Ethics Aside, a Good Business Model Remains Elusive for Stem Cells

[Wise Young]

Article from New York Time July 28, 2001

hNY Times Business Section July 28, 2001 (http://www.nytimes.com/2001/07/28/business/28CELL.html?ex=997438714&ei=1&en=ea0df9a0b67dfca2)

Interesting analysis of the lack of large corporate investment into stem cell research and why NIH funding will be necessary to fulfill the promise of stem cells.

[rdf]

"Diacrin Inc. (news/quote) of Charlestown, Mass., is testing neural cells from pig fetuses. The treatment failed
in a recent clinical trial for Parkinson's disease."

This statement is deceptive, to say the least. The trial was successful in certain areas, not so successful in others. But such a negative blanket statement is harmful to the perception of stem cells, and we all know perception means a hell of a lot more than performance.

Nevertheless, the article doesn't paint a pretty picture concerning research, coporations, patents, and viability of stem cells, at least at the present time. Without a lot of people trying to get stem cells to grow into one type of cell only, it's gonna take a long time. I wouldn't put my hopes on stem cells being what heals me, at least not the first therapy that will do so. But I can see it as an element in a comination therapy.

http://sci.rutgers.edu/forum/images/smilies/cool.gif \/ http://sci.rutgers.edu/forum/images/smilies/smile.gif

[mikek]

Big businesses want to invest in a product that they can roll out to the public and recoup any R&D costs. Stem cells will need to be customized not only for the individual but for the ailment ie : diabetes vs. SCI. So,this will never be a pill like viagra but a sophisicated cell implantment to a particular area of the body.
But there is more interest now than ever and there is a light at the end of the tunnel.

[Wise Young]

The good thing about good business is that it doesn't pretend to be about anything but money. I have learned my lesson with the Cando situation. There are of course altruistic businesses but money is still the bottom line. What the spinal cord injury community must do is to understand how to take advantage of this characteristic to generate funding and technology that benefits the community.

The recent advances in stem cell research suggest that there is much more to stem cell therapy than we had ever imagined. Let me give you a few examples:
• Stem cells can be injected intravascularly or intrathecally and they will migrate into the injury site where they will take up residence and produce new cells. So, the future of stem cell therapy may be as simple as going to the doctor's office and getting an injection of cells.
• Our body contains stem cells and we should be able to stimulate these stem cells (with AIT-082, for example) to prolifirate and do their thing.
• A major source of stem cells will be our own stem cells from bone marrow or even from our own fat (liposuction). These can be harvested, expanded in culture, genetically modified to do specific tasks, and then reinjected.

The main point of the New York Times article is that most venture capitalists don't see how the above would be able to make a lot of money and therefore they are reluctant to invest large sums into biotech companies that are specializing in stem cell therapies. By the way, most of money-making is really due to timing. If you invest too early, you lose money. So, for example, if you had invested money into cell phone technology in the 1980's, you probably would have lost your shirt. However, if you did so in the 1990's, you would have made a bundle. However, there is such a thing a investing too late.

Wise.

[mikek]

Wise don't get cynical on us lol !!!!!!How do you sell something that can't be seen by the human eye? Or patent this product " stem cells " which could be a treatment in a doctor's office? Dr. Cheng's glue can that be patented and could he ultimately receive royalities from it's use ? Does anyone have a patent on schwann cells? Wall St. would rather see a turn key product with it's own unique delivery system that can me marketed to the public asap and not in a few years. I feel very confident that there are private funding groups looking very closely on how to make a buck out of this.

[mikek]

Government should fund research as aggressively as possible as an investment towards reducing
Medicare and Medicaide present expenses. Even if
stem cell in it's infantcy or phase one roll out doesn't provide a full cure but was just able to return bladder and sexual function, think of the savings impact on just urological issues of supplies and meds.

[Steven Edwards]

Business models are fun to play with...

Let's see: How can companies make money from stem cells? Scientists still do not know which mixtures when combined with stem cells produce specific precursor cells. Finding a mixture that results in 90% neural precursors would allow a company to possibly patent the mixture, or at least keep it as a trade secret, and sell it to different research institutes. The same would work with any precursor cell.

A company goal could also be to find an environment that allows cells to grow or differentiate at a faster rate, then selling pre-made "incubation" type machines. The faster the cells are produced, the quicker you can get them to your client. Would you prefer getting your cells back in five weeks or 72 hours?

There are a few other ideas that could be implemented, but the ones I mentioned [along with the delivery system mentioned by Dr. Young] seem obvious enough.

-Steven

-Steven

[DA]

"The main point of the New York Times article is that most venture capitalists don't see how the above would be able to make a lot of money and therefore they are reluctant to invest large sums into biotech companies that are specializing in stem cell therapies."

yet these same ppl pumped billions of dollars into dot-com's companys without any clue of making money.

[Steven Edwards]

DA,

I think the dot-com fallout is why the VCs are cautious about new and unproven business models.

-Steven

[Wise Young]

The stem cells business is frightening to venture capitalists for several reasons:

1. Direct patent protection for products are very limited. Unless one can produce a generic stem cell line that can be transplanted into many patients, how would a company gain exclusivity on the products? For example, a company would not be able to prevent another company or doctor producing stem cells from a fetus, a cloned embryo, or adult tissue source.

2. The area is fraught with political and public relations problems. With Congress constantly proposing legislation to outlaw use or study of stem cells, cloning, gene therapies, and other restrictions on the biotechnology, the companies that specialize in this area will be subject to many forces that are beyond their control.

3. The clinical trials for demonstrating safety and efficacy will be expensive and risky. At the present, just getting a drug approved by the FDA and into the market costs about $500 million. It is likely that it would cost much more to get the first stem cells into the market.

Despite these hurdles, several small companies have committed themselves to this field and several large pharma companies have also committed themselves based on a few business models:

• Non-immunogenic cells. Several companies are working on creating generic non-immunogenic cells that can be transplanted to many people. For example, Diacrin and Alexion both have active programs in this area.

• Methods of producing stem cells. A number of companies are specializing in methods to isolate and produce transplantable stem cells. Geron and Cytotherapeutics are examples. They are concentrating on generating patents that cover the methods of producing stem cells.

• Non-embryonic sources of stem cells. Several companies are concentrating on the production of stem cells from non-controversial sources. These include companies that are producing stem cells from umbilical cord, from human tumor cell lines, etc.

• Devices to produce stem cells. In the laboratory, we use various devices such as cell sorters to isolate and purifying stem cells. Although these machines are available for laboratory use, there are no machines that can do everything from beginning to end... i.e. imagine a desktop machine that can take in liposuction material, sort out the stem cells, and spit them out the other end in 15 minutes. Such a device will probably have to be approved by the FDA and would be eminently protectable with patents.

Wise.

[This message was edited by Wise Young on August 02, 2001 at 09:50 AM.]

[Scorpion]

It seems to me, if a strong business model is created, the politicians will figure out a way to work out (or ignore) the ethical questions. Money talks. :-/

~Rus