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					Q1
        OXFORD
     2006    n    ISSUE    1
                                         B I O U A RI T EN C Y NP A R T E TE R R
                                             Q S C     E R L E   E W S L N T E S
                                                                                                                   NEWSLETTER




W H AT ’ S I N S I D E
                               Seeing Beyond the Curve to Identify
DEVICES
                               Market-Transforming Technologies
Saving Heart Failure
Patients’ Lives,
                                                                                    OBP has built its reputation by working closely
Reducing the Need for
Open-Heart Surgery                                                                  with each portfolio company’s scientific and
                      page 2
                                                                                    executive leadership to help them develop
                                                                                    corporate strategies that will move products
THERAPEUTICS
                                                                                    swiftly forward and position the businesses to
Preparing for a                                                                     bring optimal rewards for investors’ willingness
Flu Pandemic
                      page 3                                                        to take risk.

                                                                                    OBP has made its mark throughout the
TOOLS &
INSTRUMENTS                                                                         bioscience field. For instance, OBP’s patient,
                                                                                    over-the-horizon perspective made it a leading
Affordable, Fast Genome
Sequencing: A Dream                                                                 early investor in genomics and gene-driven
Becomes Reality                                                                     technologies, which have now transformed the
                      page 4                                                        process by which disease targets are identified
                                                                                    and drugs developed. Many of those genomics
BREAKTHROUGH                   Since the creation of its first fund in 1993,        companies, such as Human Genome Sciences,
TECHNOLOGIES                   Oxford Bioscience Partners (OBP) has strived         Exelixis, and Gene Logic, have moved
Sirna Therapeutics             to identify the technologies that will not simply    successfully to convert their proprietary
Re-Invents the Drug            lead to novel products but will actually transform
                      page 5                                                        intellectual property into the development
                               entire markets. As a result, OBP has been a          of pharmaceutical products.
VENTURE AHEAD                  driving force in the bioscience revolution.
                                                                                    As their technologies develop, many of these
2006 Biomedical                The companies described in this issue—               companies prove highly valuable, either to public
Executive Summit:
                               PowderMed and VaxInnate, Solexa, Mitralign           markets, such as Memory Pharmaceuticals
Evaluating Risk
in Decision-Making             and Circulite, and Sirna—represent a new             and Geron, or for merger and acquisition,
                      page 6
                               generation of OBP investments that have              such as Corixa, now part of Glaxo SmithKline,
                               the potential to transform the pharmaceutical        and CombiChem, acquired by DuPont.
OXFORD TEAM                    and medical device industries and, by doing
                      page 7
                               so, benefit public health. These companies           With more than $900 million under management,
                               possess technologies that may replace                OBP continues to draw on its exceptional
                               outmoded vaccine technologies and prepare            in-house scientific, information technology
                               for possible pandemic influenza; they will soon      and medical expertise, as well as teams of
                               bring to market genetic sequencers that could        outside consultants with specialized knowledge,
                               make the promise of the low-cost human               to build companies that will revolutionize
                               genome for personalized medicine real; they          the marketplaces of the future.
                               may create an entirely new type of therapeutic
                               agent that opens new avenues for treating
                               diseases; and they may herald the end of the
                               need for open heart surgery for many of the
                               25 million heart failure patients worldwide.
W W W. OX B I O . C O M
    OXFORD              Q S C    E R L E    E W S L N T E S
                    B I O U A RI T EN C Y NP A R T E TE R R



          Saving Heart Failure Patients’ Lives,
          Reducing the Need for Open-Heart Surgery
          Heart Failure (HF) patients who undergo                 and treating the MR. Many patients who currently
          open heart surgery to repair the progressively          are not candidates for open heart surgery due
          accumulating damage to their hearts face                to their HF condition will benefit from this less
          long, expensive operations that require                 invasive procedure.
          lengthy hospitalization and all too often lead
                                                                                             CircuLite is also seeking
          to complications and even death. Many more
                                                                                             to expand the number
          HF patients, however, are not candidates for
                                                                  of HF patients whose condition can be improved
          surgery at all because of existing complications,
                                                                  by developing the world’s smallest minimally
          resulting in suffering and early death. Through
                                                                  invasive micro-assist device for chronic HF. Many
          Accelerated Technologies, Inc., (ATI), a unique
                                                                  chronic HF patients have failed conventional
          device “accelerator” for interventional cardiology
                                                                  medical therapy, but are not sick enough to justify
          ventures developing minimally invasive technologies,
                                                                  undergoing a surgical implantation of a mechanical
          OBP has been founding and investing in
                                                                  support device to sustain life. Currently, these
          companies that may one day end the need
                                                                  patients have no other option except to wait for
          for many of today’s open heart surgeries and
                                                                  their HF condition to deteriorate while their quality
          also make lifesaving procedures more widely
                                                                  of life declines. The Circulite technology will offer
          available for the world’s 25 million HF patients.
                                                                  these patients a new, minimally invasive option to
          Operating since 2001, ATI (www.acctec.net)              increase their heart’s output, thus improving their
          utilizes cardiology, managerial and venture             quality of life.
          expertise to identify breakthrough product
                                                                                               CircuLite’s heart
          opportunities and then develops and
                                                                                               assist device, no bigger
          commercializes these products within stand-
                                                                                               than an AA battery,
          alone companies. Two recently founded ATI
                                                                                               allows subcutaneous
          ventures, Mitralign and CircuLite, exemplify
                                                                                               placement and
          ATI’s ongoing program.
                                                                                               endovascular delivery.
                                  The novel Mitralign             The miniature size and minimally invasive delivery
                                  system is being developed       of the CircuLite device reduce the complications
                                  to treat Mitral Regurgitation   associated with mechanical circulatory support and
    DEVICES




          (MR), a leak in the mitral valve that, when healthy,    enable implantation in a catheterization lab by an
          keeps oxygenated blood flowing in the proper            interventional cardiologist. The device requires only
          direction inside the heart. MR robs the heart of        a pocketsize battery pack to operate. These key
          pumping ability and the body of needed blood,           benefits will allow many more chronic heart
          significantly increasing the risk of mortality          failure patients earlier access to mechanical
          in HF patients.                                         support. Currently some 1 million patients
                                                                  worldwide are candidates for implantation of
          The minimally invasive Mitralign system
                                                                  a mechanical-assist device. That number
          resembles surgical annuloplasty during which
                                                                  could double with CircuLite’s technology.
          a dysfunctional, dilated mitral valve opening is
          reduced to a functional size. Instead of opening        Through ATI, OBP anticipates developing other
          the heart to repair the faulty mitral valve, the        technologies that will transform the lives of
          Mitralign procedure utilizes catheters to deliver       millions of people with heart disease and the
          a series of sutures which are cinched together,         interventional cardiology industry.
2         reducing the circumference of the dilated valve
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Preparing for a Flu Pandemic
The risk of a global influenza pandemic currently          VaxInnate seeks to put the power
facing the world is unprecedented. A virulent              of the innate immune system—the
strain of H5N1 influenza has reached epidemic              immune response with which we
proportions in wild and domesticated birds.                are born—to work. The company’s
The best documented avian epidemic of this                 technology uses the innate response
scale immediately preceded, and ultimately                 to activate the adaptive portion of
precipitated, the deadly 1918 influenza that               our immune system—the “learned”
killed 100 million people worldwide.                       response that defends against repeat
                                                           invaders—to recognize even mutant
The US and other countries are unprepared for
                                                           strains of a virus such as avian flu.
a pandemic; the US currently has manufacturing
                                                           Moreover, the vaccine can be
capacity for only 50 million vaccine doses per
                                                           produced out of e. coli culture far faster, less
year and other developed nations are similarly
                                                                               expensively and with less risk
constrained, while the developing
                                                                               of contamination than the
world has no reasonable
                                                                               current process of growing
access to flu vaccines and
                                                                               vaccines in eggs. VaxInnate’s
would be devastated by
                                                                               first flu vaccine should enter
a pandemic. Production
                                                                               human testing at the beginning
shortages of seasonal




                                                                                                                    THERAPEUTICS
                                                                               of next year.
flu vaccines have added
to public anxiety and                                                          Based in Oxford, UK, PowderMed
increased government                                                           already has four clinical and
scrutiny concerning the lack of readiness.                 three preclinical programs. Its programs target
                                                           influenza, chronic viral diseases and cancer, and
Flu vaccines are currently produced using chicken
                                                           are all based on its DNA particle-mediated epidermal
eggs; a fifty-year-old approach with significant
                                                           delivery (PMED™) technology. PMED™ coats
problems, including the risk of bacterial
                                                           gold particles with DNA, which are thrust into the
contamination, long lead times in the production
                                                           skin of a patient using a helium-powered device.
cycle (nine months from strain identification to
                                                           These gold particles are small enough to deliver
vaccine availability), lack of scalability, and the high
                                                           DNA directly to the nucleus of antigen-presenting
expense of adding new manufacturing capacity.
                                                           dendritic cells in the skin. The cells’ machinery
                                                           translates the DNA into its corresponding cell
                                                           surface protein causing the immune system to
                                                           recognize the cells as foreign, thus evoking an
Two OBP portfolio companies, VaxInnate, Inc.,              immune response.
and PowderMed, Inc., are developing new
                                                           Successful completion of Phase I trials of the
vaccine technology to replace this outmoded
                                                           company’s influenza vaccine in the past quarter
vaccine production method, which will permit
                                                           has paved the way for a larger Phase II study
the preparation of a stockpile of readily available
                                                           to begin later this year. The PowderMed DNA
vaccine with cross-strain immunity in the event
                                                           vaccine will offer many advantages, including
of an avian flu outbreak. Their technologies also
                                                           faster production and the ability to store inventories
offer the potential for new immunotherapeutics
                                                           in dry form for stockpiling, thus reducing the
for cancer, HIV and other diseases.
                                                           possibility of supply shortfalls in the event of
                                                           pandemic outbreaks of flu or other diseases.
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    OXFORD                 Q S C    E R L E    E W S L N T E S
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              Affordable, Fast Genome Sequencing:
              A Dream Becomes Reality
              The completion of the 13-year, $3 billion Human     affordable part of health care. The ultimate goal
              Genome Project (HGP) in 2003 was an epochal         of personalized medicine to which the HGP
              event that promised to change the nature of         pointed—prescribing the right treatment for
              biomedical science, drug development, clinical      the right patient at the right time—will finally
              diagnostics and patient care. However, at           be realized.
              present sequencing each additional human
                                                                  In its initial step toward making that dream a
              genome still costs around $20 million, making
                                                                  commercial reality, Solexa is delivering its initial
              it unaffordable and impractical to sequence
                                                                  “early-access” Systems to launch customers,
              the hundreds of additional human genomes
                                                                  including several major genomics centers, starting
              required to do statistically valid genome
                                                                  in the second quarter of this year. Potentially
                                    comparisons. In the past
                                                                  more than a dozen Solexa Systems - with a list
                                    quarter, OBP portfolio
                                                                  price of nearly $400,000 for a full-specification
                                    company Solexa, Inc.
                                                                  instrument, plus $100,000 to $200,000 in Solexa
                                    began delivering the
                                                                  reagents per instrument per year - could be in
              first-generation of the Solexa Genome Analysis
                                                                  operation before the end of the current year.
              System that will enable whole genome
                                                                  The company expects its instrument to be
              sequencing for less than $100,000 for the first
                                                                  adopted as the standard platform for those
    INSTRUMENTS




              time. This represents a milestone as important
                                                                  centers and eventually to become a core
              in its way as the HGP itself, allowing scientists
                                                                  research tool in biotechnology and pharmaceutical
              to do the genomic comparisons necessary to
                                                                  laboratories and biomedical research centers
              move genome-scale science into the clinic.
                                                                  throughout the world.
              The Solexa System comprises the 1G Genetic
                                                                  OBP enabled Solexa to advance its technology to
              Analyzer, Cluster Station and associated
                                                                  its present commercial product stage by leading
              reagents, consumables and software. The
                                                                  the financing and guiding its purchase of Lynx,
              System’s Sequencing-By-Synthesis process
                                                                  a publicly traded instrument maker. This merged
              breaks the genome into millions of small,
                                                                  Solexa’s technology with Lynx’s instrument-
              fluorescently labeled pieces read out by high
                                                                  making expertise and enabled the new Solexa
              speed laser readers. At full capacity it can
    TOOLS &




                                                                  to complete two successful public offerings.
              generate a billion bases of sequence per day,
              compared to half a million bases per day for        Highlighting Tools & Instruments
              current instruments. Solexa System users
              should experience dramatic increases in             ExonHit Therapeutics entered its 50th
              productivity while reducing costs by over           SpliceArray™ commercial project one year after
              two orders of magnitude relative to current         the launch of the service. SpliceArray enables the
              state-of-the-art DNA sequencing technologies.       identification of new therapeutic targets or diagnostic
                                                                  markers based on alternative RNA splicing using
              To screen a single gene today costs about           the leading microarray technologies.
              $1,000. Solexa’s longer-term goal is to reduce      BioProcessors sold its SimCell™ system to
              the cost to $1,000 for all 30,000 genes. That       NovoNordisk. SimCell is the first fully-integrated
              will make the dream of the HGP real. Sequencing     cell culture experiment management system for
              of individual genomes will then be practical for    bioprocess development capable of generating
              use in a wide range of applications from basic      data scalable to large-scale bioreactors.
4             research through clinical diagnostics, and an
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Sirna Therapeutics Re-Invents the Drug
                       In the entire history
                       of the pharmaceutical
                       industry there have
                       been only two types
of therapeutics: small molecule chemicals and
protein-based drugs. Sirna Therapeutics, Inc.
has moved rapidly ahead to create an entirely
novel type of therapeutic agent that may lead
to new and better treatments for a wide range
of important diseases. With the progress of its
lead program into advanced clinical trials this
year and a second program about to begin
human testing, the entire industry will be
watching to learn whether Sirna is on the
brink of changing the pharmaceutical world.




                                                                                                            BREAKTHROUGH
In the past few years it has become apparent
that short interfering RNA, or siRNA, plays




                                                                                                             TECHNOLOGIES
a critical role in almost all aspects of gene        Sirna’s powerful technology lends itself
regulation in higher cells. The possibility exists   to extremely fast drug development. Sirna
for disease-treatment purposes that chemically       is the first company to enter human clinical
synthesized siRNAs can be specifically               trials with a chemically optimized siRNA and
designed to travel into a cell and prevent the       demonstrate its biological activity in humans.
production of virtually any disease-causing          Sirna is also the first company to demonstrate
protein or virus, including proteins and viruses     efficacy of a systemically delivered siRNA
that other types of drugs have never been able       in multiple pre-clinical models at therapeutically
to reach. The opportunity to treat previously        relevant doses.
incurable or incompletely treated diseases with
                                                     In a period of just 18 months, Sirna moved its
siRNA drugs has led Sirna to ramp up drug
                                                     first therapeutic candidate, a treatment for
discovery and development programs in
                                                     AMD, from discovery into human testing.
age-related macular degeneration (AMD),
                                                     The successful Phase 1 clinical trial for the
hepatitis C, dermatology, asthma, Huntington’s
                                                     drug was completed in 2005 and, with strategic
disease, diabetes and oncology.
                                                     partner Allergan, Phase 2 clinical trials will
OBP was part of a high-level syndicate               commence in the next few months. Sirna has
which enabled publicly traded Sirna to               also selected a clinical compound for hepatitis
become the siRNA technology leader and               C virus, which the company plans to bring into
to capture nearly all the intellectual property      Phase 1 clinical trials before the end of this year.
in the field. The company has a leading              In addition, Sirna has established an exclusive
intellectual property portfolio covering over        multi-year strategic alliance with GlaxoSmithKline
250 mammalian gene and viral targets and             for the development of siRNA compounds for
over 175 issued or pending patents covering          the treatment of respiratory diseases.
other major aspects of RNAi technology.
Alliances with several strategic partners have
affirmed the company’s leadership in this
potentially revolutionary technology.                                                                                       5
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                2006 Biomedical Executive Summit:
                Evaluating Risk in Decision-Making
                Each year OBP brings together its portfolio         the proper evaluation of data. He also pointed
                company executives along with senior                to judgments driven by “representativeness”
                executives of pharmaceutical and medical            bias, in which evidence based on only partially
                device companies for its annual Biomedical          comparable information can lead to flawed
                Executive Summit. This year, the theme of           outcome predictions; he also discussed
                the Summit, held May 31-June 2 on Cape Cod,         “anchoring” in which executives estimate
                was the evaluation of risk in decision-making.      value based upon an initial baseline number
                                                                           derived from irrelevant past events
                The goal of the Summit was to help
                                                                                and from which they then make
                the executives improve their ability
                                                                                    insufficient adjustment in arriving
                to evaluate the relative risk of
                                                                                      at a final estimate. Above all,
                competing alternative courses
                                                                                       he said, “Over-optimism is the
                of action, such as the decision
                                                                                        most prevalent bias.” This bias
                whether to continue a clinical
                                                                                        leads to overconfidence and
    VENTURE AHEAD



                development program or
                                                                                        harms predictive ability.
                whether to enter into a
                corporate partnership to transfer                                       Kahneman urged the audience
                risk to a larger company.                                             to be vigilant against psychological
                                                                                    biases in evaluating risk. He
                Estimating risk should be a rational
                                                                                suggested that organizations
                process, relying upon methodologies
                                                                         build discipline into their decision-making
                such as risk-adjusted net present value analysis,
                                                                    processes to free them of over-reliance on
                real option analysis, and probability assessment.
                                                                    intuition and personal experiences, and to
                But as attendees discovered, biases inevitably
                                                                    look to more objective external evidence to
                creep into human judgments, leading to faulty
                                                                    counter the inherent optimism of the wholly
                forecasts characterized most often by excessive
                                                                    “inside” viewpoint.
                optimism. Successful executives must learn
                to spot these biases, according to Summit           The meeting also featured a presentation by
                keynote speaker, Nobel Laureate in Economics        Professor David Scharfstein of Harvard Business
                Daniel Kahneman, Princeton University               School on the risks of clinical trial failure and
                Professor of Psychology. Professor Kahneman         how successful large and small companies
                described some of the most persistent               are, comparatively, in managing these risks.
                psychological errors in the judgment of risk        Scharfstein presented illuminating and
                which he has found to afflict even highly           provocative data on the effect of corporate
                experienced executives.                             alliances and financial resources on success
                                                                    in the clinic with a particular program. The Summit
                Among the biases Kahneman identified were
                                                                    also included as panelists numerous heads of
                those he termed the “availability heuristic,”
                                                                    R&D and business development of major
                in which executives assess risk based on
                                                                    pharmaceutical, biotechnology and medical
                the ease with which analogous situations
                                                                    device companies.
                come quickly to mind rather than relying on




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Oxford Team




Jonathan J. Fleming        Alan G. Walton, Ph.D., D.Sc.   Jeffrey T. Barnes         Mark P. Carthy
Managing General Partner   Senior General Partner         General Partner           General Partner
Boston, MA                 Westport, CT                   Boston, MA                Boston, MA




                                                                                                             OXFORD TEAM
Matthew A. Gibbs           Michael Lytton, J.D., M.Sc.    Ellen S. Baron, Ph.D.     Douglas M. Fambrough, Ph.D.
General Partner            General Partner                Partner                   Partner
Boston, MA                 Boston, MA                     Boston, MA                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          Cornelius T. Ryan              venture funds with combined committed
Founding General Partner   Founding General Partner
Costa Mesa, CA             Westport, CT                   capital of more than $900 million.




                                                                                                                           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


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                  Costa Mesa, CA 92626
                   Tel: (714) 754-5719
                   Fax: (714) 754-6802




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