzy on the inside, right. But I digress…

Today is all about prediction time. That said, and based upon the marginal success of the brave bio IPO class of 2009, as defined here not by gain in market cap but rather an avoidance of total erosion of enterprise value combined with a recent and very interesting announcement out of Burrill & Co., which to my surprise has not yielded much chatter, Life Science Deal Flow therefore is now calling for pure PANDAMONIUM in the bio IPO market for 2010. That’s right, a bold call, maybe, and you heard it heard it here first, and now immortalized in the http internet protocol archives.

Burrill & Co. is a diversified international life science investment company behemoth, from venture capital to private equity to merchant banking even a stalwart in competitive intelligence, publications, conferences and special events – truly amazing. Now add to that lengthy list, I-banking partner to WR Hambrecht + Co. to focus on, yes…taking bio entities public. But not engineering IPO’s like your daddy’s Initial Public Offering rather the dynamic banking duo will be leading companies to the land of liquidity via the OpenIPO® dutch auction route!

Perhaps this process sounds vaguely familiar? That is because in 2004 a little search company by the name of Google (NASDAQ: GOOG) came public through this auction route raising a cool near $2 billion in its trading debut.

The OpenIPO® process provides wider and more diversified access to once difficult to acquire IPO shares. The protocol, engineered by the Nobel Prize-winning economist William Vickrey, places qualified individual investors on an even playing field with that of the institutional big boys, thus yielding an allocation of shares in an impartial way.

Lets run through an example to perhaps better understand just how this works.

• Assume ABCgen, Inc. has recently had their large molecule approved by the FDA and is now ready to take the company public and use the proceeds to build an internal sales and commercial unit to launch their product into the US market. ABCgen thus seeks to sell 10 million shares at $10 to $13.

• Mr. Alpha, my Subaru mechanic and repair shop owner, Mrs. Beta, my neighbor who happens to be an aerospace engineer and Mr. Sigma, the portfolio manager of the $20 billion Next Century Bio Fund all want to purchase ABCgen shares and thus all plan to submit bids, no one is guaranteed shares but with this auction process all have an equal opportunity to acquire. Mr. Alpha wants 200shrs @ $12, Mrs. Beta 1,000shrs @ $13 and Mr. Sigma 7,500shrs @ $8.

Tune into Part #2 of “2010 | Impending Bio IPO Pandemonium” to find out who is able to get the ABCgen shares and why. The steps you can take today to position yourself to participate in the IPO acution process tomorrow, and most importantly why this Burrill/Hambrecht offering is going to set the 2010 Bio IPO market on fire.

Waltham, MA-based Synageva Biopharma (formerly AviGenics) is focused on novel, next-generation and follow-on protein therapeutics that leverage their Synageva Expression Platform (SEP™). SEP™ is an integrated platform of proprietary vectors and protein production, processing and purification systems that may be superior to current expression methods with respect to productivity in addition to offering potential advantages with regards to cost, scalability and consistency of end product – with vectors expressing protein at ~10 g/L in a fully compliant cGMP process. A spectrum of proteins have been expressed through SEP™ including monoclonal antibodies, fusion proteins and cytokines.

Synageva’s most advanced assets are next-generation and follow-on cytokines:

SBC-014 (Phase II; being developed via biosimilar pathway in EU) is an O-glycosylated granulocyte colony-stimulating factor (G-CSF). The purpose of the study is to assess the dose response, efficacy, and safety of three different dose levels of SBC-014 G-CSF versus Amgen’s (NASDAQ: AMGN) Neupogen® (Filgrastim) in breast cancer patients at high risk for chemotherapy-induced severe neutropenia.

SBC-091 (Preclinical) is a PEG-cytokine that has demonstrated significantly enhanced efficacy in animal studies versus currently available therapies.

The Company also has pre-clinical novel protein assets (SBC-102) and novel or next-generation mAbs (SBC-201) potentially targeting several oncologic indications including lymphomas and certain forms of leukemia and (SBC-202) planned to target certain forms of breast cancer and potentially other gynecologic cancers.

INDICATIONS & MARKETS PURSUED

• Breast cancer is the second leading cause of cancer deaths in women in the U.S. Worldwide, mortality rates vary with geographical location, but overall, this disease has a significant global impact. Breast cancer incidence rates increased steadily throughout the 1980s, and leveled off in the 1990s. As the population continues to age, the incidence of new breast cancers will rise. This will ultimately lead to the subsequent demand for accurate screening and effective treatments, thus facilitating the entry of next generation cancer therapeutics into the market. Breast cancer is a multifactor disease; hence, no standardized medication is available for patients. Genentech’s (NYSE: DNA) Herceptin® is the only product that is approved by the FDA currently available in the market. Besides, mastectomy and radiotherapy, the administration of hormonal, cytotoxic or biologic therapeutics is carried out to improve the long-term outlook of the treatment. The breast cancer therapeutics market is anticipated to grow to $ 11.5 billion by 2011, with CAGR of 9.8%.

FINANCING (to-date ~$77M)

Synageva was founded in Athens, Ga., in 1996 as AviGenics, Inc., by University of Georgia geneticist Robert Ivarie, who developed a process to use egg whites to produce human proteins that can be used for treatment of human diseases. Piecing together primarily tidbit courtesy of Reg D filings it appears as though two convertible notes were closed in 2004 and 2005 for $1.4M and $6.5M respectively with a Series A financing of $14M closing in 2005 with participation from Fuqua Ventures, Kitty Hawk Capital, Cordova Ventures, TD Javelin Capital Fund, TD Lighthouse Capital Fund, Baker/Tisch Investments and Baker Brothers Life Sciences. Then in 2007 came a $10.1M Series B with participation from prior investors. The latest Series C financing, announced in October 2009, totals $45M and included new investor New Leaf Venture Partners along with participation from previous investors.