Glaxo Claims in Suit Its Patent Applications In U.S. Are at Risk - WSJ.com - Sent Using Google Toolbar

Glaxo Claims in Suit Its Patent Applications In U.S. Are at Risk - WSJ.com

Glaxo Claims in Suit
Its Patent Applications
In U.S. Are at Risk

October 13, 2007; Page A4

GlaxoSmithKline PLC is squaring off against the U.S. Patent and Trademark Office. In a lawsuit filed Wednesday, the United Kingdom-based pharmaceutical company claimed that the office's new rules, due to take effect Nov. 1, could damage about 100 of the company's pending patent applications.

The lawsuit is believed to be the first by a corporation to challenge the rules, which are designed to make the patent-application process more "efficient by encouraging applicants to use greater precision in describing the scope of their inventions," according to a statement by the patent office.

"The patent office is very concerned with the growing backlog of patent applications," said Gene Quinn, a patent attorney not involved in the litigation. "They want to make applications smaller and allow people to apply for fewer applications." But Mr. Quinn adds that if the rules take effect, "it will become extremely expensive to obtain meaningful patent protection."

The patent office declined to comment on the suit. Under existing rules, after an initial patent application, companies can file an unlimited number of "continuing" applications, which are typically aimed at refining the scope of patent protection for a certain invention. Under the proposed rules, after parties have filed two continuing applications, they would be barred from filing additional ones without showing that new claims "could not have" been submitted during a prior filing.

Glaxo says that after an initial application, it can learn information that may help it obtain stronger patent protection.

Write to Nathan Koppel at nathan.koppel@wsj.com

PLI to Cover GSK Injunction Hearing Live - Sent Using Google Toolbar

PLI to Cover GSK Injunction Hearing Live

PLI to Cover GSK Injunction Hearing Live

(PRLEAP.COM) On Tuesday, October 24, 2007, the Patent Practice Center blog sponsored by the Practising Law Institute announced that John White, a patent attorney and Director of the PLI Patent Bar Review Course, will be in attendance on October 31, 2007 for the GlaxoSmithKline preliminary injunction hearing. Glaxo is challenging whether the United States Patent Office has the authority to promulgate new rules that are to take effect on November 1, 2007.

The Patent Practice Center blog has been closing following the new rules as the effect date approaches, and has already written extensively on topic. Gene Quinn, a patent attorney and the Editor of the Patent Practice Center says: "It is virtually impossible to find anyone outside the Patent Office who thinks these new rules make any sense at all. These new rules are simply absurd." Quinn further explains that "the new rules are not only going to affect GSK and the pharma industry as a whole, but they are going to affect everyone, whether individual inventor, small business, Universities, Federal Laboratories, small cap, large cap or Fortune 500."

What the Patent Practice Center plans to do is have Mr. White call Mr. Quinn with updates throughout the day regarding how the hearing is going, providing his insights and impressions. Quinn will then immediately post the reports, thereby providing near real time reports published on the Patent Practice Center blog. Quinn says "stay tuned to the Patent Practice Center blog throughout the day on Wednesday, October 31, 2007. The hearing starts at 10:00 am and we plan to have a lot of undates as soon as anything worthy or reporting happens. If John can find a reliable enough wireless signal for his laptop he also plans on making his own posts during the lunch break and immediately following the hearing."

In related news, on Friday, November 2, 2007 from 1-2pm Eastern Time, PLI will hold a hot topic briefing that every patent attorney and patent professional should hear. The briefing is titled New USPTO Rules: Enjoined or Effective 11/1/07? What is the Fall-Out? Whether the district court issues an injunction or not, whether the Federal Circuit gets involved or whether nothing happens at all and the rules go into effect on November 1, 2007, there will be plenty to talk about. John White and Bob Spar, the recently retired Director of the Office of Patent Legal Administration at the USPTO will be giving the briefing, bringing you up to date with what is likely to be a flurry of activity.

For those who cannot hear the briefing live it will be recorded available for later download. Alternatively, if you are interested in receiving a personal briefing for you firm or company Bob Spar is available to make 1, 2 or 3 hour presentations on the new rules, which would be an excellent opportunity to bring your whole staff up to speed. If you are interested please contact Zoyna Dixon at (212) 590 - 8865 or via e-mail at zdixon@pli.edu.

For more information on the case you can find all of the documents at:


For all the PLI blog posts on these new rules see:


Biogen Idec sale could have big impact in Boston - FierceBiotech - Biotechnology Articles, Biotech Industry News, FDA Approval News - Sent Using Google Toolbar

Biogen Idec sale could have big impact in Boston - FierceBiotech - Biotechnology Articles, Biotech Industry News, FDA Approval News

With Biogen Idec on the market , reporters are delving into the possibilities for the company and the potential fallout in the Boston biotech cluster that the company calls home. In one scenario, Cambridge, MA-based Biogen Idec and its big research operations are gobbled up whole by a Big Pharma company, with the region losing one of its oldest and biggest marquee names. But the biotech boosters in Beantown prefer to look on the sunny side of things, speculating about a deal that could enhance local work on biologics. Right now, biotech companies in general are fetching a premium as pharma buys in to the next generation of therapies.

Biogen Idec's quarterly profit, meanwhile, slid 24 percent on a charge related to the consolidation of Cardiokine .

- read the report from The Boston Globe
here's a report from the Wall Street Journal on Biogen Idec's numbers

Related Articles:
Biogen Idec in play after Icahn makes his move. Report
Boston biotech booming as scientific research flourishes. Report
The growing power of biotech. Report
Biotech stocks surge as investors anticipate buyouts. Report
Speculation soars over Pfizer's interest in biotech. Report

The Volokh Conspiracy - Chief Justice Roberts on Technology-Related Cases: - Sent Using Google Toolbar

The Volokh Conspiracy - Chief Justice Roberts on Technology-Related Cases:

Chief Justice Roberts on Technology-Related Cases:
According to the Deseret Morning News, Chief Justice Roberts recently responded to a question at Brigham Young University about areas of law likely to be important in the future by suggesting "that technology-related cases could be the most important area of law considered by the Supreme Court over the next quarter of a century."
  Emerging technologies can create new questions about old laws. For example, imaging technology exists that allows law enforcement officers to see through walls. "Is that an unlimited search and seizure?" Roberts asked.
  "People tend to be focused on what are the hot issues right now," he added. "Those are not the issues I think 25 years from now will be the ones people will look back on and say were significant."
  Justice Alito made a somewhat similar comment last year after judging a moot court that touched on how the Fourth Amendment applies to computer networks:
  What constitutes a "search and seizure" online is a critical law debate and is constantly reshaping the Fourth Amendment, he said.
  "Now we're entering this new virtual world," Alito said, "and we have to translate the precedents and principles we have dealing with physical grounds to the world of electronic communication."
Hat tip: Howard.

Biotech Viragen to liquidate assets - South Florida Business Journal: - Sent Using Google Toolbar

Biotech Viragen to liquidate assets - South Florida Business Journal:

After 25 years and at least $193 million invested in trying to launch a sustainable biotech company, Viragen has thrown in the towel.

The Plantation-based company (OTCBB: VRAIE) and subsidiary Viragen International (OTCBB: VGNI) filed an assignment for the benefit of creditors in Broward County Circuit Court on Tuesday. Fort Lauderdale-based accountant Soneet R. Kapila was assigned to liquidate the company's assets.

On Oct. 16, its Scottish subsidiary filed a petition to wind down its business and liquidate its assets in a Glasgow, Scotland, court. Its Swedish subsidiary, ViraNative AB, filed an application for protection under the bankruptcy laws of Sweden on Sept. 17.

The closing of Viragen comes after decades of trying to introduce a breakthrough drug that led to constant losses. It's a reminder of the pitfalls of the biotech industry Florida is working hard to develop.

For years, the company put out press releases about manufacturing drugs in eggs laid by transgenic hens at Scotland's Roslin Institute - the same place that cloned Dolly the sheep. Viragen released pictures of green chickens to show that it could pass down altered genetic traits that could be useful in drug production. Low on cash and with no revenue potential in sight, Viragen canceled its agreement to fund the work at Roslin on June 21.

The company's only approved drug is Multiferon, which is a first-line treatment for malignant melanoma in Sweden and a second-line treatment for the disease in Mexico, Indonesia, Hong Kong, Myanmar, Bulgaria, Egypt Thailand and South Africa.

It was not able to get approval for the drug in the United States or Europe. The company also studied using Multiferon for severe acute respiratory syndrome (SARS) and avian flu - often issuing press releases in the middle of intense media coverage of these diseases - but nothing tangible came out of it.

In the nine months ending March 31, the last financial results available for Viragen, it sold $299,249 in Multiferon for its only revenue. It had a net loss of $27.6 million during that time.

In that filing, Viragen listed assets of $7.6 million verses an accumulated deficit of $193.8 million. The company made a $3 million private placement since that filing.

Shares of Viragen remained unchanged at 1 cent in afternoon trading.

The stock has declined sharply in recent years - falling from $3.70 on Sept. 9, 2003, to 87 cents on June 6, 2005, and 51 cents on May 31, 2006. In June 2006, the Motley Fool Web site rated Viragen one of the 10 worst performing stocks of the past 10 years, with a negative return of 99.3 percent.

The Patry Copyright Blog: The Effect of Judicial Ideology in IP Cases - Sent Using Google Toolbar

The Patry Copyright Blog: The Effect of Judicial Ideology in IP Cases

Awhile back I posted about an article by Professor Oren Bracha entitled the "The Ideology of Authorship Revisited. " Professor Matthew Sag and his colleagues, Tonja Jacobi and Maxim Stych, have just posted on ssrn a paper entitled "The Effect of Judicial Ideology in Intellectual Property Cases," available here. Professor Sag et al have produced not a philosophical look at ideology as Professor Bracha did, but rather, a draft analysis of data from intellectual property cases decided in the U.S. Supreme Court from 1954 to 2006. They conclude that ideology "is a significant determinant of cases involving intellectual property rights. However, our analysis also shows that there are significant differences between intellectual property and other areas of law with respect to the effect of ideology." (Abstract).

As interestingly, within the IP field, they conclude that "compared to patent cases, in copyright cases, the justices were significantly less likely to vote against the IP owner, and conversely, were more significantly more likely to vote against the IP owner in trademark cases. One interpretation of this result is that the justices are more convinced by the incentive theory underlying copyright than they are by the consumer protection theory underlying trademark law. " (page 34).

This last conclusion is more easily susceptible of objective verification than the first conclusion about the effect of ideology (because you can see from the opinion who won or lost, appreciating that not all disputes are binary), but that shouldn't mean that efforts to discover whether ideology plays a role shouldn't be undertaken. The authors start from the premise of determining whether "copyright exceptionalism" -- the theory that copyright is not ideological in a political sense -- pans out. They note:

First, the Supreme Court decides an unusually large number of IP cases unanimously. Second, there are a number of IP cases in which justices vote against type, i.e. cases in which conservative justices vote against the IP owner or liberal justices vote in favor of the IP owner.
Third, there are also many IP cases which produce strange coalitions of liberals and conservatives that would appear to defy the predictions of an attitudinal model.(page 17).

There are plenty of graphs and charts and explanations of models used, too detailed to go into here, and which address the expected objections to such an effort. A highly recommended read.

The Volokh Conspiracy - Measuring Ideological "Activism" in Supreme Court Justices' Decisions to Overrule Regulatory Agency Actions: - Sent Using Google Toolbar

The Volokh Conspiracy - Measuring Ideological "Activism" in Supreme Court Justices' Decisions to Overrule Regulatory Agency Actions:

Measuring Ideological "Activism" in Supreme Court Justices' Decisions to Overrule Regulatory Agency Actions:

Cass Sunstein is a top-rank scholar, and I always learn a lot from his work, even when I think he is ultimately wrong. Unfortunately, however, I fear his recent study (coauthored with Thomas Miles) of judicial "activism" in Supreme Court justices' votes on cases reviewing federal regulatory agency decisions doesn't tell us as much about the subject as one might like. There are three major problems: the way they analyze agency decisions, the failure to consider the possibility that there are centrist ideologies as well as "liberal" and "conservative" ones, and their interpretation of Justice Stephen Breyer's record (the justice they claim is the most "restrained").

Essentially, Miles and Sunstein first code each agency decision as "liberal" or "conservative" (e.g. - a decision to reject an environmental group's claim that a regulation isn't broad enough is "conservative"), and then try to determine how "activist" each justice is by seeing how often they vote to overrule agency decisions. Lastly, they measure how ideologically "partisan" the justices are by determining how often each one voted to overrule "conservative" decisions versus "liberal" ones. Justice Kennedy comes out as the most ideologically "neutral" justice because he voted to overrule conservative agency decisions about as often as liberal ones, while Breyer comes out as the most "restrained" (because he was the least likely to vote to overrule agencies overall).

Here are my three reservations about this framework:

I. What about the Distribution of Agency Errors?

When the Supreme Court reviews agency actions, what they are trying to do is determine whether the agency erred in its interpretation of the federal statute that grants it the regulatory authority in question. Miles and Sunstein implicitly assume that agencies are equally likely to err in a conservative direction or a liberal one. Thus, if Justice Thomas votes to overrule liberal decisions far more often than conservative ones, that shows his ideological "partisanship" in a conservative direction. However, if agencies are more likely to err in a liberal direction than a conservative one - then perhaps his voting pattern simply reflects the distribution of agency errors, not Thomas' ideological biases. Maybe Thomas is the only one fully able to set aside his own biases and focus only on the "true" pattern of agency behavior. Miles and Sunstein's approach can't rule this possibility out. And the same goes for Justice Stevens' apparent tendency to overrule conservative decisions far more often than liberal ones; perhaps that's just a reflection of the agencies' pattern of errors (which may tilt more in a conservative direction), not Stevens' biases. I won't go into detail here, but there are many theories of agency behavior that posit that liberal errors are more common than conservative ones or vice versa.

II. What about Centrist Ideologies?

Miles and Sunstein's framework assumes that there are liberal and conservative ideological biases, but doesn't consider the possibility of centrist biases. Thus, Justice Kennedy is seen as ideologically "neutral" because he votes equally often to strike down liberal and conservative agency decisions. But let's assume for a moment that Kennedy is an ideological centrist, and all he cares about is enforcing that ideology against agency decisions that deviate "too much" from his centrist preferences. He's willing to overrule both deviations in a conservative direction and those that go in a liberal one. Commitment to imposing ideological centrism could explain Kennedy's voting record just as readily as ideological "neutrality." I don't myself know which of these explanations is accurate (perhaps neither is). But the Miles-Sunstein methodology can't distinguish between them.

III. The Special Case of Justice Breyer.

Miles and Sunstein praise Justice Breyer as "the champion of modesty and restraint" because he is the least likely to vote to strike down agency actions overall. Perhaps Breyer deserves this praise. However, it's important to remember that Breyer has a strong ideological commitment to regulatory agency autonomy. In various writings, such as his 1993 book Breaking the Vicious Circle, Breyer has argued that regulatory agencies staffed by expert bureaucrats should be given greater autonomy in order to insulate them from what he regards as harmful pressure from the democratic process. He also believes (for similar reasons) that they should to a large extent be insulated from judicial review. Breyer is a leading defender of the "rule of experts" theory of governance - at least when it comes to regulatory policy. This belief is no less an ideological commitment than is a commitment to conservatism, liberalism, or centrism.

Is Breyer's apparent reluctance to overrule regulatory agency actions driven by "modesty and restraint" or by his ideological commitment to governance by expert regulators relatively insulated from outside control? I honestly don't know the answer; quite possibly both factors are at work. Or maybe neither is. But Miles and Sunstein's methodology can't distinguish between the two.

PLI - Patent Blog - Sent Using Google Toolbar

PLI - Patent Blog

UC Vice Chancellor Concerned About Patent Reform & PTO

24 October 2007

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By Gene Quinn

The Senate Judiciary Committee held a hearding today on The Role of Federally-Funded University Research in the Patent System.  While there was speculation in some corners that this hearing may have been provoked by my article on how the new patent rules will erode the successes of the Bayh-Dole legislation, the hearing was primarily to discuss the fact that when a University's work is being done in a facility that is actually owned by the federal government, the University must return a portion of the royalties from the invention when those royalties exceed 5 percent of the facility's budget.  See Statement of Senator Patrick Leahy.

Nevertheless, one of those testifying at the hearing was Dr. Charles F. Louis, Vice Chancellor for Research, University of California, Riverside.  During his prepared statements Dr. Louis took the opportunity to at least briefly raise the questions about the ongoing patent reform legislation and the wisdom of the Patent Office's new rules on claims and continuations.  During his prepared testimony Dr. Louis stated (with emphasis added):

Because of financial constraints, universities do not have the resources to file patents on everything that is discovered by their researchers and must pick and choose the ones with the potential to be commercialized. Financial constraints are an important consideration for universities in fostering technology transfer and meeting the objectives of the Bayh-Dole Act. Any shifts in the current system could make it harder for universities to afford to engage financially in technology transfer efforts and would serve to undermine the Bayh-Dole Act's effectiveness.

UC is concerned for example, that some of the proposals being considered in the current debate over patent reform legislation could, if enacted in their current form, make it more difficult and more costly for universities and others engaged in technological advancements to continue to effectively make use of the patent system, as provided by the Bayh-Dole Act, and to ensure that advancements made in research laboratories reach the public. In addition, any rules promulgated by the U.S. Patent and Trademark Office that make it more burdensome and expensive for universities to obtain patents on their inventions, such as the new claims and continuation rules, would be detrimental to university technology transfer.

The uncertainty that these changes to the patent system will create for a university's patents has the potential to negatively impact private industry's interest in investing in the technology developed at universities. If it becomes more costly for universities to file and maintain patents, fewer patents will certainly be filed, resulting in fewer technologies that make it into the hands of the public. And if it becomes too risky for private industry to invest in patents because patent rights have become less certain under the law, the public's ability to reap the benefits of the initial federal investment in these inventions will be further curtailed.

Dr. Louis did not miss his chance while in Washington, D.C. to step up to the plate and make sure that at least the Senators on the Judiciary Committee are informed that the new rules that will go into effect on November 1, 2007 will be unequivocally bad for Universities and for the very mission of Bayh-Dole.  He even testified that UC manages over 7,500 active inventions in its portfolio, whith 80% of those generating some level of private or public sector interest and another 50% resulting in financial investment toward the development of a product.  Dr. Louis even specifically cited a number of tremendous success UC has had, including:

  • A vaccination for the potentially-fatal Hepatitis B disease (UCSF);
  • The Cohen-Boyer recombinant DNA patent held jointly by UC and Stanford University that helped to spawn the development of the biotechnology industry (UCSF);
  • Lung treatments for respiratory problems associated with premature births (UCSF);
  • A laser/water Atomic Force Microscope that helps scientists to better view and analyze different properties of matter at the nanoscale (UC Santa Barbara);
  • The minimally invasive Guglielmi Detachable Coil used to treat brain aneurysms (UCLA);
  • A plasma electric generator to create power without the use of fossil fuels (UCI);
  • Strawberry varieties that create an annual $1 billion-plus industry in California; and
  • The Nicotine Patch that assist smoking cessation (UCLA)

Dr. Louis' remarks should not come as a surprise given that year after year after year the Regents of the University of California obtain more U.S. patents than any other Univeristy, which means that they are going to be most negatively impacted.  Who knows what this will mean moving forward, but the message is starting to get out into the mainstream.  Hopefully it will not be to late to matter come next Wednesday at the Glaxo preliminary injunction hearing at the Eastern District of Virginia.

Perhaps I am dreaming, and perhaps I am over inflating my own importance and the importance of this blog in general, but if anyone is looking for something that they can do to help the cause of bringing the Patent Office back in check then consider sending a link to this blog post to anyone you know in a position of authority at any Univeristy that receives federal funding.  No need to stick your neck out and worry about the Patent Office taking its pound of flesh in retribution later, stay publicly anonymous and just send a link to get the word out.  It might not make any difference, but then again it just might. 

In the famous words of Justice Brandeis, "[s]unlight is said to be the best of disinfectants..."

lifesciences - Sent Using Google Toolbar


Life Sciences In The Air

David Y. Bang is CEO of LifeConEx LLC, a joint venture between DHL Global Forwarding and Lufthansa Cargo. LifeConEx is the only industry-specific provider of integrated end-to-end
temperature controlled transportation solutions for the life sciences industry.

     Lufthansa Cargo and DHL Global Forwarding saw there was a need for temperature-sensitive cargo service for the pharmaceutical, biotechnology and life-science industries, and in 2005 decided it would be smart to start a company specializing in just such transport—they haven't looked back since.
     LifeConEx, which is short for Life Sciences, Connectivity & Control, Expediting & Expertise, says today it's the only industry-specific provider of integrated end-to-end temperature controlled transportation dedicated to the pharmaceutical, biotechnology and life-science industry.
     There is some debate in the scientific community whether life sciences and biotechnology aren't actually the same thing.
     In the most simplified of terms, both use living organisms to make, or aid in making products or processes.
     Some of the applications range from the production of pharmaceuticals and chemicals to fuels and plastics.
     The United Nations Convention on Biological Diversity said "Biotechnology means any technological application that uses biological systems, living organisms, or derivatives thereof, to make or modify products or processes for specific use."
     Plantation, Florida-based LifeConEx says their premise is that through the security of better transportation, monitoring, management, documentation and information, as well as integrating processes of the airlines, ground handlers and freight forwarders, pharmaceutical and life-science companies will reap a better return on their investments.
     The customers have access to much of the data 24/7, and LifeConEx says it covers most of the major airports in the world.
LifeConEx takes measures to provide the aforementioned features, reducing risks of transport when pharmaceutical and life-science products become ready to ship, regardless of their stage - sometimes living biological elements, raw materials or finished products in development, trial or marketing phases.
     "LifeConEx's unique value proposition is to integrate the processes from the airlines, forwarder, and ground handlers," Shauna Biersey, a company spokeswoman told FlyingTypers. "Additionally, LifeConEx has a 24/7 Life Science Service Center, where each shipment is monitored and documented at each pre-determined milestone."
     LifeConEx would only say the 50-50 joint venture generates revenues "in the millions," and that it's seeing strong double digit year-on-year sales growth. The company wouldn't provide an outlook for the current year, offering only "the biotechnology sector has a huge growth potential for LifeConEx as well as potential for our parent companies."
     It also noted that the biological market is growing at twice the rate of the traditional chemical-based pharmaceutical market and that there has been a regulatory agency push for better quality in the transit chain.
     That should simply equate to more solutions for the pharma-bio-life industry, and added business for LifeConEx in future.
George Frey

Berkeley Daily Planet - Sent Using Google Toolbar

Berkeley Daily Planet

UC Scientists Unveil Emeryville Biofuel Lab

By Richard Brenneman

Scientists from Lawrence Berkeley National Laboratory (LBNL) joined with officials from two cities and a leading developer Monday to unveil the site of a $135 million biofuel lab.

Though announced months after BP declared Berkeley the winner of a $500 million corporate biofuel research program, the federal lab will be the first to commence tweaking genes in the drive to turn plants into fuel for planes, trains and automobiles.

UC officials and officers of the British oil company have yet to sign a final agreement spelling out the details of the more lucrative pact.

LBNL chemical engineer Jay Keasling, CEO of the new Joint BioEnergy Institute (JBEI) and a central figure in the BP program, served as emcee of Monday's event at EmeryStation East, the new Emeryville building that will house the lab, funded by the U.S. Department of Energy (DOE) to turn plants into transportation fuels.

Called Jay-bay by cognoscenti, the Emeryville lab will fuse the research efforts of two UC campuses, Berkeley and Davis, with the Carnegie Institution for Science and three UC Berkeley-administered federal energy labs—LBNL, Lawrence Livermore and Sandia.

"This is a great moment for us," said Keasling, who said the UC Board of Regents, the DOE and Wareham Development signed the contract for the 65,000-square-foot lab last week.

The lab, which will open sometime in the spring, occupies the fourth floor of Wareham's just-finished building at 5885 Hollis St.

Keasling will also be a familiar figure on the building's first floor, where his own privately held and patent-seeking biotech company—Amyris Technologies—has just leased a lab of its own.

That company's CEO is a former BP vice president hired while UC Berkeley was negotiating the half-billion-dollar Energy Biosciences Institute that the British oil company awarded to the university in February. The firm employs at least three other BP personnel.

While most biofuel currently in use is corn-derived ethanol, Keasling said JBEI will focus on other plants, including rice straw, switchgrass and Arabidopsis, a plant in the mustard family.

Keasling said work at the lab will focus on breaking down plant cellulose, drawing on research on microbes found in the gut of the common termite, where they break down wood into digestible sugars that fuel the termite's ravenous rampages.

DOE Under Secretary for Science Raymond L. Orbach, a former chancellor of UC Riverside, sent written congratulations, expressing his hope that the center "will become a crucible for transformational discoveries."

The George W. Bush administration made biofuel development a major effort of the DOE, declaring alternative energy a matter of national security.

"I can't think of a more profound privilege than to be associated with Jay-bay," said Wareham founder Rich Robbins, whose company has dubbed the building a "center for noble and Nobel research."

"This is a very auspicious occasion," said Emeryville Mayor Nora Davis.

Berkeley Mayor Tom Bates was also on hand, praising the new lab's work as "a definitive partnership that's going to be working together to make a difference."

Also on hand was the mayor's City Council colleague, Gordon Wozniak.

Keasling said the lab wouldn't be working on corn, the primary source of ethanol—known in the old days as white lightning or corn liquor.

A controversial crop derivative, ethanol isn't as efficient as gasoline and can't be transmitted through pipelines.

Instead, he said, JBEI will be seeking ways to break down plant cellulose into fuels more similar to petroleum-derived gasoline.

No lab efforts will focus on genetically modified crops, though the gene-engineering technology developed for working on microbes and on other technologies for breaking down plant cell walls could have later applications for altering plants, he said.

While most of the research will occur at the Emeryville lab, crop testing is slated for fields at UC Davis, where the ground is more suitable for growing rice.

The primary microbe slated for gene-tweaking is E. coli, which is found in the guts of most animals.

Researchers will also be working on organisms found in the multi-chambered digestive systems of cattle, which are assembly lines for breaking down cellulose into food.

Keasling acknowledged that there are potential conflicts of interests for researchers who have their own private biotech startup companies, and JBEI's other lead figure, Chris Somerville, has a biofuel-seeking company of his own, Mendel Technology.

"There are a lot of conflicts," Keasling said, "and we have to manage those appropriately." He said the new lab will use the same conflict-handling mechanisms now in place at the university.

Keasling said the new lab wouldn't need any significant measures to contain the altered microbes because production "won't take place in this facility within that five-year period."

Biotech Firm Does It Cheaper, Just Like Other Chinese Companies - Sent Using Google Toolbar

Biotech Firm Does It Cheaper, Just Like Other Chinese Companies

Biotech Firm Does It Cheaper, Just Like Other Chinese Companies
October 26, 2007: 08:05 PM EST

Oct. 29, 2007 (Investor's Business Daily delivered by Newstex) --

The biotech industry isn't just a U.S. phenomenon. Yep, China has one, too, and it's growing about 20% a year.

One of China's leading biotech firms -- 3SBio SSRX -- is growing faster than the overall market, and it has been profitable for the past few years.

It holds the No. 1 market share in China for the popular protein-based biotech drug recombinant human erythropoietin -- also known as Epoetin, or Epo for short.

The drug typically is used to treat anemia associated with chronic kidney failure. It stimulates growth of red blood cells.

3SBio's flagship Epo product, under the brand name Epiao, has cornered 37% of the Chinese market in product sales. It's similar to Epogen, the blockbuster from U.S. biotech giant Amgen (NASDAQ:AMGN) AMGN.

Amgen's product, sold in China by Japanese licensee Kirin Brewery under the name Espo, has 15% market share.


A smaller Epo entrant is Recormon from the Swiss drug firm Roche, with 10% market share. 3SBio also competes with several Chinese biotechs.

"This is the best-selling (biologic) drug in the world and it will have great potential in China for a long time," said 3SBio Chief Executive Jing Lou, who holds a Ph.D. in molecular and cell biology.

He's worked on Epo drugs for the past 20 years, including postdoctoral studies at the National Institutes of Health in Bethesda, Md.

Why is 3SBio ahead of the Epo pack in China? For one thing, its low-cost and quality yield manufacturing plant allow it to price the drug below foreign rivals, analysts say.

"We're priced at one-third of Kirin and Roche and our gross margins are still 90%," said David Chen, the company's VP of business development.

3SBio, which formerly was named Shenyang Sunshine, has worked to make its high-tech manufacturing facility less labor-intensive than rivals, says analyst Kimberly Lee of Pacific Growth Equities, which helped take the firm public in February.

In addition, Epiao is approved by Chinese authorities for three indications rather than the typical one or two. They include anemia associated with chronic renal failure, anemia from chemotherapy in cancer patients with non-myeloid malignancies and red blood cell mobilization.

With approval expected soon of a high dosage Epiao, the company likely will tap deeper into the oncology market.

"Right now in China, we're the only one who can sell to the oncology market," Chen said. "And we have a dedicated oncology sales force, so we think we will continue to maintain market leadership over Kirin and Roche for years to come."

Still, Chinese doctors don't treat anemia in oncology patients as aggressively as they do in the U.S., says analyst Lee. While 70% of oncology patients in the U.S. are treated for anemia, only 2% in China are so treated, she says.

Even so, 3SBio has sold about 7 million vials of Epiao since 1999. The drug accounts for about 70% of 3SBio's total revenue and is growing more than 30% annually.

Total revenue in the firm's second quarter jumped 49.2% over the earlier year to $5.7 million.

Sales of 3SBio's second best-selling product, Tpiao, which launched in January 2006, grew faster -- 263%. Used to treat chemotherapy-induced platelet deficiency, Tpiao took in $1.3 million in the quarter.

Still, the company has a lot riding on its core brand Epiao, execs admit. But because the drug still has a low penetration rate in China, over-reliance on one drug isn't as big a concern as one might think.

In addition to new cancer applications, continued growth likely will come from use in kidney dialysis. Costly dialysis still isn't as widely practiced in China as it is in the U.S. One big reason: affordability.

Only 10% of the Chinese population is covered by government insurance -- most of them through employers. That figure will no doubt expand as the state gradually increases health care spending over the next several years, Lou says.

Education, meanwhile, will play a key part in growing 3SBio's hospital business. Most drugs in China are sold to hospitals. Through third-party distributors, 3SBio sells Epiao to more than 800 hospitals in China's larger cities. It expects to have contracts with 921 hospitals by year-end.

The company's expanding sales force still has plenty of Chinese hospitals to tap into.

"Our focus is on the biggest facilities in big cities," Lou said. "In China, more than 4,000 hospitals have over 100 beds."

Then there's continued growth potential for Tpiao. Not only has it been growing fast since its launch in January 2006. It has no known competition in China.

"So we can charge whatever we want," Lou said. Analyst Lee writes that Tpiao is priced at least five times that of Epiao. She estimates the drug will take in $4.8 million in fiscal 2007 and could grow to about $29 million in sales in five years.

Drug Pipeline

Six pipeline drugs, meanwhile, are in development. They include second-generation versions of Epiao and Tpiao as well as a vaccine for human papilloma virus, or HPV, to name a few. HPV is a silent virus that can lead to cervical cancer if undetected and untreated.

By 2011, 3SBio also wants to sell into European markets. It's preparing its existing plant, and a new one not yet built, to comply with European standards.

When it does enter Europe, the firm will have a competitive edge, Lee says.

"They can price their drugs lower compared to other products because of their high-tech manufacturing abilities," she said.

Analysts polled by Thomson Financial expect 3SBio to post strong double-digit earnings growth through 2011, starting with 32% year-over-year growth in the next fiscal year, to 62 cents a share.

Newstex ID: IBD-0001-20538884

Originally published in the October 29, 2007 version of Investor's Business Daily.

Feuerstein's Biotech-Stock Mailbag - News & Analysis - Biotech - DCTH - DNDN - Sent Using Google Toolbar

Feuerstein's Biotech-Stock Mailbag - News & Analysis - Biotech - DCTH - DNDN

Feuerstein's Biotech-Stock Mailbag
By Adam Feuerstein
Senior Writer

10/27/2007 11:43 AM EDT

URL: http://www.thestreet.com/newsanalysis/biotech/10386895.html

I missed my appointed rounds by not delivering a Biotech Mailbag last week. But we're up and running again -- as always, send me your questions and comments here.

There was a buzz about Delcath Systems (DCTH) this week, which was the subject of a slew of emails. Among those, Adam H. asks:

"I'm sure you know about the stock, and I'm sure you have read the story, but I think a perfect candidate for your mailbag would be a story highlighting the [National Cancer Institute] vs. the FDA. The NCI has affirmed changes that have been implemented into the trial protocol, but still, the FDA asked for a temporary halt on new enrollments."

Here's some background: Delcath is testing a system that uses catheters and filters to deliver chemotherapy directly to the liver without allowing the toxic chemicals to reach the rest of the body. This Percutaneous Hepatic Perfusion (PHP) system is being tested in phase II and phase III clinical trials, some of which are being sponsored and conducted by the National Cancer Institute.

On Oct. 11, Delcath announced that its phase III trial was highlighted as the "Featured Clinical Trial" in a recent NCI newsletter .

On Oct. 23, the FDA sent Delcath a letter asking the company to halt enrollment in its clinical trials because of agency concerns over gastrointestinal side effects. Delcath claims that these GI toxicities were previously reported and disclosed to the NCI folks running the trial that changes were made in the study to prevent future events from happening, and that the NCI was OK with the study moving ahead.

But the FDA, apparently, isn't satisfied. It wants more information addressing the safety issues. Delcath's stock was essentially cut in half and now trades around $1.54.

Investors in the stock are spitting mad, claiming this as yet more evidence that the FDA is messing with cancer companies, a la Dendreon (DNDN) and Provenge.

If the NCI is a fan of Delcath's PHP system and isn't worried about safety, why is the FDA butting its nose into the picture, they ask?

My simple answer is that the FDA, not the NCI, is the country's final arbiter on drug safety, so if the agency has safety concerns, it's not a trivial matter.

Many readers who emailed me about Delcath this week are placing a lot of emphasis on the fact that Delcath's PHP phase III trial was a "Featured Clinical Trial" in the NCI newsletter, as if that's some imprimatur of great import.

Well, previous cancer trials featured in NCI newsletters include one study investigating pomegranate juice as a treatment for prostate cancer; another trial is looking at the combination of frankincense and a vegan diet in brain tumor patients. (Apparently, myrrh is not necessary.)

I'm not trying to equate Delcath with fruit juice or ancient herbal remedies, but on the other hand, let's all realize that the NCI conducts a lot of cancer research. Some of it is groundbreaking and important, and some of it ends up in the trash heap. So it's best not to equate a newsletter mention with a guarantee of success.

And if Delcath is so great, why is the stock such a laggard, even before this FDA setback? It may be simplistic, and I may be woefully shortsighted, but might there be a good reason that it has never really traded much above $5?

I've also received many emails about Exact Sciences (EXAS) , including this one from Andre L.:

"I've enjoyed your work over the years. I had a question on Exact Sciences. It originally caught my eye when Odette Galli, your former colleague, wrote about it as an alternative to colonoscopy.

"It's been a long road and it looked like the Pregen-Plus test was about to be included in the Ameircan Cancer Society guidelines, which meant that the insurance companies would reimburse patients (i.e., pay Exact).

Now the FDA seems to have sent a warning letter about this "device" and about some additional steps that Exact may have to jump through. What's your take on this whole situation?"

A blogger/stockpicker posting on the SeekingAlpha Web site seems to be responsible for the early October run in Exact Sciences. This guy was touting the stock's potential for an "exponential increase" on speculation that the Pregen-Plus screening test for colon cancer would soon receive blessing and inclusion in the American Cancer Society's colon-cancer screening guidelines, with Medicare reimbursement to follow soon after.

Well, soon after that posting, the FDA told Exact that it wanted the company to seek formal regulatory approval for its diagnostic test. That sent the stock reeling, because it signals more delays and setbacks for Pregen-Plus, which has already been hit with years of delays and setbacks.

I view Exact with the same lens as a company like Discovery Labs (DSCO) , i.e., train wrecks that might, perhaps, possibly, eventually, one day turn themselves around. But there's no guarantee, and the track record certainly shouldn't give anyone confidence that the carnage can be cleaned up.

It seems better to sit on the sidelines and wait for something good to happen.

Manuel E. writes: "I am from Portugal. I appreciate very much your articles, they are informative enough and your opinions are wise. Thank you. Please let me know what you think about Prana Biotechnology (PRAN) and its drug against Alzheimer's disease."

Thank you, Manuel. I left Prana out of my recent column looking at various Alzheimer's drugs in clinical trials. It was an accidental oversight on my part.

The company recently announced that patient-dosing in a phase IIa study of its drug PBT-2 is finishing up, with data expected in the first quarter of 2008.

I don't have an opinion on PBT-2; we'll see what the data from this trial tell us. My friend Harry Tracy, editor and publisher of the NeuroInvestment newsletter, however, isn't a big fan.

An email From Pir M.:

"On Oct. 11, Hemispherx Biopharma (HEB) announced that it had filed an NDA [new drug application] with the FDA for Ampligen for the treatment of chronic fatigue syndrome (CFS). Any thoughts about this company, its drugs and the market potential for CFS?"

This week's Mailbag is chock full of single-digit-midget stocks, isn't it? Doesn't anyone want to know about real biotech companies? Sigh...

I knew nothing about Hemispherx before reading Pir's email. But plug the company into Google, and you'll find a lot of interesting stuff:

Hemispherx and renowned (or infamous) Wall Street short-seller Manuel Asensio had a pretty ugly row in the 1990s.

My old friend and former colleague Herb Greenberg even chimed in on Hemispherx back in the day.

At various times, Hemispherx has claimed that Ampligen could treat SARS, AIDS, West Nile virus and avian flu, among other maladies.

The clinical data on Ampligen and chronic fatigue syndrome look suspiciously thin to me. (The efficacy data from a "pivotal" study seems to change with every press release.) The side effects of Ampligen, at least the way the company describes them, are downright scary. I'll just quote from the company's 10-K, with my emphasis added:

"We believe that Ampligen has been generally well tolerated with a low incidence of clinical toxicity, particularly given the severely debilitating or life threatening diseases that have been treated. A mild flushing reaction has been observed in approximately 15% of patients treated in our various studies. This reaction is occasionally accompanied by a rapid heart beat, a tightness of the chest, urticaria (swelling of the skin), anxiety, shortness of breath, subjective reports of "feeling hot",' sweating and nausea. The reaction is usually infusion-rate related and can generally be controlled by slowing the infusion rate. Other adverse side effects include liver enzyme level elevations, diarrhea, itching, asthma, low blood pressure, photophobia, rash, transient visual disturbances, slow or irregular heart rate, decreases in platelets and white blood cell counts, anemia , dizziness, confusion, elevation of kidney function tests, occasional temporary hair loss and various flu-like symptoms, including fever, chills, fatigue, muscular aches, joint pains, headaches, nausea and vomiting. These flu-like side effects typically subside within several months."

That's some list!

Pir, you probably know where I'm going with all this: Stay away from Hemispherx.

John B. is mad about my mention of Vion Pharmaceuticals (VION) :

"Thank you very much for your advice on Vion. I had 7,000-plus shares and sold yesterday morning. You should go crawl under a rock!"

Glad to help, John.

When 76 majors aren't enough - The Stanford Daily Online - Sent Using Google Toolbar

When 76 majors aren't enough - The Stanford Daily Online

"I started school thinking I wanted to go into medicine, so I took a lot of biology, chemistry and physics courses freshman and sophomore year," she said.

After working for a venture capital company in the biotech industry, she changed her mind, and is now majoring in Financial Engineering in the Biotech Industry.

"I wanted to continue studying bio because I liked the coursework, but I also wanted to learn more about finance," Hdez said. "It's nice being able to pick and choose my courses across the different departments, rather than take courses that are required of a major, but not related to what I want to do."

Students and administrators alike say that this is the main benefit of the IDM program — it gives motivated students who are passionate about a subject the freedom to select their own core classes. It's the applications that show, according to IDM criteria, "breadth and depth within the academic discipline" and "a clear academic goal" that are accepted.

"Having to put that much time, energy and thought into what I want to do has just been so valuable for me," Bell said. "The whole process of figuring out your purpose and justifying every single class you take gives you such a clear understanding of what you want to get out of school."


PLI - Patent Blog 5/25

PLI - Patent Blog

Applications Flagged for 5/25 Violations Already!

18 October 2007

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By Gene Quinn, Patent Attorney & PLI Blog Editor

A few days ago in, a Patently-O post, it was reported that cases were already being flagged by the Patent Office for violating the 5 independent claim and 25 total claim rules that will go into effect on November 1, 2007, and I then posted mentioning this Patently-O report.  In response to that post here on our blog we received a comment that stated that as of October 16, 2007, several cases on the docket of one patent attorney had been flagged.  This is a huge development!  This cannot be ignored because the new rules make distinctions between cases that have had a first office action and those that have not had a first office action.  Specifically, the Summary of the rules contained in the Federal Register notice explains:

The changes to 37 CFR 1.75, 1.142(c), and 1.265 are also applicable to any nonprovisional application filed before November 1, 2007, in which a first Office action on the merits was not mailed before November 1, 2007.

For those who have not internalized the changes made in these CFR sections, which I suspect is many of you (and me too!), allow me to point out that this means that if you have not received a first office action on the merits by November 1, 2007, then you are going to be subject to the so-called 5/25 rules, which are going to require you to cancel claims or file an Examination Support Document, which will cost thousands of dollars and provide the rope necessary for anyone to challenge the patent later.  This is the height of arrogance, and luckily the height of stupidity, on the part of the Patent Office.  One of the things that some have said will make it difficult for GlaxoSmithKline to prevail on the TRO & Preliminary Injunction level is because they will be hard pressed to show irreparable harm.  This is irreparable harm, and it is evidenced by the Patent Office's own PAIR system! 

Flagging applications prior to the enforcement date of the new rules is one thing, but according to the post in Patently-O by Dennis Crouch he has contacted the Patent Office and was told that these flagged applications were being removed from examiner dockets!  The post reads:

According to a telephone conversation with the Office of the Commissioner for Patents, these cases have been pulled from Examiner dockets because they exceed the 5/25 limit and are thus-far unexamined.

It will be exceptionally difficult to get a first office action mailed on or before November 1, 2007, if the application has been pulled from the examiner docket.  In fact, even though there may be some evidence that the Patent Office has noticed their mistake and may be removing flags as we speak, if an application was flagged and removed from the examiner docket for any length of time that has to by definition make it less likely that an office action would be mailed on or before November 1, 2007.  So unless the Patent Office mails first office actions on or before November 1, 2007, for all applications that were flagged then it seems like an open and shut case of irreparable harm, not to mention arbitrary and capricious action by the Patent Office and violation of the law.  You simply cannot notice an effective date of new rules and then start enforcing early!  This is America for crying out loud!  We have rules of law and the government doesn't just get to make things up as they go along!

Whether this blatant disregard for process will matter depends upon those affected pointing out what has happened.  To patent attorneys, check to see if any of your cases are or have been flagged.  If they have been suggest to the client that they consider joining the GlaxoSmithKline lawsuit, but in the meantime file a motion for permission of the court to file an amicus brief in the TRO/PI matter.  To clients, call your patent attorneys and ask them to help you take some action to get involved, get your message out there and to take the fight to the Patent Office.  If GlaxoSmithKline is the only one challenging the rules it will be a much harder case, at least at the TRO/PI stage.

PLI - Patent Blog

Applications Flagged: Episode II

18 October 2007

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By Gene Quinn, Patent Attorney & PLI Blog Editor

In the spirit of sharing and cooperation, and to get the word out there as much as possible, I allowed the Patent Prospector blog to republish some of my work here on the PLI Patent Practice Center Blog.  Essentially, I combined a couple posts to create something quasi-unique.  Why am I telling you about this?  An anonymous comment was just made on that blog posting, which reads:

As an examiner inside the PTO bunker, I can tell you that the (sic) started going through our dockets for enforcement of the 5-25 rule on Monday, October 15th. It might have been done earlier than that date but that was when I first noticed that my docket was looking rather threadbare as all the large-claim applications had been culled.

Anonymous statements from those allegedly inside the PTO won't save the day on a Motion for TRO & Preliminary Injunction, but this seems to me to be smoking gun evidence of irreparable harm, the element that would be the most difficult to prove I suspect.  I don't know whether this was done in any of GlaxoSmithKline's pending applications, but if it was I think the odds of them winning an injunction would jump significantly.

The word I am hearing though from comments posted to the various articles on our blog here at PLI are that the flags have been removed.  What would be particularly helpful, I think, is if someone had a screen shot or print out of PAIR showing when such a flag was placed and when such a flag was removed.  Given that applicants will have to adhere to the 5/25 limit if no first office action has been mailed on or before November 1, 2007, I suspect that if an application were removed from an examiner docket for any length of time that would be irreparable harm.  What is to say that an examiner wouldn't have choosen one of those files to work on?  Even if it was not at the top of the que it could still have been choosen for work, we all know that.  Are there any former patent examiners who are now outside the office willing to go on the record with an affidavit explaining to the court the effect of removing a case from the examiner docket?  How about also explaining that in practice examiners don't always take cases in order?

By the way, thanks to Patent Hawk at Patent Prospector for dubbing me a Jedi knight.  Who knows whether one Jedi, or patent attorney, can help take down the Empire, but I am giving it a shot!

Austin Ventures changes its playbook - Sent Using Google Toolbar

Austin Ventures changes its playbook

By Lori Hawkins
Sunday, October 21, 2007

Five years ago, Austin Ventures general partner Ken DeAngelis sized up the California venture capital firms that had swarmed into town and made a prediction: "We're the battleship with a lot of other speedboats around nipping at us. But when the storms clear and the sun comes out, they'll be gone and we'll still be standing."

DeAngelis called it right. More than a dozen local and out-of-state venture firms have since closed shop in Austin, and AV has remained the region's leading source of money for new tech companies.

But the firm is operating in a much different era: Gone, for now, are the eye-popping amounts of money it returned to its investors in the 1980s and 1990s.

Today, there is far more competition among deal makers, from a range of sources, including traditional venture capitalists and a new wave of private equity firms flush with cash.

Some venture firms have just given up. Veteran Sevin Rosen Funds says the industry's model is broken, with too much money competing for too few quality deals, and profits too low to justify staying in the game.

How well Austin Ventures navigates the rougher waters will have an impact here.

Unlike Silicon Valley, Austin does not have a raft of venture capitalists to back new companies. Except for a few very small firms, AV is the only game in town. Over its 29 years, it has invested almost $1.3 billion in Central Texas companies and helped establish Austin as a high-tech center. It has groomed young CEOs, helped companies move from startup stage to stock offering, and created jobs and wealth.

John Thornton, one of AV's seven general partners, says the venture capital business isn't broken, just "temporarily unprofitable."

He adds, "You can either pick up your toys and go home or you can say, 'How can we go where other people aren't going?' "

For AV, that means wading into deeper private equity waters. The firm is buying established companies, building up consumer and media concerns, and combining small companies to create market leaders.

AV is also sending two companies it partly owns — Convio Inc. and CreditCards.com —into the initial public offering market, banking that investors will snap up their shares and help boost returns for AV.

The firm is entering new markets as well. It recently spun out Sante Health Ventures, a $100 million fund that will focus on early-stage investments in the health care industry. AV will co-invest with Sante.

At the same time, AV continues to put money into high-tech upstarts, which have been the source of its biggest financial home runs and the reason for its reputation as a top industry deal maker. Its winners include software firms Tivoli Systems and Vignette Corp., chip maker Silicon Laboratories and Dallas-based Medi-solve Inc.

Eleven of the 18 investments made from its current $525 million fund, raised in 2005, have been in early-stage companies.

"It's unusual to see a firm AV's size doing such a wide range of deals, because it's very hard to pull off," says Kirk Walden of Austin-based Walden Consulting, which advises startups and venture firms.

"It's too early to know whether it will be successful. But what they're saying is: 'We're not quitting. We're going to find a way to make this work.' "

Tech-bust woes linger

Austin Ventures has raised nine funds since 1984, drawing money from pension funds and other big institutions and investing it over time in promising companies. AV charges a management fee and gets a healthy cut of the profits as companies are sold or go public.

The stellar returns from its fourth and fifth funds, raised in 1994 and 1996, put it on the venture map as a top-tier firm.

But venture funds invested during the Internet boom into failed dot-coms are awash in red ink. AV's 1999 and 2000 funds are no exception.

"We're struggling to get capital back on the '99 fund," Thornton said. "But we believe the 2000 fund is going to make money."

One AV investor, the University of Texas Investment Management Co., says it's willing to be patient. UTIMCO manages $22 billion in endowments for UT and the Texas A&M systems and other state entities.

It scored big by investing in AV's first two funds. The first delivered a 73 percent return — almost $8 for every dollar invested. The national average for funds started that year was 21 percent, according to Thomson Venture Economics.

UTIMCO hit the jackpot again with Austin Venture's next fund, which recorded a 38 percent return.

UTIMCO invested $40.2 million in the 1999 and 2000 funds and to date has received $16 million back.

The remaining value of UTIMCO's stake in those two funds is estimated at $14 million, meaning UTIMCO might be lucky to come out even.

Bruce Zimmerman, UTIMCO's chief executive, said the endowment is a patient investor.

"Like any long-term relationship, you have your good days and your bad days," he says. "But clearly there have been enough good days — and they've been really good — that we continue to value our long-term relationship."

Because it can take more than a decade to see rewards from a fund, it's far too early to place bets on AV's two most recent funds, raised in 2001 and 2005.

'In the cool startups'

Austin Ventures' sleek offices on the top floor of a downtown office towerare buzzing again.

Instead of waiting for deals to come in, Thornton says, AV is coming up with ideas and then finding the players to make them happen.

"The vision of a venture firm is this court where eight guys sit in a row and a bunch of people parade by with ideas and they vote yes, no, yes, no," Thornton says.

"What we're doing is the antithesis of that. We've got the resources to go out and dig our own holes and build our own fence. It's hard work, and it is very time-consuming, but the idea of creating opportunities where they weren't — putting companies together or injecting fresh management into existing ones — is where we'll set ourselves apart."

HomeAway.com is one example.

AV tapped Brian Sharples, an entrepreneur the company had worked with before, gave him seed money and told him to start a company.

The idea Sharples landed on was buying up Web sites for renting vacation homes and combining them under one banner.

Last year, the company raised $160 million in financial backing, the largest single private equity investment ever in an Austin company. It bought its biggest rival and has acquired a dozen other vacation rental Web sites.

AV is also making new investments with its Sante spinout, including a $16 million venture investment in Austin-based Spinal Restoration, which is developing technology for treating lower back pain.

Meanwhile, AV continues to bet on the "two guys and a dog" strategy, providing seed money to startups with little more than an idea.

It recently led an $8.2 million investment in Black Sand Technologies, a 12-person Austin startup that is developing chips for cell phones.

"You always hear how AV doesn't do early-stage investing anymore," says Mike Maples Jr., a former Austin software entrepreneur who now runs Maples Investments in Silicon Valley.

"But from what I see, every promising seed-stage startup that they come across, they fund. If you ask me to make a list of the cool startups in Austin — Bazaarvoice, Spiceworks, SailPoint — AV is in them."

lhawkins@statesman.com, 912-5955

Austin Ventures, by the numbers

$1.93 billion: Amount invested in Texas companies since inception

$1.25 billion: Amount invested in Austin-based companies

227: Number of Texas companies AV has invested in

161: Number of Austin companies

42,000-plus: Texas jobs created by AV-backed companies

14,500: Austin jobs created

$3 billion: Total amount under management

$525 million: Total of most recent fund, its ninth, raised in 2005. AV has invested

45 percent of the money in 18 deals.

The strategies


AV invests anywhere between a few hundred thousand to several million dollars in young companies. In some cases, it serves as an incubator. That was the case with Black Sand Technologies, which was started by entrepreneurs working out of AV office space. The chip design firm was founded primarily by veterans of Silicon Laboratories Inc., one of AV's most successful Austin investments to date.

Buy and build

AV invests up to $50 million to buy companies in high-growth areas. In 2006, it combined several vacation home rental Web sites into Homeaway.com, seeking to dominate the online vacation rental business. Last year, HomeAway raised $160 million from AV and other investors to make more acquisitions.

New arenas

AV recently spun out a new $100 million fund, Sante Health Ventures, which will focus on early-stage investments in the health care industry. In Austin, LDR Spine and Spinal Restoration are two recent investments.