The Business of Stem Cells

Human stem cells have become one of the hottest areas in biotech as several companies have jumped in to try to exploit them commercially

When biologist James Thomson announced 15 months ago that he had grown human embryonic stem cells in a petri dish, scientists were excited about their potential uses in medicine. These cells, which are capable of developing into almost any other type of cell in the body, may one day provide an unlimited source of replacement tissues for treating human diseases. Some elected officials were less enthused, however; they were more concerned about the cells' source--human embryos. For now, at least, U.S. government rules that protect the embryo have put the cells off limits to most publicly funded researchers. But they aren't off limits for private companies. As a result, commercial enterprises now have the field almost exclusively to themselves.

One company, Geron Corp. of Menlo Park, California, has secured a commanding position. Geron not only bankrolled Thomson's work--gaining first rights to exploit the cells commercially--but it also funded the isolation of a second type of very early or "primordial" cell from human fetal tissue by John Gearhart of The Johns Hopkins University. Now, the company is gearing up an intensive research program aimed at turning both of these discoveries into therapeutic products. "We certainly have invested heavily" in the field, says Geron CEO and president Thomas Okarma, noting that exclusivity is the reward for "being smart and lucky."

While Geron has nabbed the early lead in exploiting embryonic and primordial fetal stem cells, almost a dozen other biotech firms are elbowing their way into a crowded field to develop therapies using so-called "adult" stem cells. Once thought to be less versatile than primordial stem cells because they have already made a commitment to become particular cell types, these cells are now turning out to have greater than expected capabilities (see previous story). What's more, they pose fewer ethical problems because they can be obtained from sources other than embryos or aborted fetuses. And the companies using them argue that it may require less work to transform them into specialized cells for transplantation.

The whole field has a gold-rush aura, with biotech companies betting heavily on their own technologies and stock prices swinging on the latest announcements. Some companies are already moving into clinical trials for products that, they are quick to point out, might serve a vast pool of patients: the estimated 2 million people with severe osteoarthritis or Parkinson's disease. "The great enthusiasm for stem cells," says Ronald McKay of the National Institutes of Health (NIH), "is based on the idea that they can be manipulated and have highly reproducible properties. I think it's a very important step in biomedical research ... to be able to use them directly in therapy."

Embryonic potential
Much of this heady anticipation was sparked by Thomson's and Gearhart's success in growing primordial stem cells. But academic researchers have been on the outside looking in, wondering when--and under what conditions--they may get to work with the new cell lines. For Gearhart's line, the answer is entirely up to Geron and its subsidiary, Roslin Bio-Med of Midlothian, Scotland: Geron controls all uses of the cell line through an exclusive license from Hopkins.

The company has less control over Thomson's cells, however. His institution, the University of Wisconsin, Madison (UW), insisted on retaining the right to distribute the cells to academics. On 1 February, UW established a new nonprofit subsidiary--WiCell Research Institute Inc., directed by Thomson--that will provide stem cells to approved applicants. The university has already received more than 100 requests, including 12 from private companies, according to Carl Gulbrandsen, director of the Wisconsin Alumni Research Foundation (WARF), which handles UW's patents.

Gulbrandsen says that anyone who wishes to use Thomson's cells will have to promise not to share them with others, not to "mingle" them with human embryonic cells to make a human clone, and not to attempt to grow them into embryos. WiCell will review each applicant's research agenda annually, Gulbrandsen says, but WARF insists that "our intention is to make these cells widely available and at a low cost for academic researchers." Distribution hasn't begun yet, and federally funded researchers will have to wait until government rules for working with embryonic cells are finalized (Science, 10 December 1999, p. 2050).

Okarma also says his company won't try to go it alone in developing embryonic stem cells. Geron intends to recruit outsiders to work with its scientific staff to "drive" the stem cells into specific applications. In December, Geron held a meeting with 45 researchers at the Asilomar conference center in Monterey, California, to begin building a collaborative network. The conference brought together experts in cell regulation, gene insertion, and nuclear transfer (cloning), Okarma says. But the agenda and guest list are confidential.

Geron is also still very much involved in basic research. In the past year, Okarma says, company scientists have produced cardiac muscle cells and three types of nerve cells from the stem cells. They have also had "some success" in introducing new genes into stem cells to control their differentiation into specialized cells. Indeed, Okarma predicts, the first commercial payoff will come from identifying genes that either initiate, or help maintain, the development of specific cell types. The information will be useful, he hopes, in designing new therapies and screening candidate drugs.

New cells, familiar sources
Primordial cells like Thomson's and Gearhart's have captured most of the attention, but adult stem cells have so far attracted far more investment. Many companies have focused on the hematopoietic stem cells of bone marrow, which give rise to all types of blood cells. Typical of this group are Nexell Therapeutics Inc. of Irvine, California, and Aastrom Biosciences of Ann Arbor, Michigan, both of which are developing systems to isolate such cells and grow them in large quantities, chiefly to aid in restoring cancer patients' immune systems after intense radiation or chemotherapy.

Osiris Therapeutics Inc. of Baltimore, Maryland, has identified a different type of cell in the supportive tissue that surrounds bone marrow, or stroma, called mesenchymal stem cells. It has patented systems for isolating and producing these cells and launched two clinical trials. Initially, Osiris is using the cells to help restore bone marrow in cancer patients, as the other companies are doing.

Meanwhile, because mesenchymal cells can differentiate into cartilage, muscle cells, and possibly even some neuronlike cells, according to Osiris, the company is investigating whether they can be used to replace cartilage in arthritis patients, fix damaged tendons, and repair brain tissue. To help in these endeavors, Osiris's chief scientific officer, Daniel Marshak, says, "we are making the cells available" to all nonprofit labs through a private distributor, "so that everybody in the research community can move the field forward."

Neural stem cells came on the scene later than the hematopoietic and mesenchymal cells, but in the past year they have become hot items because of their potential for treating patients whose brains have been damaged by disease or trauma. Indeed, investors are so keen on this idea that each new neural stem cell discovery seems to attract immediate investment. And the field is highly competitive.

Layton BioScience, a small private company in Atherton, California, has already begun clinical trials. It developed a line of cells derived from a germ line tumor that behave like neural stem cells, according to CEO Gary Snable. In 1998, University of Pittsburgh neurosurgeon Douglas Kondziolka transplanted the cells into the brains of 12 stroke patients and later reported that brain scans revealed increased glucose uptake in the affected area in several patients, an indication that the cells were alive and metabolically active.

In late 1999, Layton licensed a different cell line derived from human fetal tissue and patented by neuroscientist Evan Snyder of Children's Hospital and Harvard Medical School in Boston. Snyder's team has shown that the cells will engraft in the brains of experimental animals and is now testing them in models that mimic human diseases and spinal cord injury in preparation for a potential clinical trial next year. Snyder worries, however, that the field is becoming so hot that its credibility could be damaged by hype, and he says he aims to help deflate exaggerated claims.

Another small private company, NeuralSTEM Biopharmaceuticals of Bethesda, Maryland, plans to exploit human neural stem cells derived from embryos. Karl Johe, a former researcher in McKay's lab at NIH and now at NeuralSTEM, discovered a method of isolating and growing these cells in animals. NIH released the patent on the cells to NeuralSTEM, which was founded by McKay, attorney Richard Garr, and another investor. Garr, the CEO, says the company's first goals are to produce cells that can be transplanted into Parkinson's disease patients and develop vectors that can deliver therapeutic proteins to the brain.

A similar project is taking shape on the West Coast, under the direction of Nobuko Uchida, who previously worked in immunologist Irving Weissman's lab at Stanford University. Uchida is now chief of neurology research at StemCells Inc., which Weissman helped found. StemCells is a subsidiary of a public company known as CytoTherapeutics Inc., in Sunnyvale, California, which announced last year that it was shedding all other investments to focus entirely on stem cells. It aims to commercialize Uchida's pending patent on a method that uses surface markers to isolate adult neural stem cells from brain tissue. Once the cells are in hand, the goal is to use them to treat patients with neurodegenerative diseases.

Another company that aims to attack the same medical problems is Neuronyx Inc., which just set up shop this month in Malvern, Pennsylvania, with backing from Hubert Schoemaker, the former CEO of Centocor. Johnson & Johnson recently bought Centocor for $4.9 billion, and Schoemaker is using some of the proceeds to create his new company, which hopes to exploit embryonic stem cells for an agenda to be developed by research chief Tony Ho, a neuroscientist recently hired from Johns Hopkins.

Although most of this new business activity is taking place in the United States, several companies have sprung up elsewhere. ReNeuron, a small British company with a staff of about 17, is trying to commercialize stem cell work by three faculty members at the Institute of Psychiatry in London. With backing from the large biotech fund called Merlin Ventures, ReNeuron has established a line of neuroepithelial stem cells derived from fetal tissue. According to CEO Martin Edwards, the company hopes to begin transplanting these cells into stroke patients in a clinical trial "around the end of 2000." Stem Cell Sciences, based in Melbourne, Australia, which has ties to embryologist Austin Smith of the University of Edinburgh in Scotland, is raising money for unspecified therapies using stem cells.

It is of course far too early to judge the likelihood of success for any of these investments. But one thing is certain: We will be hearing a lot more about the promise of stem cells in the next few years.

Summary of this Article Similar articles found in: SCIENCE Online ISI Web of Science PubMed PubMed Citation Search Medline for articles by: Marshall, E. Search for citing articles in: ISI Web of Science (5) Alert me when: new articles cite this article Download to Citation Manager     Collections under which this article appears: Science and Business Cell Biology

Volume 287, Number 5457, Issue of 25 Feb 2000, pp. 1419-1421.
Copyright © 2000 by The American Association for the Advancement of Science. All rights reserved.