The Hammer Blog

Fool's Gold:
Calling Winners & Losers in the Stem Cell Gold Rush
October 24, 2012

It's axiomatic that, in any gold rush, it is the shopkeeper selling the picks and shovels – not the prospector – who has the best odds of striking it rich... provided he doesn't extend too much credit to the wrong prospectors.

With well in excess of 100 stem cell therapeutic clinical trials now underway as reported by – some with quite encouraging early results – it no longer requires much vision to predict that stem cells are a biotechnology gold mine. This was confirmed, in part, by this year’s Nobel Prize in Physiology or Medicine, awarded to Kyoto University’s Shinya Yamanaka for his 2006 discovery of “how intact mature cells in mice could be reprogrammed to become immature stem cells” (nowadays termed induced pluripotent stem cells, or iPSCs) and Cambridge University’s John Gurdon for his 1962 demonstration that “the DNA of the mature cell still had all the information needed to develop all cells.”

But while the rush to develop stem cell-based therapeutics is now clearly on, predicting future winners and losers remains an arcane and often hazardous undertaking. Fools and heroes alike rushed into this space around the turn of this century, while more cautious players (including most of the top pharmaceutical companies and venture capital firms) elected to wait on the sidelines to gain a sense of how this new field of biology would develop before committing themselves to going all-in.

Winners & Losers

As one might expect, some of the early trailblazers flamed out in spectacular fashion. Notable examples include Geron Corporation, whose star-crossed decades-long venture into embryonic stem cell therapeutics was finally abandoned late last year, and San Diego start-up, Novocell, which in 2008 created a sensation with the publication of its recipe for converting stem cells into pancreatic beta-like cells (a potential home-run cure for type 1 diabetes), only to follow, in rapid succession, with repeated and puzzling executive leadership turnovers and the company’s name change (to ViaCyte), but, years later, still with nary a hint of a clinical trial in sight.

A few of the rugged early pioneers have, of course, had much better luck. One is Cleveland’s Athersys, whose proprietary bone marrow-derived MultiStem™ cells have turned in encouraging performances in Phase 1 or 2 clinical trials for inflammatory bowel disease (with Pfizer), ischemic stroke, graft-versus-host disease, and myocardial infarction. Another is Osiris Therapeutics, whose Prochymal® brand of bone marrow-derived mesenchymal stem cells recently became the world's first stem cell therapeutic product to receive regulatory approval, and the first-ever approved therapeutic for graft-versus-host disease.

Who Cares?

Predicting winners and losers in the race toward stem cell-based therapeutics isn’t merely an exercise for investors and arm-chair quarterbacks; it is also a mission-critical task for biotech tools developers with products or aspirations in and around the stem cell space. Because these potential therapeutics rely upon a new and emerging science, so too they will likely require new and as yet largely unimagined tools in support of their R&D, clinical trials, manufacturing, QA, administration to patients, and treatment monitoring.

Different Tools for Different Cells

Stem cells come in a bewildering variety of flavors and colors today, from stable embryonic stem cell lines, to primary cells isolated from adult bone marrow, adipose tissue, blood, or other tissues, to wholly artificial constructs such as Nobelist Yamanka’s iPSCs. Some may be best suited as autologous therapies (in which cells are removed from the patient, manipulated ex vivo, then re-implanted in the same patient), while others hold great promise as allogeneic therapies (cells from a single donor are massively replicated in vitro, and banked as thousands of individual doses ready for many unrelated patients). Even among allogeneic cells, some are relatively easy to grow (and, thus, to manufacture) in vast numbers in culture (one example might be Athersys’ MultiStem™ cells) whereas others, such as embryonic stem cells and iPSCs, typically require highly skilled and fussy manipulations that can translate into manufacturing challenges. Finally, because cells, unlike small molecule drugs, naturally display pesky proclivities to change their molecular states, their identities, and to live or die, QA for identity and potency becomes a challenge without currently well-established solutions. This translates directly to opportunities for tool developers.

Knowing who will most likely win - or lose - in the stem cell therapies race informs us regarding which cell types will most likely make it to the clinic. This in turn dictates what particular tools will most likely be needed by the nascent industry.

A Cautionary Tale

One specific example should suffice to persuade investors and entrepreneurs alike of the critical importance of accurately predicting the winners and losers.

Autologous stem cell therapies offer the seductive promise of insuring a perfect immunological match, every single time, between donor and recipient (since the two are one and the same), thus alleviating the usual concerns regarding transplant rejection by ill-matched patients. Attractive as this promise may be, autologous therapies forego the considerable commercial and medical advantages of mass production, which only allogeneic therapies can promise: the ability to manufacture tens or even hundreds of thousands of doses in bulk and have them on the shelf, ready for instant use, with the reasonable assurance that each unit is effectively identical to every other unit. Instead, autologous therapies are hand-crafted ‘custom orders,’ each as unique as a snowflake, potentially translating into high manufacturing costs, challenges in assuring potency and efficacy, and many other issues. Clearly, the question of whether allogeneic or autologous therapies will predominate in the clinic of tomorrow has much to say regarding the suite of new tools the cell therapy industry will - or won’t - need in future.

Consider cell culture. Should allogeneic therapies employing mesenchymal stem cells prevail, new industrial-scale solutions for precisely controlled and cost-effective adherent primary cell culture will be the industry’s great need. Today’s Phase 1 or 2 clinical trials of such therapies are mostly fueled by small armies of sterile-gowned cell culturists in long rows of clean suites, endlessly processing dozens or even hundreds of pieces of conventional plastic cultureware per day, one piece at a time - a manufacturing approach that, clearly, simply does not scale.

Assume, for example, that a typical 50 milliliter bone marrow donation yields roughly 50,000 mesenchymal stem cells (MSCs) that an allogeneic therapeutic manufacturer wishes to expand into 100,000 doses of one billion cells each (an admittedly large but not unprecedented dose size, judging by current clinical trials). This translates into a single manufacturing batch run requiring nine million square feet of sterile culture surface area (about 200 acres!) and 900,000 gallons of sterile culture medium (roughly 45 railroad tanker cars) – not to mention a quantity of skilled hands which is simply impossible to estimate. Clearly, such a cell therapy ‘farmer’ will require highly scaleable, extremely cost-effective, and almost certainly fully automated manufacturing technologies that largely do not exist today (bioreactor solutions long popular in the bio-processing industry have proven mostly unsuitable for cell therapy manufacturing). But such solutions – critical to the allogeneic ‘farmer’ – will be irrelevant to the autologous ‘hunter/gatherer’, who manufactures individual custom doses to order.

Ready to place your bet on the allogeneic farmer’s future need for industrial scale cell culture? You should probably start your R&D in earnest today then, in order to have a fully commercialized and rigorously validated product ready for delivery before the many therapies now in Phase 1 or 2 trials enter the all-important Phase 3, in which manufacturing technology decisions get locked down. And you’ll probably need tens of millions of dollars to do so. But, if you’ve guessed wrong and the autologous 'hunter/gatherers' – with their dramatically smaller batch size requirements – prevail, your efforts and your investment could be wiped out.

The moral of the story is: if you intend to make your fortune selling picks and shovels in this gold rush, you may need to decide which prospectors to bet on.