BioWorld Today Correspondent

CHICAGO - Venture capital investment in nanomedicine hit $64 million in the first quarter of this year, compared with a total of $135 million for the whole of 2009. Deal completion is also well up on last year. The first quarter total represents seven transactions, and just 14 were completed in 2009.

"We're already on track to more than double the amount of financing into nanomedicine from venture capital investors," Jeffrey Quillen, head of the life sciences practice at Boston-based law firm Foley Hoag LLP told attendees at a Wednesday morning BIO breakout session on nanomedicine.

Most of the investment is going into early stage efforts, he said, but over the past two years $50 million went to seven firms that have products shipping. "The industry is maturing," he said.

Nanomedicine now accounts for about one-tenth of Polaris Ventures' life sciences portfolio, Amir Nashat, general partner at the Boston-based venture capital fund said, even though that was not part of its explicit intent. The area is "incredibly promising" he said, but the main issue, from the investor perspective, is to avoid being part of the first wave of failures. The dynamic is, he said, analogous to the history of antibody development. "The early bird catches the worm," he said, "but the second mouse gets the cheese."

Firms are still operating with regulatory uncertainty. As yet, no federal regulations specific to nanotechnology have been passed, although the topic is getting substantial attention.

Whereas funding for the National Nanotechnology Initiative - created by the 21st Century Nanotechnology Research & Development Act of 2003 - will remain flat next year, at around $1.8 billion, the FDA's share of the pot will more than double, from $7.3 billion to $15 million.

California has already passed state-level regulation requiring companies to disclose information for review and assessment, Quillen said, and several other states are considering similar moves. Berkeley, Calif., has passed a municipal ordinance requiring companies to disclose their toxicity testing activities, and Cambridge, Mass., also is considering putting local regulations in place.

Companies themselves continue to grapple with the complexities of manufacturing nanoscale therapeutic products. "Targeted nanoparticles have been around for a long time," Omid Farokhzad, of Harvard Medical School, told the audience.

The first were reported back in 1980 he said. Yet just one has entered the clinic since then, an RNAi delivery system, which scientists affiliated with Calando Pharmaceuticals Inc., of Pasadena, Calif., reported on in Nature in March.

Batch consistency and reproducibility has been the most pressing problem, because functionalizing the surface of nanoparticles has been an uncontrolled process, he said. Farokhzad is co-founder of two nanomedicine firms, Bind Biosciences, Inc., of Cambridge, Mass., and Selecta Biosciences, Inc., of Watertown, Mass., each of which is close to entering clinical development.

Bind, which will begin its first clinical trial later this year, has already attained Phase I scale production, Farokhzad said. The batches it produces contain a distribution of nanoparticles, ranging from 80 nanometers (nm) in diameter to 120 nm. "That distribution is reproducible from batch to batch," he said.

Key to its process has been the creation of libraries of self-assembling nanoparticles, based on standard, well-characterized components, such as polyethylene glycol and polylactic acid. "We're not inventing new nanomaterials. We've taken this [material] off the shelf to make nanoparticles with," he said.

The development effort is not confined to start-ups, however. New York based Pfizer Inc., for example, has also kicked off an initiative in this area, in an effort to move away from the silo-based approach to solving drug delivery issues.

"About a year ago, we woke up and said we need a concerted approach, with biologists, chemists and physicists coming together and developing a system that is adaptable to many platforms," Satish Chandran, chief technology officer of Pfizer Biologics, told the audience. The conference runs through Thursday.