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Stem cell research industry leaders buoyed

A measure to ensure $15 million in state funding will help keep Maryland companies competitive, executives say

Thursday, April 6, 2006

Click here to enlarge this photo Photo courtesy Cambrex Corp Researchers work at Cambrex Corp., whose Walkersville facility supplies stem cells and other biological products to biotechnology companies worldwide.

Alan Smith, president and COO of both Theradigm Inc. and Cognate Therapeutics Inc. in Baltimore, said the state funding may help his companies, but will more likely help keep stem cell development in Maryland.

Without state help now, ‘‘there may be a brain drain,” Smith said. ‘‘I know people within the state have been recruited to the West Coast. Hopefully this will reverse” that trend, he said, with the new funding attracting to Maryland small companies that are not ‘‘deeply rooted” where they are now.

With the passage of the Maryland Stem Cell Research Act of 2006, the state joins New Jersey, California, Connecticut and other states that are spending public money on stem cell research.

Adamantly favoring the initiative is Daniel R. Marshak, vice president and chief technical officer for biotechnology at Cambrex Corp. of East Rutherford, N.J., which has cell manufacturing laboratories in Walkersville.

‘‘The faster that Maryland can develop these resources, the faster there will be jobs and more opportunities,” Marshak said. ‘‘I think there is a lot of potential for business, R&D and eventually products for health care for this industry.

‘‘Maryland is a great place to do it. There are academic resources, industry and other bases of technology,” he said. ‘‘There is also proximity to government and lot of people with experience in pharma and biotech.”

One small, four-employee company that stands to benefit from the Maryland initiative is Neuralstem Inc. of Gaithersburg, said chairman and chief scientific officer Karl Johe. Neuralstem has tested 10,000 drug candidates on animals to stimulate neural stem cells in the brain, a technique that could be used to treat patients with depression, stroke and Alzheimer’s disease.

The new state funding shows leadership, Johe said. ‘‘Maryland is in the forefront of that movement, with a critical mass of companies and universities doing stem cell work.”

But any cures and treatments developed in Maryland through stem cell research won’t stop at the state’s borders. International business stakes in stem cell-related therapies are very high.

Any company venturing into the rapidly expanding stem cell field will find ‘‘huge markets” for its products, said Peter Friedli, chairman of Osiris Therapeutics Inc. of Baltimore, one of Maryland’s leading stem cell companies.

The science and ethics of stem cell research and development are still uncertain. But experts say the potential is virtually unlimited.

‘‘Stem cells are the Fort Knox of science,” says Vice Admiral Richard H. Carmona, the U.S. surgeon general.

In theory, core cells from human embryos, called embryonic stem cells, may be coaxed into growing into any type of body tissue. Less versatile adult, or somatic, stem cells are generally limited to growing into cell types of their own tissue origin, but are found in many tissues, including umbilical cord blood, bone marrow and brain cells. In 1998 researchers at the University of Wisconsin, Madison, and Johns Hopkins University became the first to isolate and grow human embryonic cells in the laboratory.

A new state panel will determine how Maryland’s $15 million will be spent. The money could go to university or private researchers working with adult or embryonic stem cells.

Maryland’s new program is modest in comparison with some others. California’s Proposition 71, for example, called for $3 billion for stem cell research over the next decade.

Boost for venture funding?

Controversy over public funding of stem cell work has made venture capitalists reluctant to invest in the budding field, said Paul Fishman, professor of neurology and neuroscience at the University of Maryland Medical Center in Baltimore.

‘‘Industry people say it hurts the raising of venture capital,” Fishman said.

Emily L. Mendell, vice president of strategic affairs and public outreach at the National Venture Capital Association, said that 13 companies that listed stem cells in their business plans reported 20 rounds of funding in 2005, totaling $102 million. Investment has fallen slightly in the past two years, probably from a lack of government policy developments favorable to stem cell research and development, she said.

But at Bethesda’s Toucan Capital Fund LLC, investments in stem cell companies are picking up, according to Linda Power, co-founder and managing director. After a slow start, venture capitalists are warming up to stem cells, she said.

Stem cells represent ‘‘a sea change, a bigger development than the arrival of antibiotics in the mid-20th century,” Power said. ‘‘Regenerative medicine, of which stem cells, tissue culture and other things are a part, is whole new era of medicine. This is why we have begun to invest in it.”

Toucan has invested $40 million of its total $120 million fund into cell therapy and regenerative medicine companies.

For example, Toucan is funding stem cell programs at Theradigm on brain injury repair, stroke and Alzheimer’s. ‘‘These are beyond the laboratory and animal tests,” Powers said. ‘‘All three could go into clinical trials.”

Overall success in stem cell industries is still a long way off, said Marshak, of Cambrex. But benefits to his company are more immediate.

As a supplier of stem cells and other biological products to biotechnology companies worldwide, Cambrex stands to gain from any incentives for the young industry, Marshak said.

In 2005, Cambrex increased the number of its client companies purchasing cells to 17, up from eight in 2004, the largest growth of the company’s three divisions, he said. Cambrex reported total revenues of $455 million in 2005.

This report originally appeared in The Business Gazette.