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ISSUE
3 W H AT ’ S I N S I D E
DEVICES
Revolutionary Ways
to Treat Back Pain
Company Sales, Financings Close Out
Another Strong Year for Oxford
page 2
Cohesive, a leader in creating new tools
for high-throughput bioanalysis, entered
into an agreement to be acquired by a large
instrumentation company. Cohesive has
developed technologies that eliminate the need
for costly, time-consuming sample preparation
for liquid
chromatography
assays. These
technologies are
widely used in drug
discovery and clinical
diagnostic testing.
THERAPEUTICS
New Drug Opportunities
Gain Public Market
Support
page 3
TOOLS &
INSTRUMENTS
High-Speed Bioanalysis
Tools To Overcome Drug
Development Bottleneck
page 4
BREAKTHROUGH
TECHNOLOGIES
Cyberkinetics Succeeds
by Turning Thought
into Action
page 5
VENTURE AHEAD
Company Sales,
Financings Close Out
Another Strong Year
for Oxford
OXFORD TEAM
page 6
Throughout its history Oxford Bioscience
Partners [OBP] has succeeded by investing in
entrepreneurs and companies with innovative
technologies and products able to transform
markets. This year continued to show the
benefits of that approach.
Highlights of the year included numerous
high value acquisitions of portfolio companies,
successful initial public offerings (IPO),
equity financings at premium valuations,
and growth-oriented strategic alliances.
Mergers & Acquisitions; Sales of Securities
page 7
W W W. OX B I O . C O M
NEWSLETTER
Solexa, which develops next-generation,
whole genome-scale instruments, reagents and
services for high-speed, low-cost genotyping,
gene expression and sequencing, announced
in November that Illumina would acquire the
company in a stock and investment transaction
valued at $600 million. OBP enabled Solexa
to advance its technology to its present
commercial-product stage by engineering
the merger in 2005 of the privately-held UK
company with the publicly-held Lynx.
The October 30 announcement that Merck
will acquire Sirna Therapeutics in a transaction
valued at approximately $1.1 billion underlined the
importance of Sirna’s revolutionary drug discovery
platform. Sirna is a leader in the chemical
synthesis of short interfering RNA (siRNA),
an entirely new class of highly targeted and
effective gene-based medicines for a wide
range of diseases.
That sale followed shortly after the announcement
of Pfizer’s purchase of PowderMed. The company
is developing vaccines using a proprietary needlefree technology to deliver targeted DNA to activate
immune cells against specific viruses. The DNA
technology greatly improves production and
storage of vaccines compared to current methods
and expands their therapeutic possibilities.
Together with company founder and CEO Ron
Zwanziger and Goldman Sachs, OBP participated
in a Private Investment in Public Equity (PIPE)
in Inverness Medical Innovations. Inverness
is developing the first daily self-testing kit for
heart disease patients at risk for additional heart
attacks. OBP has a longstanding relationship
with Zwanziger, a very successful entrepreneur
and business leader, which led to the investment
opportunity. Sale of the stock on the open market
brought substantial returns on OBP’s investment
in the PIPE.
. . . continued on page 6
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Revolutionary Ways to Treat Back Pain
Back pain is the single largest cause of doctor
office visits in the U.S. Many chronic back pain
sufferers gain relief only through surgery. But
current surgical
procedures are
expensive, dangerous
and can eventually
worsen damage to
the spinal column.
Two OBP device companies, Applied Spine
Technologies (AST) and HydroCision, hope
to reduce the pain and improve long-term
outcomes from back surgery.
DEVICES
To date, only one surgical solution exists for
treatment of degenerative disc disease, the most
frequent cause of chronic lower back pain: spinal
fusion. For this procedure, the surgeon implants
and secures metal rods to fuse together the two
vertebrae around the diseased
disc. This prevents motion
between these two vertebrae,
thus eliminating pain. Some
200,000 fusion surgeries are
performed each year in the U.S.
alone, where spinal implant
revenues are growing 20 percent
annually and are projected to
reach $10 billion by 2010. AST
was cofounded by OBP, still the
company’s largest shareholder, to develop the
Stabilimax NZ™ System, a dramatically new
minimally invasive and dynamic spine implant
for treatment of chronic low back pain.
Instead of permanently fusing vertebrae,
the dynamic spine system utilizes a dualspring mechanism that provides maximum
stabilization to the spine, decreasing the
motion that causes pain while preserving normal
movement. Importantly, the Stabilimax NZ™
requires a less invasive surgery than fusion or
disc replacement. Minimizing surgical trauma
can reduce complications and recovery time,
providing a more rapid return to the activities of
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daily life. A key advantage to treating back pain
with minimal disruption, and still allowing motion,
is the decreased potential for over-stressing the
adjacent vertebrae and associated healthy discs.
This condition is referred to as Adjacent Level
Syndrome and often treated with additional
fusion procedures.
Human clinical trials for the Stabilimax NZ™
device, developed in the Yale University laboratory
of Manohar Panjabi, began in November.
HydroCision’s SpineJet®, a spinal surgery
application of the company’s revolutionary
fluidjet cutting-with-water device, also seeks to
minimize back surgery complications. The fluidjet
technology has already been used in more than
10,000 spine, arthroscopic and wound-cleaning and
-resurfacing procedures, ushering in a new era of
knife-less “hydrosurgery.” Using
the instrument’s hair-thin, 600-mileper-hour saline stream, back surgery
to remove damaged soft and hard
tissue can be performed through a
straw-size opening—compared to
the one-to-two-inch incision with a
scalpel needed for standard open
surgery. Engineered for precise
spinal-target applications, the
device prevents damage to adjacent
tissue and vulnerable nerve fibers, a frequent
complication with other surgical modalities.
Adapting the longstanding industrial use of fluidjet
for cutting to the needs of surgical procedures
required major engineering advances. The multiyear development of HydroCision’s innovations
was supported in part by OBP, the company’s
largest shareholder. Orthopedic applications of
the HydroCision technology were licensed to the
Mitek division of Johnson & Johnson. Smith &
Nephew acquired rights for wound debridement
applications. HydroCision is commercializing the
SpineJet itself, and currently sells the devices
through dealers and direct sales representatives.
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New Therapeutic Opportunities
Gain Public Market Support
OBP portfolio therapeutics companies succeed
by developing first- or best-in-class drugs and
powerful drug discovery and development
platforms. Both Trubion Pharmaceuticals
and Santhera Pharmaceuticals made
successful initial public
offerings in 2006 through
their rapid development of
products and proprietary
technologies.
In January, Wyeth Pharmaceuticals and Trubion
formed a strategic alliance for the discovery,
development and commercialization of novel
biopharmaceutical products utilizing Trubion’s
proprietary technology. As part of the alliance,
Wyeth and Trubion will collaborate on the
development and commercialization of TRU-015,
a novel compound currently in human testing for
the treatment of rheumatoid arthritis. The drug
may also hold the potential for development
as a novel therapy for certain malignant B-cell
As part of the transaction, Trubion received an
initial $40 million payment. If all milestones in
the alliance are achieved, the total payments to
Trubion could exceed $800 million, excluding
royalties and co-promotion fees. The deal
provided the impetus for Trubion’s IPO in June.
In 2004, OBP led the financing for the merger
of its original portfolio company Graffinity
Pharmaceuticals into MyoContract to create
Santhera, a company well-positioned to develop
product candidates for life-threatening orphan,
neuromuscular diseases. In November, Santhera
raised $80 million on the Swiss Stock Exchange
(SWX), the first OBP company to go public
on the SWX. Investors were attracted by
Santhera’s pipeline of drugs promising significant
reimbursement by payors for fatal neuromuscular
diseases for which no current therapies exist.
Santhera’s lead compound, SNT-MC17, is being
tested in Phase III clinical trials for Friedreich’s
Ataxia, which today
results in death due
to cardiomyopathy, on
account of thickening
of the heart muscle.
The Japanese
pharmaceutical
company Takeda is
Santhera’s marketing
partner for SNT-MC17
outside the U.S.; Santhera will distribute the
product in the U.S. through its own sales force.
SNT-MC17 is currently also in Phase II clinical
testing for Duchenne Muscular Dystrophy and
Leber’s Hereditary Optic Neuropathy. The
company is also currently preparing a Phase II
clinical trial in the U.S. for fipamezole for the
treatment of dyskinesia in patients suffering
from Parkinson’s disease.
THERAPEUTICS
OBP was a co-founding investor in Trubion,
which is tackling important diseases with large
unmet needs by overcoming drawbacks to
therapeutic monoclonal antibodies (mAbs).
MAbs are engineered proteins designed to
trigger natural immune responses to treat
diseases. Rituximab (Rituxan), adalimumab
(Humira) and other mAbs have brought
revolutionary improvements to treatment
of many inflammatory and autoimmune
disorders and cancers. However, engineering
and manufacturing the double-chain polypetides
that compose mAbs remain costly challenges,
and their large molecular size makes tissue
penetration difficult and necessitates frequent
dosing. Trubion’s proprietary product engine
generates a novel compound class out of singlechain polypeptides that are one-third to one-half
the size of conventional therapeutic mAbs. Less
complex to design and manufacture, Trubion’s
agents also show greater tissue penetration.
cancers. Trubion and Wyeth will collaborate
on a multi-target discovery program as well.
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High-Speed Bioanalysis Tools To
Overcome Drug Development Bottleneck
Clinical trial failures plague the pharmaceutical
industry. Just 10 percent of drugs that go into
human testing ever win FDA approval. The cost
of a drug’s failure in advanced clinical trials can
run into the hundreds of millions of dollars. This
year Decision Biomarkers (DBI) launched its
bioanalysis
workstation that
should help
improve the success rate for clinical trials and
speed the day when prescribed drugs reach
those patients likeliest to benefit from them.
TOOLS &
INSTRUMENTS
Certain molecules, often proteins found in the
blood, have been determined to be indicators
of disease. Analysis of these biological markers—or biomarkers—
in a patient can thus be
used to diagnose the
presence of a disease
such as cancer,
cardiovascular ailments,
viral or other pathogenic
invasion, and many other
disorders. In some cases,
biomarkers can also be
used to track patient
response to therapy.
Hundreds of these biomarkers
and their associated conditions
are already known; thousands
of others are being studied.
Knowing just which biomarkers are present
in a patient or group of patients can help drug
investigators determine the likely efficacy of
a therapeutic agent early in the clinical testing
process. The information can also be used as a
diagnostic tool to determine whether a patient
should or should not receive a drug, and whether
the treatment is effective. Little wonder that drug
developers increasingly employ protein biomarkers
in the drug development process.
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DBI moved ahead of the curve through its
development of the Avantra™ Q400 Biomarker
Workstation. After successful field test of a beta
system in a clinical diagnostics center this year,
five pharmaceutical firms will install systems in
the coming quarter. The first fully-automated
system for multiplex protein biomarker analysis,
the instrument is virtually “hands free.”
To use the Avantra™Q400 Biomarker
Workstation, a researcher simply inserts a
multiplex biochip, injects a sample to be tested,
and starts the unit. In a single step, the biochipbased immunoassay technique simultaneously
analyzes up to 40 biomarkers, delivering precise
data from sample to results automatically
in around 30 minutes. The biochips
used by the system are
available in “off the
shelf” biomarker panels.
Additionally, DBI
offers services to
create customized
biochips for “userdefined” optimized
multiplex assays.
Future versions of
the Avantra™ Q400
Biomarker Workstation
will be installed in
hospital and clinic settings where patient samples
can be tested while they wait for diagnosis.
As more and more drugs targeted to a patient’s
individual biomarkers emerge, the DBI systems
will help make the goals of personalized medicine
a reality.
Recognizing the future importance of high-speed,
low-cost biomarker analysis, OBP led the first
institutional round of investment in DBI and an
additional $7.6 million financing in February 2006.
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Cyberkinetics Succeeds by
Turning Thought into Action
Cyberkinetics
Neurotechnology
Systems knows
how to turn thought into action, its revolutionary
neural-sensing technology potentially enabling
paralyzed patients to communicate and move.
The firm is now making the transition from a
technology-development company into a
commercial business.
Last February, Cyberkinetics acquired Andara
Life Sciences and its Andara™ Oscillating Field
Stimulator (OFS) technology for treatment of
spinal cord damage. Since then, the company
has gained a humanitarian exemption for the
technology qualifying it for rapid FDA approval.
The Andara OFS implant is being developed to
restore function, including tactile sensation, sexual
function and movement, to spinal cord-injury
patients. The implant, placed within 21 days of
injury, consists of a battery-powered device about
the size of a pacemaker with six leads. Three of
the leads are attached above and three below
the spinal cord injury site. By applying electrical
current, the device promotes nerve fiber
regeneration across the injury site. The company
hopes to gain final approval for the device and
begin its commercialization in the coming year.
Cyberkinetics is also developing an Andara OFS
technology to treat spinal cord injuries that are
months to years old.
The technology is being developed to overcome
some of the most severe disabilities due to spinal
cord injury, stroke, ALS (Lou Gehrig’s disease),
as well as other central nervous system injuries.
It provides novel communication interfaces, and
may enable users to control computer-assisted
devices and potentially restore limb movement,
simply by thinking.
Another proprietary neural-sensing technology,
the NeuroPort™ System is being developed as
an experimental tool to improve understanding
about the brain and enable more accurate diagnosis
and treatment of central nervous system injuries
and conditions. Recent clinical data showed its
effectiveness in monitoring seizure-disorder
patients.
OBP was Cyberkinetics first institutional investor
and helped develop its business strategy, including
a reverse merger bringing it to the public equity
market and support for the Andara merger.
BREAKTHROUGH
TECHNOLOGIES
The company grabbed worldwide attention in
July when an article reporting the success of
its technology was featured on the cover of the
prestigious scientific journal Nature. That article
described the science behind its revolutionary
BrainGate™ brain-computer interface technology.
In the coming year, the company will likely make
more headlines when its first commercial product,
the first device for repairing injured spinal cords,
goes to market.
The BrainGate™ System
employs a proprietary
neural sensing array
implanted into the surface
of the brain and interfaced
with a computer to turn
science fiction into reality. As part of the Nature
study, a woman with a brainstem stroke that had
left her unable to move or speak communicated
through a computer and guided her wheelchair
solely by thinking. For paralyzed patients,
Cyberkinetics BrainGate™ offers life-renewing
hope for the future.
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In often difficult IPO markets, three portfolio firms
succeeded in going public: Targacept, Santhera,
and Trubion. Drawing on decades of scientific
knowledge of tobacco’s effects on the brain,
Targacept is developing new treatments for
Alzheimer’s disease, cognitive deficits from
schizophrenia and other cognitive disorders
targeting neuronal nicotinic receptor targets.
The firm concluded a deal worth up to $700
million with AstraZeneca in 2005 to develop
certain of its drugs, and succeeded in its initial
public offering early this year. Both Santhera, a
Swiss-based specialty pharmaceutical company
focused on treatments for neuromuscular
diseases, and Trubion, which has a pipeline of
product candidates to treat autoimmune disease
and cancer, also raised funds via public offerings
of stock this year. The companies are discussed
elsewhere in this issue.
Financings
VENTURE AHEAD
. . . CONTINUED FROM PAGE ONE
Initial Public Offerings
Many OBP portfolio firms concluded major
financing rounds. Among them, Solstice
Neurosciences raised $85 million in Series B
and debt financing to support the growth in
sales of its treatment for cervical dystonia using
Myobloc® (Botulinum Toxin Type B) Injectable
Solution (also sold and distributed as NeuroBloc®
in Europe).
Another OBP vaccine innovator, VaxInnate,
concluded a Series C financing, raising an
additional $40 million. The company possesses
a powerful technology to direct the body’s innate
immune response to activate the adaptive portion
of the immune system to recognize mutant viral
strains. VaxInnate’s platform has the potential to
substantially improve vaccine effectiveness while
greatly reducing manufacturing costs. The funds
will be used for the continued development of
the company’s vaccines for human and avian flu,
malaria, dengue, and other diseases.
Rib-X Pharmaceuticals, focused on the structurebased design of novel classes of anti-infective
agents with broad-spectrum activity against
antibiotic-resistant microorganisms, raised $50
million in a Series C financing. OBP is a founding investor in the firm. The funds will be used
to advance the company’s program for hospitalbased infections, including infections caused by
Methicillin-Resistant Staphyloccus Aureus (MRSA)
microbes, into Phase II, as well as its programs for
surgical prophylaxis and community-based MRSA.
6
Pathway Medical Technologies is developing
a minimally invasive catheter device to restore
healthy circulation in clogged leg arteries, referred
to as peripheral artery disease (PAD), which affects
14 million people in the U.S. alone. In November,
the company raised $25 million in a Series B round,
sufficient funds to bring its first product, the
Pathway Atherectomy System, to market in 2008.
The company’s catheter technology employs
tiny rotating scrapers and an aspiration system
to remove plaque from even very small lower-leg
arteries through a small puncture site.
In other financings, BioProcessors raised
$18 million in a Series C round to advance
commercialization of its SimCell system, the
first fully-integrated cell culture experimentmanagement system capable of generating data
scalable to large-scale bioreactors. IntraPace
concluded a $30 million Series D financing to
move its minimally invasive implantable gastric
stimulator for the treatment of obesity forward
into clinical trials expected to begin in 2007.
Alliances
In addition to Targacept’s alliance with AstraZeneca,
many OBP portfolio companies inked valuable
corporate partnering deals with other firms. For
example, Alantos Pharmaceuticals’ licensed
European development and marketing rights
to French pharmaceutical firm Servier to
commercialize its lead compound for the
treatment of Type II, or adult-onset, diabetes
outside the U.S. market. Alantos will receive upfront and milestone payments totaling $75 million
plus double-digit royalties on any product. Servier
will also pay for all development costs for the
drug, now in Phase I testing, through Phase II
and all further costs for development of the drug
for markets outside the U.S.
UK-based Astex Therapeutics, focused on
discovery and development of anti-cancer drugs,
has multiple alliances based on its drug-discovery
engine, Pyramid™, with major pharmaceutical
companies including AstraZeneca, Sanofi-Aventis,
Boehringer Ingelheim, Astellas Pharma, Mitsubishi
Pharma and Schering AG. Pyramid employs
high-throughput X-ray crystallography and other
biophysical techniques to identify drug fragments
bound to target proteins and to transform the
fragments, using medicinal chemistry, into potent,
selective drug candidates across a wide variety
of therapeutic targets. A recent anti-cancer
drug discovery alliance among GlaxoSmithKline,
the Wellcome Trust and The Institute of Cancer
Research, focused on B-RAF inhibitors, builds
on the existing partnership of Astex, the
Wellcome Trust, The Institute of Cancer Research
and Cancer Research Technology. Successful
development of novel drugs through this alliance
will bring significant royalty payments to Astex.
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Oxford Team
Alan G. Walton, Ph.D., D.Sc.
Senior General Partner
Westport, CT
Jeffrey T. Barnes
General Partner
Boston, MA
Mark P. Carthy
General Partner
Boston, MA
Matthew A. Gibbs
General Partner
Boston, MA
Michael Lytton, J.D., M.Sc.
General Partner
Boston, MA
Ellen S. Baron, Ph.D.
Partner
Boston, MA
Douglas M. Fambrough, Ph.D.
Partner
Boston, MA
Oxford Bioscience Partners (OBP) is a
life science venture capital firm that provides
equity financing and management assistance
to advanced-stage start-ups and later-stage
commercially oriented organizations. The
General Partners of OBP currently manage
Edmund M. Olivier
Founding General Partner
Costa Mesa, CA
Cornelius T. Ryan
Founding General Partner
Westport, CT
venture funds with combined committed
capital of more than $950 million.
OXFORD TEAM
Jonathan J. Fleming
Managing General Partner
Boston, MA
7
222 Berkeley Street, Suite 1650
Boston, MA 02116
Tel: (617) 357-7474
Fax: (617) 357-7476
315 Post Road West
Westport, CT 06880
Tel: (203) 341-3300
Fax: (203) 341-3309
650 Town Center Drive, Suite 880
Costa Mesa, CA 92626
Tel: (714) 754-5719
Fax: (714) 754-6802
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