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Firms pursue stem cells' promised payoff

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    Firms pursue stem cells' promised payoff

    Firms pursue stem cells' promised payoff

    of the Journal Sentinel staff
    Last Updated: Aug. 4, 2002
    In the year since President Bush made a critical decision about stem cell research funding, the technology continues to inspire dreams of amazing cures and strike-it-rich success. That may come one day, but the work to get there remains in the very early stages.

    Stem Cell Research

    "Living cells will become tomorrow's pills," Thomas B. Okarma, president and chief executive officer of Geron Corp., said recently.

    For the companies working with stem cells, a bonanza worth billions awaits the winners of the race to cure Parkinson's, diabetes, Alzheimer's and heart disease and heal the damage from a stroke or spinal cord injury.

    Geron is among a growing number of biotechnology companies seeking profits from the promise of the technology hailed as a once-in-a-generation discovery. The state has a huge stake in this potential success because a foundation here holds key patents that would ensure that the University of Wisconsin receives its share of any stem cell wealth.

    "Stem cell research is a multiyear, probably a decade-long, approach to trying to cure dreaded diseases," said Aaron Geist, a vice president in equity research at Robert W. Baird & Co. in Milwaukee. "But a lot of progress was made in the last year."

    Much of that progress has consisted of putting the cells in the hands of more researchers, raising the chances that someone will make a breakthrough advancing the quest for a commercial product.

    Before Bush made his announcement on Aug. 9, 2001, the stem cell field faced uncertainty and a lack of funding.

    Stem cells, so-called master cells with the ability to grow into other cell types or tissues, have been derived from leftover donated human embryos from infertility clinics. The process of harvesting the stem cells destroys the embryos, a fact that has made this field so controversial.

    Bush sought a compromise between the abortion opponents who wanted the research stopped and others who wanted full federal financial support for this emerging and highly promising field.

    The president said federal grants could go to research using any of the stem cell lines that existed as of his announcement. No taxpayer dollars would support scientific work that sacrificed additional embryos, but potentially disease-curing benefits could be sought from those that already had been used.

    The decision was of huge importance.

    Federal money crucial
    Although some scientists, such as James Thomson at the University of Wisconsin-Madison, had found alternative funding sources to conduct pioneering stem cell research, the field never would blossom without federal money.

    The federal government is the No. 1 backer in the world of basic research, contributing some $20 billion a year to biomedical science.

    Before the announcement, the stem cell lines controlled by an arm of the Wisconsin Alumni Research Foundation had been distributed to only about 20 researchers. Some of those researchers never conducted experiments because they couldn't find money to pay for them, said Carl Gulbrandsen, managing director of the non-profit foundation that handles patents coming out of the university.

    Since Bush's decision, the foundation has sent stem cells to 90 researchers across the country and around the world. The foundation will begin classes as soon as this fall to train other researchers in how to work with the highly sensitive cells.

    "This has really been a watershed year for us in the stem cell area," Gulbrandsen said.

    The foundation remains a key source of stem cells.

    The National Institutes of Health maintains a registry listing 14 agencies or companies controlling 78 stem cell lines eligible for federally financed research. Federal officials have said that not all of the cell lines listed are ready for shipment to other researchers.

    The Wisconsin foundation's WiCell Research Institute has become increasingly active.

    After investing "several million dollars," the institute has a vastly expanded 5,000-square-foot laboratory facility with 20 stem cell researchers. The institute has another 2,000-square-foot operation that is serving as a distribution and training facility.

    The foundation clearly is committed to advancing the science, but it is not exactly ignoring its own interests.

    By selling licensing rights to patented technology it controls, the foundation collects millions each year in royalties. Much of this money is returned to the University of Wisconsin for additional research activities.

    Although it is hard to come up with a number while the research remains at such an early stage, stem cells could be big, possibly ranking among the most lucrative discoveries ever to come from UW scientists.

    "Ultimately, it is going to pay great dividends to the university," Gulbrandsen said.

    Wisconsin's prominent role in the stem cell field could bring a boost to the state's technology sector long before any royalties arrive.

    ES Cell International executives have visited Madison to talk about creating closer ties and possibly establishing a local facility that could tap the university's significant stem cell expertise, Gulbrandsen said.

    "They have voiced an interest in strong collaboration here at Madison," he said.

    Whether it is ES Cell or another firm, the prospect of a stem cell company opening a Madison facility is increasingly likely, Gulbrandsen said.

    Many of the companies in the stem cell field are pursuing a similar strategy as the foundation: share cells with other researchers as if planting seeds that might not be harvested for years to come.

    "The more researchers who can get a diversity of lines, the greater the knowledge pool," Robert Klupacs, chief executive officer of Australia-based ES Cell International, said last week.

    The researchers in Klupacs' own company are determined to meet a goal of having stem cell therapies to test in clinical trials within a few years, though the timeline clearly is aggressive, he said.

    Research continues to show the promise of two main areas on which ES Cell is focusing, diabetes and Parkinson's disease, Klupacs said.

    If the work continues to progress and eventually turns into cures, Klupacs said, his company would have a strong foothold in "billion-dollar markets."

    Business opportunities abound
    Stem cells offer three basic business opportunities, said Todd Nelson, a managing director and analyst at RBC Capital Markets in Minneapolis.

    One is tissue engineering, which essentially would involve encouraging stem cells to grow into different types of tissues or organs that could be used by an ailing patient.

    Using stem cells in drug discovery and cell therapy are the other two areas offering intriguing possibilities.

    Turning stem cells into blood, liver, heart or pancreas cells, for example, would provide a great source for screening new pharmaceuticals, Nelson said. Instead of waiting until much further along in the development process when tests can be conducted on people, the stem cells would provide an early warning for potential problems or help identify drug formulas that work the best.

    The idea with cell therapy is to inject or in some other way introduce stem cells into a patient's body. The stem cells might travel to the patient's liver, where they would begin producing a needed enzyme. Or they could be delivered into the brain, where they could provide a replacement source of functioning neurons.

    Geron, which has helped pay for some of the early stem cell work in Wisconsin, describes its technology as offering hope of restoring function to organs damaged by chronic diseases.

    The entirety of the human body came from stem cells, so identifying the potential uses of the technology tends to produce a long list.

    "The application of stem cells is virtually limitless," Nelson said.

    While the public markets have been battered and venture capitalists have pulled back overall, biotech companies continue to receive significant attention from investors, Nelson said.

    "Always looking for the next biggest thing," venture capitalists are strongly attracted to biotech start-ups and other companies that are using stem cells to pursue commercial success, Nelson said.

    "There will be more and more companies getting into this as the applications become more clear," Nelson said.

    Market opportunities that start in the low billions of dollars and climb much higher help explain why companies and investors are willing to risk so much money in the pursuit.

    Stem Cells Inc., a California biotechnology firm, already has spent 10 years and $131 million in its research and development effort, said D. Paul Cohen, president and director of research for a California investment advisory firm called Dirty Dozen Research: No Agenda.

    "The time and money spent should pay significant dividends," Cohen wrote in a recent report.

    Pharmaceutical companies must spend $400 million to $700 million to discover new drugs, said Geist, the life sciences industry expert with Baird. The payoff comes when those drugs turn out to be commercial blockbusters, generating $2 billion in revenue.

    Stem cell therapies will require that kind of investment or more, but they also offer the potential of that kind of gold strike - or greater, Geist said.

    "If you were able to cure Alzheimer's, revenues in the billions would not be out of line," he said.

    Appeared in the Milwaukee Journal Sentinel on Aug. 4, 2002.

    "If the wind could blow my troubles away. I'd stand in front of a hurricane."

    This illustrates that there's more money to be made in curing us vs. perpetuating our current condition.

    This should help debunk some of the ideas that there's too much money to be made by continually caring vs. curing.

    Onward and Upward!


      Good point, Chris

      Scientists are conspiring to cure us, not the other way around.

      ~See you at the SCIWire-used-to-be-paralyzed Reunion ~
      ~See you at the CareCure-used-to-be-paralyzed Reunion ~


        Heck yes

        I would sell my soul to get cured.
        "Life is about how you
        respond to not only the
        challenges you're dealt but
        the challenges you seek...If
        you have no goals, no
        mountains to climb, your
        soul dies".~Liz Fordred


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