StemCells regenerates Stem Cell Sciences

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For both sign writers and shareholders StemCells' proposed acquisition of Stem Cell Sciences should be an easy and natural fit. StemCells is set to hand over 2.65m shares and $715,000 to acquire the operating subsidiaries and related assets in a move that will end the serious cash concerns of the UK group.

Despite its cutting edge technology, that includes the know-how to eventually develop knock-out and knock-in rat models, Stem Cell Sciences had been struggling to focus its efforts and cut costs, in an attempt to get more money in the coffers before its £1.7m cash pile ran out (Clock ticking on Stem Cell Science's end of year promises, October 27, 2008).

Things had looked more hopeful on the funding front after the group announced in November that it had secured a service contract with Pfizer, an event that many believed would be the start of similar licensing agreements that would safeguard the future of the company.

But five days later trading of shares in the company was suspended, after a decision was taken by the directors to undertake a review of financial and strategic options, which many read as a sale. In December Stem Cell Sciences was forced to admit that it was in offer talks, and at the end of the month it received a £200,000 loan from StemCells to make the talks exclusive.

Attractive proposition

What has made Stem Cell Sciences so attractive to StemCells is the group’s technology which, instead of being used to develop stem cell based treatments, focuses on commercialising applications of stem cells for drug discovery, such as target validation, and the production and manipulation of stem cells.

The group also has its Internal Ribosome Entry Site (IRES) technology, which allows researchers to monitor the activity of a particular gene in living cells or tissues without blocking the normal function of the gene. In January, it revealed that it had secured a contract with a major pharmaceutical company for the technology, showing the attractiveness of the technology.

Today the market broadly welcomed the deal and in early trading StemCells’ shares were 4% higher at $1.47, but fell back in line with the wider turbulent US markets.

Rapid advances

But like other stem cell companies, StemCells’ stock has risen sharply over the last three months following both political and technological advances (Democrat victory expected to boost stem cell research, November 4, 2008). In mid-February stem cell companies saw a spike in their share prices after from President Obama's senior adviser, David Axelrod, hinted that the government might soon lift its ban on funding for embryonic stem cell research.

Recent breakthroughs in technology that have seen scientists able to create stem cells without destroying human embryos, has also sparked interest in the field from investors, as costs have been lower and research times have been speeded up (Stem cell breakthrough drives share gains for now, November 23, 2007).

On Monday it was reported that scientists in Canada had found a way to create virus free embryonic cells from adult skin cells. Viruses had previously been used to carry gene packages into adult cells to reprogramme them into embryonic cells. But the use of viruses had disrupted cells at the genetic level, which could potentially lead to cancer, making stem cell therapies carry risks that could outweigh their benefits.

The growing interest in the sector from big pharma also saw UK-based Epistem on Monday sign a $4m upfront research and development collaboration with Novartis to identify oncology targets and for each product developed under the agreement EpiStem is eligible to receive up to $45m.

But despite the growing interest in the field, stem cell companies remain in their infancy. As the table below shows only nine companies have products in the clinic and there is still no approved regulatory pathway in either the US or Europe for stem cell based therapies. The number of abandoned projects also indicates the risk involved with stem cells and the potentially long development path to approval.

This means that while StemCells' acquisition of Stem Cell Sciences has permanently eased the UK group’s need to find funding and increased the scope of StemCells, one of the biggest companies in the field, approved products could still be a long way off and StemCells itself, with only $21m in cash on its balance sheet, might have to deal with its own funding issues a few years down the line as its pipeline matures.

Stem Cell Products in Development
Product Company Therapeutic Subcategory Patent Expiry Phase
Ontaril Axcan Pharma/Cellerix Gastro-intestinal anti-inflammatories  - Phase III
ALD-101 Aldagen Immunosuppressants  - Phase III
Vascular Repair Cells Aastrom Biosciences Cerebral & peripheral vasotherapeutics  May 2017 Phase II
ALD-301 Aldagen Cerebral & peripheral vasotherapeutics  - Phase II
ALD-201 Aldagen Immunosuppressants  - Phase II
Stem Cell Therapy TCA Cellular Therapy Other cardiovasculars  - Phase II
MultiStem Athersys Other therapeutic products  - Phase I
Cord Blood Cells Celgene Blood substitutes  - Phase I
PDA-001 Celgene Other therapeutic products  - Phase I
HuCNS-SC StemCells Other CNS drugs  Sep 2017 Phase I
ALD-151 Aldagen Immunosuppressants  - Phase I
ACY001 Arteriocyte Other cardiovasculars  - Phase I
MultiGeneAngio Multi Gene Vascular Systems Cerebral & peripheral vasotherapeutics  - Phase I

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