Cofounded by Dr. Maria Siemionow, the leader of the Cleveland Clinic surgery team that performed the nation’s first near-total face transplant in 2008, Tolera is developing a drug intended to suppress the immune system of patients receiving organ transplants in order to prevent organ rejection. The company has said it also plans to investigate the use of that drug in fighting diabetes and other autoimmune disorders.

Tolera’s monoclonal antibody, TOL101, was granted orphan drug status in June 2010 and the company raised $4 million in a series B round that year to carry it through phase 2 clinical trials, which were expected to be completed in 2011. Previously, the company had raised an $8 million series A round in 2008.

Spun off from the Cleveland Clinic in 2006, Tolera moved to Kalamazoo, Michigan, closer to investors and drug development resources, in 2008. In 2010, the company was named one of  Michigan’s 50 Companies to Watch by Michigan Celebrates Small Business.

Despite increases in the number of transplants performed over the last decade, a limited supply of donor organs continues to hinder the market for immunosuppressants.

Axonia Medical has raised $1 million of the $3 million it hopes to secure in a series A financing that would carry the Kalamazoo, Michigan-based biotech through large animal trials of its regenerative nervous system repair technology.

The nervous system has a limited ability to repair itself after injury, and there is a lack of effective treatment options to restore function, especially in brain and spinal cord injuries, according to Axonia cofounder, President and CEO Harry Ledebur.

“There’s not a well-established market or standard of care for peripheral nervous system injuries, and a number of injuries with large lesions or that are close to the spinal cord can’t be treated right now,” he said.

The startup company’s technology aims to surgically rebuild and restore damaged nervous systems using living functional tissue-engineered nerve grafts, which can bridge lost nervous tissue and jump-start regenerative mechanisms in the body to restore functionality. These grafts are essentially implantable nervous tissue — not cells — made of two neuron populations connected by long stretches of functioning axons that are grown and stretched out in a lab.

Approximately 400,000 individuals in the U.S. suffer from injuries to the peripheral nervous system, with less a quarter of them achieving good restorative function.

Although it’s still in the preclinical phase, Axonia’s technology has applications to repair damage that is currently untreatable in a market Ledebur believes to be worth more than $1 billion. He said trials have produced positive preclinical results in small rodents with peripheral and spinal injuries, and the series A funding will help transition the company to 18 to 24 months of large animals trials.

If those trials produce positive results, Ledebur thinks he’ll be able to secure more funding from coastal venture groups and partners. The company anticipates a $25 million series B round.

Founded in 2011, Axonia leverages technology developed by Dr. Douglas Smith at the University of Pennsylvania. CEO Ledebur is a two-time entrepreneur and an executive-in-residence at the Southwest Michigan First Life Science Fund.

For now, the company will focus on the peripheral nervous system application but will continue researching the use of its technology in follow-on products for spinal cord and brain injuries.

Synthes

The complaint, filed in federal court in Philadelphia, also singled out three former sales staff from Synthes’ San Francisco sales unit who resigned from the company between August and October and joined Stryker, and alleged they gave trade secrets to a competitor, and breached their contractual and fiduciary obligations to the company, according to press reports.

The medical device industry has undergone a significant amount of consolidation, including the companies at the center of the lawsuit, as increased costs from the excise tax and getting products to market spur companies to gather all available tools for their armories to boost their competitiveness and increase their market share.

Johnson & Johnson (NYSE: JNJ) in New Brunswick, New Jersey agreed to acquire West Chester, Pennsylvania-based Synthes in April for $21.3 billion, making J&J the largest maker of medical devices for trauma.

It has also been a year for major growth for Stryker. It plowed through more than half of its cash reserves to boost its business through acquisitions like Boston Scientific’s (NYSE:BSX) neurovascular business, Malvern, Pennsylvania-based Orthovita and Bruz, France-based Memometal Technologies.

Earlier this year, three Synthes directors were sentenced to prison terms ranging from five to nine months under the responsible corporate officer doctrine over subsidiary Norian’s unauthorized use of bone cement in spinal surgery clinical trials. A fourth director was later sentenced to eight months.

Not surprisingly, the Farmington Hills, Michigan-based fund’s managing director Ranjit Kommineni declined to identify that investor. (Kommineni is likely the envy of VCs everywhere for his one-stop fundraising.)

“We’re more business guys; we’re not the typical investors,” Kommineni said of  LifeLine. “Since we’re funded by one private individual, we’re not in a hurry to get into a deal. We’re patient and would rather get into the right company.”

Though the fund launched in 2009, it’s only found the “right company” twice, but Kommineni said LifeLine has a couple term sheets out and is looking to make more investments soon.

LifeLine’s portfolio consists of Columbus, Ohio-based CardiOx, a heart-test device startup, and New York-based UltraLinq, a health IT firm. UltraLinq runs a cloud-based software service that allows for easy sharing and managing of medical images among physicians. LifeLine recently led an $8 million series C round for CardiOx, which is developing a noninvasive way to detect right-to-left heart shunts — a defect known as a patent foramen ovale or PFO.

LifeLine’s sweet spot for investment is mid-stage device and diagnostics companies that already have a prototype and human data to back up their efficacy, but need more funding for pivotal trials and commercialization, Kommineni said.

LifeLine prefers to invest between $2 million and $10 million per company,  but has no problem if the upper end of that range gets a little higher.

“If we’ve invested $8  million in a company and tomorrow they need another $4 million to go to market, why would we not fund them if we still believe in the management and the product?” he said.

LifeLine plans on investing in eight companies or so over the life of the fund.

It’s no accident that the $100 million fund has kept a low profile, Kommineni said.

“If we were really well-known and went out and advertised, our team would spend more time reading about opportunities we don’t like,” he said. “This way we can approach companies we like. It’s by design that we’ve chosen to be under the radar.”

Kommineni said his message to healthcare entrepreneurs who hit LifeLine’s sweet spot is simple: “If they meet the criteria and they want faster value creation, we are the guys.”

RetroSense Therapeutics, an Ann Arbor startup company, is targeting patients with blindness from retinal pigmentosa (RP) and advanced dry age-related macular degeneration (dry-AMD) for its new therapy derived from genes in blue-green algae.

According to the company’s website, it anticipates filing an IND with the FDA and starting clinical trials near the end of 2012. The company has started to raise fresh capital, according to a recent SEC filing.

In retinal degenerative diseases, the loss of photoreceptors, which convert light to nerve impulses and send them to the brain, leads to progressive peripheral vision loss and night vision troubles in patients. RetroSense’s  lead candidate, RST-001, aims to use a one-time eye injection to deliver a new gene to retinal cells that will create new photosensors and partially restore light sensitivity.

The goal is for patients to be able to see well enough to recognize someone sitting close to them and to function daily, CEO Sean Ainsworth told Crain’s Detroit Business in November. The therapy will be initially targeted for treatment of retinitis pigmentosis, with dry-AMD as a follow-on indication. About 100,000 people suffer from RP, which is typically diagnosed in adolescents and young adults.

There are treatments to help slow retinal degeneration diseases, but no FDA approved therapies to improve or restore vision once it is lost, the company says. Currently, several RP treatments are being tried, and Advanced Cell Technology is in clinical trials of a stem-cell therapy for dry-AMD.

RetroSense’s novel approach was pioneered Dr. Zhuo-Hua Pan at Wayne State University and Dr. Alex Dizhoor at Salus University and was spun off into RetroSense in 2009. So far, the technology has shown improved light sensitivity in tests on small animals.

Previously, RetroSense has secured more than $3 million in support from the National Eye Institute, the Michigan Pre-Seed Capital Fund, the Michigan Initiative for Innovation and Entrepreneurship and TechTown in Detroit.

EndOclear’s technology is meant for patients who need a ventilator for more than 48 hours. Although endotracheal tubes are cleaned in the ICU, some tubes accrue a thick biofilm that inhibits patients’ breathing and ups their risk for developing ventilator-associated pneumonia.

EndOclear’s scope-like system aims to enable doctors to see and clear the biofilm from inside the ET tube, helping the patient restore normal breathing and cutting costs associated with tracheostomy care, ventilator associated pneumonia and long stays in the ICU.

EndOclear recently raised $500,000, according to federal regulatory filings.

The company was founded by Michigan cardiovascular surgeon Dr. Brad Vazales and is conducting studies to show efficacy of its technology, according to its website.

Driven by growing instances of respiratory diseases, the ventilation systems and accessories market is estimated to grow more than 5 percent annually, according to a 2011 TechNavio market report, and hit $2.48 billion in 2014.

Tangent Medical Technologies has developed a closed-system IV device, NovaCath, that will stay comfortably on a patient longer, prevent blood spills and avoid patient exposure to pathogens.  The University of Michigan spinoff secured $1 million in private funding, which should help with regulatory approval and market launch in 2012, said Elyse Kemmerer, co-founder and director of business development.

Based in Ann Arbor, Mich., the new innovative medical device company is the brainchild of three University of Michigan Medical Innovation Center fellows who observed frequent failure of traditional IV delivery systems. Nearly all patients use IVs in hospital stays. But half the time the the IVs don’t last the three to four days they are expected to, Kemmerer said.

“One of the biggest hassles when patients are in the hospital is getting poked over and over again,” she said. “To fix this people are using better tape, but we’re redesigning the whole system so that it stays in place.”

Kemmerer formed the company in 2009 with co-founders Steve White and Adrienne Harris, who are now directors of R&D and product development, respectively. In August they hired Jeff Williams, former president and CEO of Accuri Cytometers, to become Tangent’s CEO as the company prepares to commercialize NovaCath.

The vascular access device market in the United States was valued at more than $3 billion in 2010, according to an iData Research report. But there are already competitors on the market. A similar closed-system IV system, the Nexiva, is manufactured by BD Medical.

The Kalamazoo, Mich.-based medical device maker, which started out 2011 with $1.76 billion in cash and cash equivalents now has just under $500 million in cash and cash equivalents, according to regulatory filings with the federal securities and exchange commission. Overall, Stryker has just over $6.5 billion in current assets, compared to the $7.63 billion it had on December 31, 2010.

Stryker spent more than 58 percent of its cash reserves during the first quarter on its $1.45 billion buyout of Boston Scientific’s (NYSE:BSX) neurovascular business. Overall, the company forked over about 12 percent of its total assets to do the deal, not including an additional $70 million it paid in charges related to the transaction.

A second deal in late May for Orthovita Inc. (NSDQ: VITA), a Malvern, Pa.-based orthopedic biologics maker, sucked up another $316 million. That deal closed on June 27, 2011, just before the end of the second quarter.

Stryker also signed up for another deal in Q2, when it agreed to pay $150 million in up-front cash for Bruz, France-based Memometal Technologies SA in early June. That deal includes another $12 million in milestone payments.

Stryker VP of strategy and investor relations Katherine Owen told analysts during a recent conference call with investors that the company will “continue to execute on our stated strategy of leveraging our balance sheet and cash flow to pursue M&A.”

Stryker posted earnings of $309 million, or 79 cents per diluted share, on sales of $2.05 billion during the three months ended June 30. That compares with profits of $319 million, or 80 cents diluted EPS, on sales of $1.76 billion during the same period last year.

Excluding some $43 million in integration costs from Stryker’s $316 million buyout of Orthovita and its $1.5 billion acquisition of Boston Scientific’s (NYSE:BSX) neurovascular business, the company managed a profit of $352 million (90 cents diluted adjusted EPS), up 10.4 percent and 12.5 percent, respectively, over Q2 2010.

Stryker said it expects full-year sales to grow between 5 percent and 7 percent, excluding foreign exchange effects and acquisitions and stood pat on its earnings forecast of between $3.65 and $3.73 diluted adjusted EPS.

SYK shares were down 3.1 percent to$57.30 in mid-day activity today.

The Kalamazoo, Mich.-based company added its inflatable vertebral augmentation system (iVAS) to its national agreement with supply contracting company Novation LLC.

The deal makes Stryker the single source for balloon-assisted spine augmentation for health care groups UHC, VHA Inc, and Provista LLC, according to the release.

The orthopedic giant also struck a deal to distribute its RegenKit-THT, designed to aid preparation of autologous platelet-rich plasma from a patient blood sample at the point of care, through RegenLab SA.

Stryker’s RegenKit-THT boasts the highest platelet recovery and viability, according to a company release.

“The RegenKit-THT system is the result of 10 years of scientific research in tissue regeneration and is designed to provide an autologous and physiological solution to promote a biological environment for regenerative cells enrichment.  RegenLab is pleased to collaborate with Stryker, a leader in medical technologies and innovation, which will allow for the widespread distribution of our A-PRP technology,” said Antoine Turzi, founder & CEO of RegenLab.

Mogul, 46, was with Stryker for most of his professional life. He joined the Kalamazoo, Mich.-based medical device giant in 1989 when he was just 24 years old and worked his way up to vice president of sales for the ortho division by 1994. He was named group president of Stryker’s backbone ortho section in September 2009.

Mogul will take his new position at Vista, Calif.-based DJO June 13, replacing Lee Cross (who will step up into a position as chairman).

“I am honored to join the talented leadership team at DJO and looking forward to helping them grow the company in new and existing markets,” Mogul said in a prepared release. “DJO has a proud history of innovation, world-class customer service and a terrific corporate culture, which make it an exciting platform on which to build.”

 DJO, founded in 1978 as DonJoy Inc., brought in just under $966 million in sales in 2010 but posted net losses of $52 million. The company has about
4,000 employees around the globe and makes a diverse array of orthopedic rehabilitation products used by physical therapists and rehabilitation centers.

Stryker named neurotechnology and spine group president Kevin Lobo to run the orthopedics division, which brought in just over $4.3 billion last year.

The stockholders, led by Andrew Thorn, accused the two companies and Orthovita’s board of breaching its fiduciary duty in agreeing to the deal and charges Stryker with abetting that breach.

Earlier this month Stryker offered to pay $3.85 per share in cash for Orthovita, a 41 percent premium on VITA’s closing price of $2.73 per share the last trading day before the deal was announced. A tender offer for the shares kicked off last week, set to expire at midnight June 24.

Orthovita makes a suite of products for the fusion, regeneration and fracture fixation of human bone, including Vitoss, a bone graft substitute, and Cortoss, a bone augmentation material.

Filed in the Court of Common Pleas of Montgomery County, Pa., the complaint alleges that the defendants breached “fiduciary duties in their pursuit of a sale of the company at an unfair price through an unfair and self-serving process to Stryker,” according to the court documents, which seek to stop the merger.

“Orthovita believes that this action is without merit and intends to defend its position in this matter vigorously,” according to a regulatory filing.

Orthovita reported a $1.16 million loss on $23.7 million in sales during the three months ended March 31, compared with $1.18 million in losses on $24 million in sales during the same period last year. Orthovita had just over $59.7 million in assets at the end of the quarter, including $8.3 million in cash and equivalents.

Orthovita’s product line could potentially fill the hole left at Stryker by its offloaded its troubled OP-1 bone growth implants family to Japan-based Olympus Corp. for $60 million in December 2010.

The deal marked a a step towards Stryker freeing itself of the legal woes related to allegations it promoted the off-label combination of two of its bone growth products.

Federal investigators in Oct. 2009 indicted the company and four managers charging that they led a two-year campaign to promote the combined use of separate bone-healing products, each granted a narrow, provisional “humanitarian device exemption” by the FDA. Combining the treatments and devices — the OP-1 Implant, OP-1 Putty and the bone void filler Calstrux — caused adverse effects in patients ranging from minor irritations to infections requiring follow-up surgeries. The indictment also charged that Stryker and  former Stryker Biotech president Mark Philip lied to the FDA about the number of patients treated each year with OP-1 Putty.

The legal proceedings are still ongoing and in November federal prosecutors blasted Stryker Biotech, its former president and three sales reps for seeking the dismissal of the bulk of the 16 criminal charges pending against them in a federal case alleging the illegal promotion of the bone putties.

MacMillan said the Kalamazoo, Mich.-based orthopedic and medical equipment giant has proven its mettle in tough times, something he said would allow it to continue to perform, despite struggles in the orthopedic industry.

“For many years in med tech, the rising tide lifted us all along with it,” he said. “What we hope you see is a company, and a team, that continues to deliver,” he said. “And we are poised to win in any environment.”

The CEO reaffirmed Stryker’s guidance for 2011, despite mounting pressures from tough economic conditions that have been a drain on the entire orthopedic industry. In January, Stryker officials predicted 11 to 13 percent sales growth and adjusted per-share earnings of $3.65 to $3.73.

MacMillan said his confidence was rooted in the fact that the company isn’t dependent on just one market for success. In fact, no single franchise in the Stryker family makes up more than 18 percent of the company’s total revenues, MacMillan said.

“With any sector I’ve ever watched in med tech, what is hot for one period of time goes cold,” he said, explaining why the company has hedged its bets. “What you see over time is that some pieces offset others.”

MacMillan pointed to the rise in Stryker’s MedSurg equipment business in 2010, which offset the unexpected slowdown in the company’s reconstruction segment, which includes orthopedic reconstructive equipment.

He also took some time to discuss the company’s activity on the acquisition trail over the past 24-months. MacMillan noted that Stryker spent more than $2 billion on acquisitions from 2008 to 2010, up considerably from the $400 million it spent during the previous three year period.

However, he bristled at the notion that these moves were anything other than smart business decisions.

“Our acquisitions have all been grown out of existing relationships we have with our customers. It is no diversification for diversification sake, but diversification because we see opportunities for growth,” he said. “It’s not like we went out and hired some consultant who said ‘you ought go on a diversification kick.’”

In 2011, the company has already committed nearly $2 billion to acquisitions alone. In January it closed aclosed a $1.5 billion acquisition of Boston Scientific Corp.’s (NYSE:BSX) neurovascular business and this week SYK announced a $316 million buyout of Orthovita, Inc. (NSDQ: VITA).

Generic drug company Synthon Pharmaceuticals has received tentative U.S. Food and Drug Administration approval on its application to make a version of UCB‘s (EBR:UCB) allergy medicine Xyzal.

Netherlands-based Synthon, which has its U.S. headquarters and laboratories in Research Triangle Park, North Carolina, said it is seeking to bring a generic version of Xyzal oral solution to the U.S. market with partner Perrigo (NASDAQ:PRGO). Michigan-based Perrigo is a maker of over-the-counter and generic pharmaceuticals.

Synthon said it believes it is the first to file an application with the FDA for a Xyzal generic. Being first to file gives Synthon the advantage of 180 days of marketing exclusivity over other Xyzal generics.

The FDA approved Belgium-based UCB’s antihistamine Xyzal in 2007. The drug has been marketed in the United States by partner Sanofi-Aventis (NYSE:SNY).  It has been available in Europe since 2001.

Zyrtec, another UCB allergy drug, and Xyzal combined to generate $755.2 million in global sales in 2006. But Zyrtec’s sales suffered upon entry of generics into the market. Now Xyzal appears to be facing the same fate. Xyzal generates about $15 million in annual sales, according to information and publishing firm Wolters Kluwer.

SWMF LifeScience Venture Fund intends to raise another $35 million, said Pat Morand, adding that six years ago, the fund raised its first $50 million.

While Morand is the managing director, three other individuals hold the position of director in the fund: William Johnston, William Parfet and Goran Ando, according to a filing with the U.S. Securities & Exchange Commission.

The goal is to look at companies nationwide and locally, but to invest in companies that have major operations in southwest Michigan. That focus is apparent even in the name of the fund; SWMF stands for Southwest Michigan First. The fund is part of Southwest Michigan First, a private, nonprofit organization focused on driving economic growth in the  Kalamazoo Region.

Morand said he did not have a particular timeline within which he wants to raise the additional $35 million. The company has been making investments since the first $50 million was raised in 2005, but so far none of the portfolio companies has exited the fund.

“They are mostly therapeutics companies,” Morand explained. “I know raising money is news, but I’d much rather talk about exits.”

The fund has invested in seven companies, according to its website.

Stealth 360° Orbital PAD System

St. Paul, Minnesota-based CSI (NASDAQ:CSII) claims the Stealth 360° has a simpler, more user-friendly design than previous devices in the company’s Orbital PAD System family — the Diamondback 360 and Diamondback Predator 360°.

Click here to watch an animated video about how the Stealth 360° works.

“The new Stealth 360° is as fast and easy to set up as a balloon or stent, but safer and more durable,” Dr. J. Mustapha, an interventional cardiologist at Metro Health Hospital in Grand Rapids, Michigan, said in a Cardiovascular Systems news release.

The release of the Stealth 360° comes after U.S. Food and Drug Administration 510(k) marketing clearance. The limited market release is meant to provide a smooth transition to the new platform, with the company seeking feedback from physicians to establish best practices for device operation.

Cardiovascular Systems doesn’t expect any significant revenue from the Stealth 360° until the company’s fourth quarter, ending June 30.

In CSI’s second-quarter earnings release, David Martin,  the company’s president and CEO, praised the Stealth 360°’s electronic handle. “Elimination of the controller, the capital equipment portion of our current system, will reduce future product cost,” he said.

For the first half of its present fiscal year, Cardiovascular Systems brought in $36.9 million in revenue, a 22 percent increase from the first six months of the previous fiscal year. Losses for the six months ended Dec. 31 were $6.3 million, less than half what they were during the same period a year before.

Stryker Corp. (NYSE: SYK ) CEO Stephen MacMillan once again deferred a pay raise in 2010 due to the “challenging business environment,” despite increasing the company’s bottom line by 15 percent last year.

The top boss at the Kalamazoo, Mich.-based orthopedic device maker earned $1.2 million in base salary for 2010, the same amount he took home in both 2008 and 2009, according to regulatory filings.

But unlike the previous year, MacMillan took home a significant performance bonus of nearly $1.4 million, just shy of the maximum $1.8 million he could have pulled down. MacMillan received just $545,000 in performance bonuses in 2009, as Stryker saw profits slip by nearly 4 percent for the year.

Stryker’s performance bonuses are based on meeting sales, EPS, cash from operations and quality/compliance standards. In 2009, none of the officers at Stryker Corp. reached even 80 percent of their target bonuses.

MacMillan also fetched about $2 million in stock option awards and about $225,000 in other compensation, for a total of $4.7 million. Some of those perks included country club fees, an executive physical and personal use of the corporate jet.

Overall, Stryker closed out last year on a strong note, reporting profits of $1.27 billion, or $3.19 per diluted share, on $7.32 billion in sales. That’s a 15.5 percent top-line increase from earnings of $1.1 billion, or $2.79 per diluted share, on $6.7 billion in sales during 2009.

The purchase expands Perrigo’s presence in the generic drug business. Paddock offers 80 products in its portfolio and has several more drugs awaiting U.S. Food and Drug Administration approval.

The deal should close in Perrigo’s fiscal fourth quarter pending a review by federal regulators.

Analysts saw the acquisition as a sharp move by Perrigo and the company’s stock responded in kind, rising to an all-time high. Perrigo purchased Paddock for roughly twice its revenue — the final price is $445 million after certain tax benefits — even though Paddock is in a fast-growing, high-margin niche and had recent  revenue growth of more than 20 percent, according to Morningstar.

The exit is also an impressive one for Paddock, a pharmaceutical company in a medical device town. It was founded in 1977 as a regional company selling specialty pharmaceuticals. Among the company’s key moments was a 1996 federal generic drug approval for Nystop, Nystatin Topical Powder  which treats fungal infections. That single product has generated $175 million in sales for the company, according to Paddock’s Web site.

The defendants — Stryker Corp.’s (NYSE:SYK) Hopkinton, Mass.-based biotech arm, former president Philip, national sales director William Heppner and regional sales managers David Ard and Jeff Whitaker — are accused by the U.S. Justice Dept. of scheming to promote the off-label use of a pair of bone-growth products and lying to the Food & Drug Administration. Prosecutors lambasted Philips and three other executives in legal filings late last year in their opposition to the defendants’ attempts to have 12 of the 16 charges dismissed.

Now Philips and the others are returning fire, accusing the government of over-reaching with its indictment and failing to back up most of its charges. Prosecutors added a charge not included in the indictment accusing Stryker and Philip of “seeding the files of Stryker Biotech with a bogus legal opinion,” according to court documents.

Philip argued that the document was privileged communication with outside counsel and thus out of the bounds of the lawsuit.

“The government struggles to explain itself because of its overreach in this case. The potential consequences of this case are enormous,” according to the documents. “The government seeks to criminalize communications with counsel without any showing that those communications were to be disclosed to the government. This has the potential to swallow completely the attorney-client privilege.”

Moreover, Philip argued, the government fails to prove that Philip and Stryker had any duty to disclose the number of patients treated with OP-1 putty before its 2008 annual report, due in April of that year (after the period covered by the lawsuit, October 2007 through February 2008).

“Even though the indictment charges Philip with concealment of a material fact … the government fails to allege in the indictment, or demonstrate in its opposition, any duty on the part of Philip or Stryker Biotech during the relevant time period,” according to the documents.

Under the terms of the humanitarian device exemption the FDA granted for the putty, no more than 4,000 units per year were permitted to hit the market. The FDA never asked for any additional compliance filings, Philip argued, adding that the government’s opposition argument was “confused.”

“Irreconcilable statements in the government’s opposition highlight its own confusion over the actual charge,” according to the documents, which claimed that the prosecutors’ concealment charge was actually an accusation of false statement.

“The government cannot have it both ways. As the government concedes, Count 16 lodges a concealment charge, not a false statement charge,” according to the documents. “The opposition, however, relies not only on the new un-indicted theory the ‘seeding the files of Stryker Biotech with a bogus legal opinion’ was a violation but inexplicably seeks support in case law that supports a false statement charge, not a concealment charge. The government is merely obscuring the issue.”

And because prosecutors didn’t charge Philip or Stryker with faking or concealing the records from the FDA, an aiding and abetting charge should also be dismissed, Philip argued.

“Philip does not contend that a false statement was made. There was no false statement made in the first place,” according to the documents. “Even more to the point, the government has not properly alleged that any crime was committed.”

In a separate joint filing, the defendants argued that another 10 counts in the case be dismissed for lack of venue. The wire fraud charges (over emails allegedly sent as part of the alleged scheme) should be dismissed because the emails “merely bounced off a Massachusetts-based computer server while in transit,” according to court documents the defendants filed last year. Their most recent filing argues that the charges are unconstitutional.

“The government asserts that venue in the District of Massachusetts is constitutionally permissible on these criminal counts because in their trip through cyberspace, the e-mails from which the counts arise instantaneously passed through a electronic server located in a storage room in Hopkinton, Mass.,” according to the filing. “The government’s remarkable argument finds no support in the case law and runs roughshod over both the Constitution’s text and principles.”

That’s because the alleged acts detailed in the charges — the sending and receiving of the emails — were not committed in the Bay State, the defendants argued.

“The Constitution makes clear — not once, but twice — that a criminal prosecution may only be brought in a venue where the alleged offense was ‘committed,’” according to the filing.

The lawsuit began in 2009 with an indictment accusing the defendants of a scheme to promote the combined use of a pair of separate bone-healing products, each granted a narrow, provisional HDE by the FDA. Combining the treatments and devices — the OP-1 Implant, OP-1 Putty and the bone void filler Calstrux — caused adverse effects in patients ranging from minor irritations to infections requiring follow-up surgeries. The indictment also charges that Stryker and Philip lied to the FDA about the number of patients treated each year with OP-1 Putty.

Last year, federal prosecutors declined to produce evidence the defendants claimed could clear them of the charges, later ripping into the defendants’ arguments that 12 of the 16 charges should be dismissed.

In August 2010, Stryker Biotech agreed to pay $1.35 million to settle with Massachusetts attorney general Martha Coakley for alleged false marketing and fraud over the bone growth products. last month the company looked to put such woes in the past, selling the OP-1 line to Olympus Corp. (OTC:OCPNY) for $60 million.

Related articles

• Feds won’t produce evidence that could clear Stryker of charges (medcitynews.com)
• Stryker Biotech spars with prosecutors over criminal charges (medcitynews.com)
• Stryker hopes judge cuts charges in bone-growth product case (medcitynews.com)

ProNAi, based in Kalamazoo, Michigan, uses DNA gene silencing to attack a gene that helps tumor cells survive. In September, the company launched a Phase I study on its treatment PNT2258, which will run through next year. The funding is likely to pay for this trial and others. ProNAi Chief Operating Officer Robert Forgey said in September the company had raised nearly $1 million to pay for the trial.

The company, which started in 2004, has raised about $17 million so far through Apjohn Ventures and Sigvion Capital, among others.

The 2-year-old startup closed on $400,000 and could raise as much as $2 million, according to a regulatory filing. Company executives previously said they want to win U.S. Food and Drug Administration approval for their device next year.

Hygieia’s glucose monitoring system would allow diabetics to adjust the amount of glucose they inject without visiting a doctor. The device provides dose-by-dose insulin recommendations based on their body chemistry as well as a blood sample. The product is called the Diabetes Insulin Guidance System, but is often described as a GPS for diabetes, adjusting someone’s diabetes goals the way a GPS guides drivers on the road.

Meditrina, which is based in Ann Arbor, Michigan, is using patents from AstraZeneca to treat women’s health problems including endometriosis and uterine fibroids, which are abnormal growths or tumors that can cause pain and infertility. The company has completed Phase II trials on its two drugs – MPI-676 and MPI-674 – which treat endometriosis and abnormal uterine bleeding, respectively.

Its drugs stop the creation of aromatase, which typically creates estrogen.

The four-year-old company launched with about $4.4 million in funding provided through the state of Michigan.

Stryker's OP-1 bone putty

Orthopedics company Stryker Corp. (NYSE:SYK) has agreed to sell a product line including the bone growth putty that has caused the company so much legal grief to Olympus Corp. for $60 million.

Kalamazoo, Michigan-based Stryker plans to record a loss on the sale of its OP-1 product line — which includes OP-1 implant, OP-1 putty, Opgenra and Osigraft — as well as a manufacturing plant in Lebanon, New Hampshire, of between $75 million and $80 million. That would erase between 19 cents and 20 cents a share from the company’s fourth-quarter earnings.

The planned sale is “aligned with strategic objectives for both companies,” Stryker said in a written statement. The Michigan company plans to redirect a portion of its OP-1 R&D spending to other projects, “which it believes offer the potential for greater shareholder returns, including its clinical efforts already underway with BMP-7 for potential use in osteoarthritis and research into other non-orthopaedic applications,” it said.

Commercialization of Bone Morphogenetic Protein-7 is not expected for at least five years because of the early stage of the company’s clinical efforts and the expected scope of data to be required by the Food and Drug Administration, the company said.

Stryker Biotech, its former president and three sales reps have been sparing with federal prosecutors about criminal charges pending against them in a case alleging the illegal promotion of bone putties, including OP-1 putty.

In August, it took less than 24 hours — and $1.35 million — for Stryker to settle claims by Massachusetts Attorney General Martha Coakley that its biotech unit illegally promoted the combined use of a pair of its bone growth products and falsified Institutional Review Board documents.

Stryker, which recently agreed to buy Boston Scientific’s neurovascular unit for $1.5 billion, still expects to make between $3.27 and $3.30 per share in 2010, an increase of between 10 percent and 12 percent from 2009. The company’s shares lost 58 cents, or 1 percent, on the New York Stock Exchange Monday, ending at $51.53.

Under the manufacturing and development partnership, ATEK will supply key components and technology for use in Aastrom’s cell manufacturing process, according to the companies. The new collaboration expands upon a previous supply deal the two companies had.

Ann Arbor, Mich.-based Aastrom develops autologous cellular therapies based on a sample of a patient’s bone marrow for the treatment of severe cardiovascular diseases. Doctors deliver the therapy back to the same patient to promote regeneration of damaged tissues, according to the company.

“We expect that this collaboration will be a critical advantage for Aastrom as we move our cardiovascular programs into the final stages of clinical development. We are also very pleased to be joining with [Grand Rapids, Mich.-based ATEK] in this collaboration. We believe that this partnership will result in the creation of high-paying jobs in Michigan,” said Aastrom CEO Tim Mayleben in prepared remarks.

Co-based in Toulouse, France, Cerenis closed a $55.7 million (1 euro = $1.39) C Series round in July. The recent investment by IXO Private Equity, a leading French private equity investor, and IRDI, which IXO advises, as well as “undisclosed international private investors,” brought the round to $69.6 million, the company said.

Since its 2005 start, Cerenis has raised about $163 million from the likes of the Fund for Strategic Investment, Sofinnova Partners, HealthCap, Alta Partners and TVM Capital, EDF Ventures, OrbiMed and Daiwa Corporate Investment.

The company has several cholesterol-related drugs in its pipeline. But its lead candidate, CER-001, mimics high-density lipid (“good”) cholesterol and can rapidly reverse atherosclerotic plaque, which causes heart disease.

Cerenis will use its latest investment to do Phase II clinical trial development of its HDL therapy, which is based on apolipoprotein A-I, the major protein component of HDL cholesterol.

A 2007 study of a similar drug showed “a favorable rapid treatment effect” that surprised Dr. Steven Nissen, cardiology chief at the Cleveland Clinic. “To see a regression of disease that has taken several decades to develop with just four doses is really asking a lot for a drug,” Nissen told TheHeart.org, at the time.

“The authors of this study have certainly opened a door; we now need to see if they can jump through it,” Nissen said, with a caution. “We must be cautious, as the primary end point was not met, but we have had so many failures that anything that shows a glimmer of hope now makes us excited.”

Maybe that’s why Cerenis Chief Operating Officer Bill Brinkerhoff calls a drug that causes the regression of arterial plaque “the holy grail” of cardiovascular disease therapeutics. If all goes well in clinical trials, Cerenis aims to file for regulatory approval for its lead drug within about five years, Brinkerhoff said in July.

Cerenis was founded by former executives of another Ann Arbor drug developer, Esperion Therapeutics. Esperion’s founder, president and chief executive, Roger Newton, is a co-inventor of Lipitor, the Pfizer cholesterol-fighting blockbuster. Newton started Esperion in 1998, sold it to Pfizer for $1.3 billion in 2004, then restarted the company in 2008 after Pfizer divested it.