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What’s
Next for Stem Cell Companies?
By Charles Jennings
July
24, 2006
The
prospect of using human embryonic stem cells for
transplantation has created much public enthusiasm,
yet very few companies are pursuing this area. More
attractive, in the near term, is the use of ES cells
as tools for drug discovery. This article examines the
prospects for these fields in light of recent
technical and political developments
The
controversy over human embryonic stem (hES) cells came
to a head recently when President Bush used his
first-ever veto to block a bill that would have
expanded federal funding for hES research. Emotions
run high on both sides of the debate, but in a reverse
of the proverbial wisdom, the biopharma industry seems
to live by the motto, “Don’t put your mouth where
you wouldn’t put your money.” The lack of a strong
industry voice in the debate reflects a reluctance to
invest, based on deep uncertainties about the
commercial promise of this emerging technology -- at
least as a therapeutic product. More realistic, at least in the short term, is
the prospect of using hES cells as a platform for drug
discovery, and this is starting to attract the
attention of industry. (See
table of Selected Companies below)
In
principle, ES cells have two major advantages over
other types of stem cells: They have great capacity
for proliferation, and they can give rise to any cell
type of the body, including -- potentially -- those
that are defective or die in diseases such as
diabetes, Parkinson’s disease, heart failure, and
many other life-threatening conditions.
But
many obstacles must be overcome before hES cells can
be used for transplantation therapy – the ‘Holy
Grail’ for the field-and these appear daunting to
many investors. Technical risks are high, the likely
lead times are long, and the business model remains
unclear, particularly given that interest among big
pharma companies is almost nonexistent. According to
Harry Glorikian, managing partner at the Boston-based
advisory firm TSG Partners, the field of cell based
therapy is still “pretty nascent,” and even among
the companies active in this space, only a handful are
betting on embryonic stem cells.
First
to the clinic will probably be Geron Corp., which has
announced plans to conduct trials for hES cells in
spinal cord injury. Preclinical work by Hans Kierstead,
a neuroscientist at University of California, Irvine,
suggests that hES cells can be turned into
oligodendrocytes, the myelinating cells of the CNS,
and that transplanted cells may be able to repair the
demyelination that occurs after spinal cord injury.
Not everyone, however, is convinced by Kierstead’s
evidence. Lorenz Studer, a stem cell researcher at Sloan-Kettering Institute in New York, is among the skeptics, and he cautions against proceeding too
quickly to the clinic. The mechanism underlying the
improvement seen in animals is still unclear, he says,
“and to claim it is due to remyelination is not
proven, at least to my or many other people’s
satisfaction.” Geron is continuing with preclinical
research and hopes to begin clinical trials next year.
At
this point, however, few other companies seem ready to
follow Geron’s lead. Glorikian notes that most of
the cell-based therapies in the pipeline are based on
autologous (self) rather than allogeneic (non-self)
transplants, partly because these create fewer safety
concerns for regulatory agencies. It may eventually be possible to create autologous hES cells via nuclear transfer, but now that the Korean claim to have achieved this has been discredited, the prospect of 'therapeutic cloning', as it is often described, seems to lie many years in the future.
A
Boon to Drug Development?
Although
the public debate has focused mainly on the prospect
of transplantation therapy, other less glamorous
applications of hES cells are more immediately
attractive to industry. In particular, the cells may
be useful as tools for drug discovery, allowing
high-throughput screens on genetically human cells of
different types -- a “virtual human,” as it were.
This approach could be used for both target validation
and toxicity screens. Moreover, by using multiple hES
lines it should be possible to capture at least some
of the genetic diversity of the human population,
rather than relying solely on inbred strains of
animals for preclinical screening.
The
potential of this approach is considerable, according
to Marsha Roach, a researcher at Pfizer in Groton,
Conn. Her group uses mouse ES cells not only to make
genetically altered mice but also as screening tools
in their own right. One advantage, she says, is speed.
“In vitro differentiation allows us to validate a target in six
months rather than waiting a year ore more [for mice].
We may still want to do the mouse studies, but by the
time the mice are ready you’ve already done months
of prior work.”
Despite
this promise, Pfizer is not yet using human ES cells
for screening, and the company has a global ban on hES
cell research, according to Joseph Hammang, Pfizer’s
director of science policy and pubic affairs. Hammang
emphasizes that the technology is not yet sufficiently
mature to be seen as a critical need for Pfizer, but
outside observers agree that politics also plays a
role. Big companies such as Pfizer must cater to many
constituencies, and the pharma industry has been
largely content to watch the stem cell debate from the
sidelines, leaving small biotech companies and
academic labs to drive the research agenda.
That
may be changing, though, for both political and
technical reasons. The recent vote in the U.S. senate
has underscored the breadth of bipartisan support for
hES research, and the political controversy will
presumably die down if the next president lifts the
funding restrictions in 2009.
Meanwhile, methods for growing hES cells continue to improve, according to Sloan-Kettering's Studer. Although human ES
cells are trickier to handle than their mouse
counterparts, recent advances mean that it is now
feasible to use human cells for high-throughput
screens. Based on work in his own lab and elsewhere,
Studer believes an automated screen of 200,000
compounds should now be feasible, and he expects
several papers to appear in the near future describing
these advances.
Among
the companies hoping to exploit this potential is
Invitrogen, according to Mahendra Rao, the company’s
VP for research in stem cells and regenerative
medicine. Rather than pushing to be first with
transplantation therapy, their internal research is
focused mainly on solving the technical challenges
associated with growth and differentiation of hES
cells. One important hurdle is differentiation, says
Rao, and to conduct a high-throughput screen, the
cells must be grown in large numbers and then
differentiated reproducibly into the desired mature
cell type. This process already works well for
dopamine neurons and cardiomyocytes, he says, and
pancreatic islet cells are not far behind. Rao sees
this approach as broadly applicable: “We have solved
most of the major process issues, and we are confident
that we could do this for any other cell type should
there be sufficient demand.”
Rather
than going it alone, Invitrogen’s strategy is to
collaborate broadly, to be “the bridesmaid at the
wedding,” as Rao puts it. As one example, he cites a
recently announced collaboration with Cellartis, a
Swedish stem cell company, to develop hES cell lines
that could be sold in Europe as a platform for
teratogenic screening of drugs for pregnant women.
Several
smaller companies are also pursuing hES-based
screening methods. Among these is Stem Cell Sciences,
whose R&D program focuses especially on converting
hES cells to neural cells. Chief scientific officer
Tim Allsopp comments that the timeline for bringing
products to market will depend in part on the
attitudes of big pharma companies and their investors,
who in Allsopp’s view tend to follow the pack. But
he says, “If someone sticks their head above the
parapet and does a screen of 200,000 compounds, then
things could rapidly change.”
Another
new player in the field is Cellular Dynamics
International (CDI) in Madison Wisc., whose cofounders
include James Thomson of University of Wisconsin,
whose landmark 1998 paper on the isolation of human ES
cells launched the field. Another CDI cofounder is
Thomson’s colleague Craig January, a cardiology
researcher who has developed in
vitro methods to screen out drugs that could cause
Long QT syndrome.
According to Nicholas Seay, a patent lawyer who
serves as CDI's Chief Operating Officer, the company
plans to derive cardiomyocytes from hES cells and use
them to screen for other cardiac side effects, as an
alternative to using pig or dog hearts. Seay hopes the
company will have a first-generation product as early
as this fall.
Patents
and Politics
The
University of Wisconsin is also at the center of a
controversy over intellectual property that has major
implications for the field. Based on Thomson’s work,
the Wisconsin Alumni Research Foundation (WARF) owns
two important U.S. patents on human ES cells. WARF
offers licenses to companies wanting to work on hES
cells, but it has drawn intense criticism over terms
that many see as exorbitant, particularly for small
companies. “It’s one way to slow down the
field,” says Rao. Invitrogen was unable to reach
agreement on terms, he says, and so its hES research
is currently conducted outside the United States,
where the WARF does not have patent rights.
The
WARF patents are seen a problem not only for companies
but also for state stem cell programs such as the
California Institute for Regenerative Medicine, which
hopes to spend $3 billion of state funds on stem cell
research over the next decade. Several other states
have also established stem cell programs, often in the
hope of encouraging the emergence of a local stem cell
industry. CDI may have advantage in this respect; the
Madison-based company is backed by $2 million in
grants and loans from Wisconsin state funds, as part
of that state’s plan to cash in on Thomson’s
research. Seay, who prosecuted the Thomson patents on
behalf of WARF, confirmed that CDI has licensed the
patents from WARF, which also owns equity in the
company, but he declined to comment on whether or how
much was paid for a license.
The
WARF patents are already being challenged in the
United States and may never issue in Europe, where the
IP landscape is complicated by concerns over patenting
human life. How these various disputes will play out
is anyone’s guess, and the uncertainty is an
additional disincentive to many investors, who must
already contend with technical risk, political
controversy, and lack of public funding.
The
impact of the Bush administration’s funding
restrictions on the private sector is difficult to
assess, given that few companies depend on the federal
government for their funding. Pfizer’s Hammang, for
example, acknowledges that the policy has impeded
academic research but claims that it has no direct
effect on Pfizer. Invitrogen’s Rao sees things
differently. Companies such as Invitrogen do not have
the resources to do all their R&D in-house, he
says, and the industry has always looked to
universities as a source of innovation. “But if
there’s nothing to license, we can’t move forward.
That’s one huge issue. What made biotech strong in
the United States was the link between academia and
government and industry. That’s why this is the best
place in the world to set up a biotech company,
because of that synergy. That connection has been
broken by this policy.”
Charles
Jennings is a private consultant based in Concord,
Mass. He is a former editor with the Nature journals
and a former executive director of Harvard Stem Cell
Institute. He serves as an advisor to the State of
Connecticut
’s stem cell research program. E-mail: jennings.cg@gmail.com.
Selected
Companies Involved in hES Cells and Related Areas
|
Company
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Activities
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Biotech
Companies
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Advanced
Cell Technology
Alameda, Calif.
www.advancedcell.com |
Aims
to develop cell-based therapeutics based on hES
derivatives. Hopes to produce cloned hES cells
by somatic cell nuclear transfer.
|
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Cellartis
Goteborg, Sweden
www.cellartis.com |
Aims
to develop drug-screening methods based on
undifferentiated hES cells or their derivatives
(e.g., cardiomyocytes, hepatocytes).
|
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Cellular
Dynamics International
Madison, Wisc.
www.cellular-dynamics.com |
Aims
to convert hES cells to cardiomyocytes for drug
screening.
|
|
ES
Cell International
Helios, Singapore
www.escellinternational.com |
Supplies
hES cells. Aims to develop cell therapeutics and
drug-screening methods based on hES cell
derivatives (multiple cell types).
|
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Geron
Menlo Park, Calif.
www.geron.com |
Aims
to develop cell-based therapies in multiple
disease areas based on hES cell derivatives.
Clinical trial for spinal cord injury
anticipated in 2007.
|
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Invitrogen
Carlsbad, Calif.
www.invitrogen.com |
Aims
to provide a broad range of support services for
the development of hES-based therapies and drug
discovery platforms.
|
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Novocell
Irvine, Calif.
www.novocell.com |
Aims
to convert hES cells to insulin-producing cells
to treat diabetes.
|
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Stem
Cell Innovations
Houston, Texas
www.stemcellinnovations.com |
Aims
to develop “In
Vitro Human” for drug development based on
differentiation of human embryonic germ (EG)
cells to multiple cell types.
|
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Stem
Cell Sciences
Edinburgh, UK; Melbourne, Australia; Kobe, Japan
www.stemcellsciences.com |
Develops
methods to differentiate hES cells into neural
and other cell types, for drug screening, for in vitro disease models, and for cell-based therapeutics.
|
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VistaGen
Therapeutics
Burlingame, Calif.
www.vistagen-inc.com
|
Aims
to develop drug-screening methods based on hES
cell derivatives.
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Larger
companies
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AstraZeneca
London, UK
www.astrazeneca.com |
Is
collaborating with Cellartis to develop hES-based
toxicology screens.
|
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Becton,
Dickinson and Company
Franklin Lakes, N.J.
www.bd.com |
Has
licensed ES cell patents from WARF.
|
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General
Electric Co.
Fairfield, Conn.
www.ge.com |
GE
Healthcare has collaborative agreement with Stem
Cell Sciences to develop hES-based screening
methods.
|
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Johnson
& Johnson
New Brunswick, N.J.
www.jnj.com |
Has
an equity stake in Novocell.
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Novartis
Basel, Switzerland
www.novartis.com |
Has
established an ethics committee to oversee hES
research.
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Need
to learn more about Stem Cell Applications?
See Cambridge Healthtech Institute’s:
CELLutions
SUMMIT
August 14-17, 2006 | Boston, MA
www.CELLutionsSUMMIT.com
CHI's
CELLutions SUMMIT highlights developing
technologies and techniques to meet the needs of
therapeutic development. Building on last year's
successful Back to the
Science of Stem Cell Research and Tissue
Models for Therapeutic Development
meetings, we have expanded the program to include the
Inaugural Mammalian Cell
Culture, and Partnerships
& Technologies, creating a summit that
shapes the foundation for more rapid advances towards
the clinic.
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