Seattle Times ... Stem-Cell Research Still An Embryonic Business

[Murray Charters <mcharters@xxxxxxxxxxxxxx>]

Seattle Times ... Stem-Cell Research Still An Embryonic Business
By Luke Timmerman
Seattle Times business reporter

Sunday, February 22, 2004 - Page updated at 12:26 A.M

Whoever learns to control embryonic stem cells that can morph into healthy 
human cells could be standing on a gold
mine: Four million Americans have damaged brain cells from Alzheimer's, and a 
million people each year suffer tissue
damage from heart attacks.

No one doubts that those people ? and millions more who suffer from 
Parkinson's, diabetes or stroke ? would pay big
money to restore their quality of life. But that powerful profit motive hasn't 
pushed stem-cell research quickly toward
to development of new treatments.

Despite the progress ? earlier this month a team of South Korean researchers 
showed that they could clone human embryos
and harvest their stem cells ? building a business in the field is tough. 
Investors in the pharmaceutical and
biotechnology industries aren't committing billions of dollars, largely because 
society hasn't clearly decided whether
the research is moral.

With the stem-cell research in its infancy and massive government funding 
constrained by a policy enacted in August
2001, industry experts say the field is too risky, the business model too 
vague. Researchers don't know how to control
embryonic stem cells, for example, so they will become heart cells instead of 
cancer cells, and they don't know how do
it cheaply, conveniently or consistently enough to make it a viable business.

Some startups have failed, unable to raise cash. To the industry, the 
efficiency isn't there. The South Koreans' work
is a breakthrough, but the group got only one cloned embryo to produce stem 
cells, out of 240 attempts.

Chuck Murry, a human-embryonic-stem-cell researcher at the University of 
Washington who has used the cells to grow
human heart tissue in rats, believes it could take 20 years before the first 
stem-cell-based treatment could arrive ?
five to 10 years to get ready for tests in humans and then several years in 
human testing.

Murry's next step ? a tricky one, he said ? is to show that human heart tissue 
from stem cells can repair the heart's
lost functions in animals. He's filing patents on the work but hasn't been 
bombarded with calls from investors, he
said.

"The typical venture capitalist has a horizon of getting a return on investment 
in about three years, with some
exceptions," Murry said. "This kind of stuff, the benefits of it, are much 
further off."

There are some exceptions ? companies that say the world of stem cells is 
closer to human testing than many believe.

Geron, a tiny 14-year-old biotech company in Menlo Park, Calif., is the world 
leader in embryonic stem-cell research.
The company believes it will be cleared to start the first stem-cell therapy in 
human tests next year, possibly for
spinal-cord injury.

David Greenwood, Geron's chief financial officer, said the company believes it 
can build its business by adding a
centralized factory to mass-produce standardized embryonic human cells. If a 
patient's immune system is suppressed, he
said, the standardized cells could be transplanted into random patients without 
being rejected by their immune systems.


The company decided to go that route, Greenwood said, because it would cost too 
much to take a personalized approach.
In that technique, a patient's own skin cells could be scraped off, the nucleus 
of DNA taken out and cloned in a lab
dish to make a "therapeutic clone" that could produce stem cells. Those cells 
could regenerate, for example, spinal-
cord cells that are a patient's identical genetic match, cells that, in theory, 
wouldn't be rejected by the immune
system. But the logistics don't yet make sense, Greenwood said.

"The problem is, you have to have a therapeutic you can deliver at a reasonable 
cost so we can charge a reasonable
cost," Greenwood said. "If you can say to a patient, 'We can help you. Do you 
have $200,000?', that's not going to be
helpful for most people. We believe we have to operate within the current 
parameters of health insurance."

Investors have not shown a willingness to jump at the idea, either. Geron stock 
has fallen from a high of $75 to around
$10, and the company has laid off many to save money. The tide will turn, 
Greenwood said, and pharmaceutical investment
will flood in once Geron gets approval from the Food and Drug Administration to 
start human tests.

The debate over ethics is one of the risks scaring away investment. Each year, 
Congress considers an outright ban on
all human cloning, for reproductive or therapeutic research. The FDA has said 
it will consider allowing stem-cell
therapies to be tested on a case-by-case basis, but it hasn't given the green 
light for a trial.

The National Institutes of Health provides grants for work on about a dozen 
kinds of embryonic cells, but supplies are
not abundant, and scientists say they need more to understand how cells from 
multiple embryos ? not just the few
approved by the federal government ? react in experiments to prove their 
theories.

The obstacles aren't entirely about money or regulation. Science can be 
difficult.

Tony Blau, a stem-cell researcher at the UW, said it is "extremely laborious" 
to keep the embryonic cells growing, well-
nourished and stable in the lab so they don't die or turn into a cell type with 
less potential. Researchers need to
know how to channel the stem cells to create a specific kind of cell, how to 
test whether they're pure, and how to
develop drugs that could serve as a sort of antidote in case infused stem cells 
started creating something dangerous,
such as cancer.

Big companies, Blau said, want to know that their drugs will be almost 
completely stable, standard, pure and
consistent, because they can behave differently if they aren't. Stem cells 
never will achieve that kind of
standardization, Blau said, because living cells are more complex than 
chemically synthesized drugs. That fact
discourages pharmaceutical companies.

Small biotech companies have more scientific interest, Blau said, but in many 
cases, "they don't have the money."

Doug Williams, chief scientific officer of Seattle Genetics, said the long-term 
potential of the stem-cell business is
intriguing but is not on the radar screens of most companies. Companies like 
his are judged by investors on the odds
that their experimental products will reach the market ? and provide a return 
on investment ? within five years.

Before investing serious money, Williams said, companies can't just be wowed by 
the science but have to think early on
about how much it would cost to make the product and how convenient it would be 
to give to patients. Re-infusing cells
is much more complicated than a pill or an injection.

Most shudder at the idea of cloning to reproduce people, but it is conceivable 
that a few people wealthy enough to
afford it could want to be cloned or could want to replace a lost child or 
loved one with a genetically identical twin.
The question is whether market demand could push it ahead despite the 
objections of scientists and physicians who
consider it unethical.

"That's not where the market is ? the market is in curing diseases with huge 
populations," said Robert Nelsen, a
managing director with Arch Venture Partners in Seattle. His firm hasn't 
invested in the work and is nervous about
doing so until the debates are settled and more-compelling scientific evidence 
emerges.

Bob Overell, a venture capitalist with Frazier Healthcare Ventures in Seattle, 
said investors are intrigued by the
potential of stem-cell treatments but are reluctant to invest.

"There's a point at which we have to decide as a country if this is something 
we want to happen," Overell said. "If it
is, we'll have to look at how to regulate it appropriately and put a ban on 
certain kinds of work. Otherwise, it's not
worth the risk."

Luke Timmerman: 206-515-5644 or ltimmerman@xxxxxxxxxxxxxxxx

SOURCE: The Seattle Times, WA


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