Stem cells – the quick guide

Developing neurons (picture courtesy ReNeuron)

What do they do? | Any problems? | Where they fit in | The market

There has been much hype about the potential of stem cells, but clearly the report's authors and the UK government believe the promises that stem cells will - eventually - provide treatments for conditions like Parkinson's disease, diabetes and heart disease. So what are stem cells, what will it take to translate their potential - and why aren't venture capitalists and pharmaceutical companies investing in them?

What do they do?

Stem cells are exciting because they hold the master code for making other specialised cells - from blood and bone to heart and liver. As well as providing all the basic building blocks that shape the body, they also serve as its biological repair system.

Thus the great lure of stem cells is to tap into and control this inherent ability, and use them to replace missing or damaged cells.

The clinical proof of principle for doing this exists already: bone marrow transplants containing blood stem cells have been used to treat leukaemia for decades.

There is also proof that implanting specialised cells can treat disease. One famous example involves treating diabetics with islet cells removed from the pancreas of cadavers. Another is the treatment of Parkinson’s disease, by injecting dopamine-producing cells derived from fetuses.

These and other examples provide hope that cell replacement therapy could have a significant medical value. But apart from ethical concerns around the sources of cells used in such procedures, it is very difficult to get enough material. Stem cells are attractive because they represent a limitless supply of material for cell-based therapy.

Attempts to date to use stem cells in therapy have involved adult stem cells, such as bone marrow cells. This does not mean necessarily that the cells are taken from an adult - but that they have advanced to a stage where they are able only to generate a specific subset of specialised cells.

Any problems?

The exact range of cells that can be derived from adult stem cells is the source of intense scientific and ethical controversy. It is clear however, that stem cells from embryos have the potential to differentiate into every cell type in the body. Most embryos used to date as a source of stem cells are derived from in vitro fertilisation. The use of such embryos to extract stem cells has turned this into one of the most politicised fields in the history of science.

California's plans to invest $3 billion in stem cell research are currently held up by lawsuits from tax advocacy groups that are trying to prove it is unconstitutional. But the California Institute for Regenerative Medicine opened its new facility at the beginning of November and the directors say they will raise a bridging loan to get research under way while they await the outcome of the lawsuits.

The field is also dauntingly complex - embryonic stem cells may have properties that make them a suitable source of cells for regenerative therapy, but there are many hurdles to be overcome to make them safe and effective.

These include simplifying, standardising and scaling human embryonic stem cells growth, developing reproducible methods to selectively differentiate cells, find methods to deliver them to the target tissue, and get them to survive, and develop scalable low-cost production methods.

One of the first problems to be overcome was to grow cell lines without using any animal based nutrients. The next challenge is to understand how to control the differentiation of ESCs into specific cell types. This involves finding formulae for nudging them along one path or another in a reliable and reproducible manner.

Where they fit in

At one level embryonic stem cells can be seen as part of a much wider field of cell and tissue therapy, a group of technologies that aim to replace diseased or dysfunctional tissues or cells with healthy functioning ones.

But at another level embryonic stem cells could eventually overtake all other types of replacement therapy. Not only that, but they could replace other conventional treatments such as kidney dialysis or insulin therapy.

As yet the science remains preliminary, and for the promise to translate will take a huge investment of time and money.

The market

If stem cells deliver on their promise there would be a huge market. For now the issue for those attempting to commercialise stem cells is how to make any money.

The US company Geron has differentiated a number of cell types from embryonic stem cells including oligodendroglial cells for treating spinal cord injuries, a human neural cell line designed for treating Parkinson's disease, and a cardiomyocyte line for treating heart disease. These three lines have reached the point where they can be tested in animal models.

A UK company, NovaThera, a spin out from the Tissue Engineering and Regenerative Medicine Centre at Imperial College, London, says it has developed a basic process for differentiating embryonic stem cells into other cell types. It can reliably produce heart, blood and lung cells, using the same basic process, but running a different programme each time.

NovaThera says its Type II pneumocytes derived from ESCs are "fully analogous" to naturally occurring cells that line the alveoli in the lungs.

Once the formula for producing different sorts of cells from ESCs is determined that next stage is to develop large-scale automated manufacturing processes.

At the beginning of 2005 NovaThera was awarded a £3.75 million government grant to identify the factors that control the reproduction and differentiation of ESCs to develop intelligent bioprocesses capable of generating specialised cells reproducibly and automatically.

One early route to revenues is providing cell lines for use in drug discovery and development. For example human liver cells are proving very useful in toxicity testing in preclinical trials. Another approach has been to build a business in umbilical cord banking. The US company ViaCell Inc had annual revenues of over $50 million from cord blood banking in 2004.

But beyond some limited services there is little money to be made in stem cells as yet.

While venture capitalists may understand the potential of the field, they have proved reluctant to invest in stem cell start-ups. Many VCs cite the preliminary nature of the science, arguing that it is still at the basic research stage where it should be publicly funded.

Others point to the ethical and regulatory uncertainties. This is a particular deterrent in the US, where it is far from certain that there will be a single market for stem cell products. Similarly in Europe, there is a patchwork of different regulations, and the market is likely to be fragmented.

Other VCs see stem cells as risky because as yet there are no patented technology platform. Companies tend to be focusing on developing a single treatment for a single disease - a very high-risk approach.

Furthermore, VCs have lost money in the field, most notably Merlin Biosciences, which put over £5 million into ReNeuron before floating it in November 2000. Three years later the firm was forced to pay fellow investors £3.6 million to take the company private again.

ReNeuron and SCS listed on the Alterative Investment Market in London earlier this year, but both had to settle for less money than they hoped for.

Peter Mountford, CEO of Stem Cell Sciences, which is based in the UK, Australia and Japan, is happy to complain that despite a ten-year track record and revenues from services, it was impossible for him to raise money from VCs.