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Originally published June 24, 2008 at 12:00 AM | Page modified June 24, 2008 at 11:37 AM

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Bothell biotech firm Alder gets ready to grow in antibodies

A unlucky streak of disappointing clinical results and rocky financial markets has forced several of the Seattle area's most prominent publicly...

Seattle Times business reporter

Alder Biopharmaceuticals

Cash-flush Alder aims to end the year with 50 employees — twice as many as it had in January, when it raised $40 million from venture capitalists.

Headquartered in: Bothell

Money raised so far: $68 million

Employees: 34

What it does: The company says it can discover and manufacture antibody-based biotech drugs faster than other firms by growing antibodies in yeast instead of mammalian cells, the more traditional method.

Source: Alder Biopharmaceuticals

A unlucky streak of disappointing clinical results and rocky financial markets has forced several of the Seattle area's most prominent publicly traded biotechnology companies to shed dozens of jobs in recent months.

But a discreet, closely held Bothell startup has managed to raise millions in that same tough environment and is in the mood to expand quickly.

Alder Biopharmaceuticals snagged some $40 million from investors in January, one of the largest local venture-capital rounds this year.

Now the firm, whose founders devised a method to accelerate the discovery and production of biotech drugs, wants to expand its payroll to 50 employees by the end of the year, from about 34.

"It's a change of emphasis," said Chief Executive Randall Schatzman, whose company spent its first years developing its technology. Now it wants to improve its manufacturing methods and get its products to the market.

"This is about pushing things through the clinic," CEO Schatzman said.

Alder is looking for experts in antibody manufacturing and clinical development, including a director of clinical operations, a medical director and clinical-study managers.

Antibodies are immune-system proteins in our blood that defend the body against foreign or dangerous substances.

Some of the most promising biotech-drug therapies rely on antibodies to carry their payload directly into cancer cells or to fight immune diseases — but they cost hundreds of thousands of dollars.

Alder was founded in 2004 on the premise it could make these drugs cheaper. "Our goal is to be probably about 1/10th of the cost of things that are currently being made," Schatzman said.

The company intends to do that by growing its antibodies in genetically engineered yeast cells, which divide more quickly than the industry-standard mammalian cells. That means a commercial strain could be deployed in five weeks, as opposed to 40 weeks, Alder says.

Generating antibodies more quickly can also speed up research. The company, however, still has to "improve our processes and go to much larger scale," Schatzman said.

Part of the challenge is convincing the industry that human antibodies can be grown in what essentially is a microbe. Alder's antibodies have so far been tested in more than 50 humans and proved safe, said Schatzman.

Alder, which reeled in its first catch of venture capital in mid-2005, had enough proof of its concept by January to score a $40 million investment round.

"We knew the technology worked. We identified our first therapy, understood its safety profile," said Schatzman. "We became a much safer play for venture capitalists to invest in."

The latest round was led by Delphi Ventures and TPG Biotech. Existing investors Sevin Rosen Funds, Ventures West, H.I.G. Ventures, and WRF Capital also participated.

So far Alder has raised $68 million from venture capitalists.

So far, so good, investors say. "They've been fabulous," said Steve Dow, a Palo Alto, Calif.-based partner with Sevin Rosen Funds, which led the initial investment round. "They've been on plan since day one."

The company has also established a partnership with pharmaceutical giant Schering Plough and Seattle Genetics, the area's largest independent biotech by market capitalization.

Alder plans both to license its manufacturing system and to market its own discoveries. The company's most advanced clinical program has successfully completed early-stage, also known as Phase I, clinical studies.

That product is designed to treat cachexia — the life-threatening wasting — of patients with non-small-cell lung cancer and rheumatoid arthritis.

Alder will launch a Phase II study in September, estimated to reach completion in the first half of 2009. The product could hit the market in 2011, Schatzman said.

A second compound, for arthritis, is ready to go into clinical testing, That market is lucrative, yet crowded with drugs from major biotechs like Amgen, the world's largest biotech company.

If Alder can cut back the biotech industry's notoriously long gestation period for new drugs and its steep costs, pharmaceutical companies would have to review their pricing strategies, and taxpayers could benefit, Schatzman said.

"A cost of $15,000 to $20,000 per patient per year is something that will ultimately break the budget of our health-care system," he said. "Our goal is to bring that down significantly."

Ángel González: 206-515-5644 or agonzalez@seattletimes.com

Immune Design snags $18 million

Immune Design said Monday it had raised $18 million in venture-capital funding to develop a new generation of vaccines.

The Seattle-based biotech, formerly called Vaccsys, is headed by Steven Reed, who helped start the Infectious Disease Research Institute and Corixa.

Among the company's founders is Nobel laureate and Cal Tech professor David Baltimore, and Larry Corey, chief of infectious diseases at the Fred Hutchinson Cancer Research Center.

Investors in the round include Alta Partners, The Column Group and Versant Ventures.

"While vaccines and immunotherapeutics represent a growing market that is receiving increased interest from pharmaceutical companies, true innovation in the field has been stagnant," said Reed.

The company intends to improve the field by changing the way some cells and hormones respond to vaccines.

Immune Design expects to test its vaccines in humans within 12 months.

Copyright © 2008 The Seattle Times Company

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