All systems were go for federally funded embryo stem-cell research at the National Institutes of Health. New guidelines bequeathed by the Clinton administration for skirting a congressional ban were in place. A meeting to review the first applications for grants was set for mid-April, when NIH's acting director Ruth Kirschstein suddenly received the word from on high: cancel the meeting.
Health and Human Services Secretary Tommy G. Thompson wanted a chance to review the new guidelines. Some NIH researchers were aghast.
"It's unfortunate," said a member of the NIH stem-cell review committee, who spoke to the Washington Post on the condition of anonymity. "It certainly is holding up research that could potentially affect a lot of people with a number of different diseases."
What's all the fuss about? Stem cells are the primordial goop of the human body, human cells that have not yet been differentiated into, say, bone, blood, or brain cells. For medical researchers, stem cells represent a mother lode of possible new treatments for diabetes, heart disease, Parkinson's, Alzheimer's, and more. Capable of differentiating into the full spectrum of other cell types—from a new liver cell to a new neuron—they could be ideal for repairing or replacing diseased organs.
The furor over stem-cell research is not over their usefulness, but their source: Should researchers use aborted or discarded human embryos? Or should they be restricted to adult stem-cells, found in fat, bone, and the brain?
The ethical questions are certainly riveting, but they may be swiftly trumped by the market, specifically the venture investment market, which is voting with its dollars for adult stem-cell research. Why? "If you look at some of the medical and scientific indications, adult stem cells are much closer to therapeutic applications; embryonic cells still have a variety of obstacles that need to be overcome," says Kevin FitzGerald, an assistant professor of medicine at Loyola University Medical Center who conducts research on gene regulation in leukemia.
Moreover, embryo cells can be a bit too flexible, differentiating into all kinds of tissue, both desirable and not. When injected under the skin of certain mice, for example, they grow into teratomas, tumors consisting of numerous tissue types, from gut to skin to teeth. Injected adult stem cells are better behaved, growing into other tissues only after the application of appropriate growth factors or other external cues. This need for external cues is ideal since doctors want to be able to tightly control results.
Adult stem cells have already been used for more than 20 years as bone-marrow transplants to reconstitute the immune systems of patients with cancer and to treat blood cancers such as leukemia. Using the body's own stem cells means the immune system's rejection reflex will not be aroused.
The proof, for now at least, is in the investment pudding. The universe of established companies doing stem-cell research encompasses about 30 public and private biotechnology firms. Of these, fewer than half are involved primarily in developing treatments from stem cells. And only two of those 15 "pure play" companies (Geron Corporation and BresaGen) do significant work with embryonic cells.
Geron, publicly held and widely viewed as the leading embryonic stem-cell company, attracted $50 million in investment over the past year. BresaGen, which works with both embryonic and adult stem cells, received more than $15 million from investors last year. By contrast, 13 companies working with adult stem cells attracted over $100 million.
Osiris Therapeutics Inc., a bellwether company in adult stem-cell research, raised $16.5 million from private investors. ViaCell, Inc., a new privately held company that banks and uses adult stem cells derived from umbilical cord blood for the treatment of cancer and certain genetic diseases, raised $48 million in VC money. Aastrom Biosciences, another early-stage company that banks and develops adult stem cells, received two venture financings totaling $11.8 million. Others funded last year include NeuralStem Biopharmaceuticals, NeuroNova AB, Layton Biosciences, closely held MorphoGen Pharmaceuticals, and StemCells Inc., which uses adult stem cells for a variety of applications.
The VC community is typically more adept at judging new technologies than government bureaucrats, even well-intentioned ones with Ph.D.s. When two similar technologies exist, this kind of uneven investment flow is usually a proxy for scientific promise and imminent commercial potential.
Adult cells are far closer to commercial application, which is crucial to venture investors. Given the long lead times necessary to gain approval for new medical technologies, if a company can't get significant results in four to six years, it's generally beyond the scope of a venture capitalist's interest.
In addition to speed, venture capitalists look for a "technology platform" broad enough to support multiple indications for the same product. That way, if a company missteps on one application, it can still make money in other areas. While the embryonic cells are rumored to have broad potential, so far only adult stem cells have demonstrated wide uses. Osiris Therapeutics, for example, has programs exploring the use of adult stem cells in everything from regenerating cardiac muscle to growing new bone, cartilage, and bone marrow.
Finally, venture investors must also consider the political environment. If
adult stem-cell companies have attracted more Wall Street financing, "It's as
much to do with what's immediately applicable but also what the eventual total
return will be," says Dr. Frank Young, former commissioner of the Food and Drug
Administration. "If there's a major ethical problem with embryonic stem cells,
we will probably see the return on these ventures to be much lower."
The American Spectator, June 2001