By Maureen McDonough
Dec 2005 / Jan 2006 | If the twentieth century was the century of the gene, then the twenty-first century is the century of the cell. In the race to turn cutting-edge science into profits, stem cells appear to be the horse everyone is betting on — or at least some European and Asian governments, a few U.S. states, and a few old Wall Street favorites.
No one wants to be left behind, or worse, miss out on the profits of tomorrow’s science. This is why the European Union provided EuroStemCell, the European Consortium for Stem Cell Research, with 11.9 million euros in funding for four years and California earmarked $300 million per year for the next decade with Proposition 71. In the United States alone, nearly $4 billion in private and state monies have been committed to stem cell research over the next decade, and another three-quarters of a billion dollars are under active consideration.
Though billions of dollars are being directed towards stem cells, there is enormous variety in both the funding mechanisms and the types of stem cell research. While some companies are focusing on embryonic stem (ES) cells, others are pursuing the less controversial adult stem cells. And while a few companies are working to create a few stem cell lines that large populations can use, others are developing patient-specific products. Finally, some U.K. companies have received government seed grants for stem cell research, while most U.S. businesses rely on venture capital.
In 1992, Geron established its headquarters and main facilities in Menlo Park, Calif., before the state became the center of the stem cell gold rush. When the company was first founded, it focused on isolating the human gene coding for telomerase — a molecule thought to prolong cellular life by preventing cell death (apoptosis). Hyped for its potential use as an anti-aging agent and cancer target, telomerase had Wall Street tripping over itself to invest in the company. Though Geron continues to actively pursue therapeutic products that target telomerase, today its human ES cell programs play a more prominent role.
Geron is looking to mimic the familiar blockbuster model. “We are going to sell these cells in a pill,” says Thomas Okarma, CEO of Geron. Local pharmacies will have the cells on ice, ready to fill patients’ stem cell prescriptions. The company’s first stem cell trials, which could begin as early as next year, will be for patients with spinal cord injuries. However, there are only 11,000 cases of spinal cord injury per year, and Geron is hoping to move quickly onto heart disease and diabetes where there is a greater patient population, says Okarma.
Of the types of stem cells to choose from, Geron has chosen to focus its energy on the embryonic variety. “Embryonic stem cells are the only available platform that’s fully scalable,” says Okarma. And scalability is a key component to creating a blockbuster. However, these cells have created more ethical controversy than therapies to date. Okarma doesn’t think the political climate or the public perception of ES cells will affect the development of therapies. “What will change the public debate is when ES cells are in clinical trials and there is data,” he says. “Until there is data, we are all just talking.”
In contrast to Okarma’s “ES cells or bust” attitude, some companies have chosen less controversial routes, such as stem cells derived from umbilical cord blood. Companies such as Viacord (see “Cord Blood Commerce”) are creating some of the most profitable stem cell businesses. However, unlike the blockbuster cell therapy Geron is after, cord stem cells could only be used to treat relatives of the donor.
One company working to create even more patient-specific cell therapies is Advanced Cell Technology (ACT). With 300 patents and patent applications, ACT has focused almost exclusively on the problem of immunological compatibility. Even if ES cells can be used to treat a disease, there is still the problem of rejection, as ViaCell (see “Cord Blood Commerce”) can attest.
One application of nuclear transfer (or therapeutic cloning) involves taking the nucleus from a patient’s cell and putting it inside an egg so that ES cells can be generated from the subsequent blastomere. Because the genome in these cells matches the patient’s, the chance of rejection is theoretically abolished. This technology is ACT’s intellectual property and scientific strength, says Bill Caldwell, CEO of ACT. Yet nuclear transfer is also one of the most ethically challenging technologies because it results not only in the destruction of the embryo (when the ES cells are harvested) but also in the derivation of cloned embryos.
“Nuclear transfer is the most advanced technology, but we are actively looking at others,” says Caldwell. “However, we cannot derail [work on nuclear transfer]. All the other potential alternatives are just that — potential.” But ACT is actively pursuing that potential.
In October, ACT published results in Nature announcing that the company had derived ES cells in mice by removing a single cell from an embryo, a technique that does not destroy the embryo. “The most basic objection to ES cell research is the fact that embryos are deprived of any further potential to develop into a complete human being,” said Robert Lanza, medical director of ACT and senior author of the study. “We have shown in a mouse model that you can generate ES cells using a method that does not interfere with the developmental potential of the embryo.”
ACT is focused on being the first to commercialize the most profitable applications of regenerative medicine. “Clearly, on a corporate level we create competition,” Caldwell says. In what appears to be an obligatory step for ambitious stem cell companies, ACT recently expanded its senior scientific team in California.
U.S. Versus the Rest of the World
While the cautious political approach to federal stem cell funding has handicapped research in the United States, competition around the globe, particularly in Korea and the United Kingdom, is heating up and threatening to leave the United States lagging behind, Caldwell says. “The U.S. has a distinct advantage over the world. We have the economic infrastructure, we have innovation plus creativity, and finally the key to success, and we have the entrepreneurial spirit. The tragedy is that we have potentially left this field open to the rest of the world to capitalize on,” Caldwell says.
One company trying to use America’s slow start to its advantage is Stem Cell Sciences (SCS) Ltd. Company president and CEO Peter Mountford offers two reasons why this company will be successful: a simple business model and a global stance.
In 1993, Mountford and Austin Smith, chair of the Institute for Stem Cell Biology in Cambridge, England, filed a patent for a technology that allows the isolation of essential cell types that differentiated from stem cells. “Some people are calling [the patented technology] the PCR of stem cells,” Mountford says. “It’s not quite that, but it’s close.”
A year after filing the patent, Mountford founded SCS as a virtual company in Australia. Today SCS has research facilities in Melbourne, Australia; Edinburgh, Scotland; and Kobe, Japan. Each center has close ties with its local academic institutions including Monash University, the Australian Stem Cell Center, and the RIKEN Center for Developmental Biology. At the University of Edinburgh, SCS is the commercialization partner of the Institute of Stem Cell Research and has an intellectual property licensing agreement with the university.
Part of SCS’s strategy is to align itself with some of the best stem cell research centers in the world, but the company has yet to set up shop in the United States. “We want to build strength outside the U.S. before we go there,” Mountford says. “Right now, the company is self-building in getting the best of the best.” But like most everyone in the business, SCS is looking toward California, both as a potential funding source and as competition.
Mountford counts Geron and ACT among SCS’s stiffest competition. “Geron is known for its financial assets; we are known for the science,” he says. “But the state of California will be a serious threat to us all.”
While U.S. researchers have had to look beyond the federal government for funding for ES cell research, scientists abroad are almost entirely reliant on public funding. In an attempt to increase its chances of making money from stem cell technology, Scotland has created an organization with 150 million pounds to spend over the next decade.
ITI Life Sciences closely monitors the global life science landscape and tries to identify the best places for investment in precompetitive work. The organization then creates and funds research programs designed with commercial applications in mind. “We are an economic development tool,” says Karen Sullivan, director of intellectual asset management and commercialization. “But we aren’t very VC-like because we take a very active role in the projects. We are spending taxpayers’ money, so we need to be responsible. All the time we try to capture as much benefit for Scotland.”
Though Scotland’s investment may seem small in comparison to the numbers being thrown around by some U.S. states, the country is hoping to get the most for its money through carefully managing projects likely to have intellectual assets. The strategy contrasts starkly with the chaotic nature and mixed motives behind U.S. state and federal stem cell funding, but then Scotland is also lacking the VC money that has played such a large role in the United States.
Like most new life science industries, the stem cell business landscape looks like a maze. There are many paths, turns, and dead-ends, but it is quite possible that there will be more than one route to the finish line.
Maureen McDonough is a communications officer at Harvard Stem Cell Institute. E-mail: email@example.com.