BIO 2009: Stem Cell Companies’ ‘Fate’ Relies on Interdisciplinary Business Models

I attended the ‘Mastering Your (Cell) Fate: Stem Cells, iPSCs and the Future of Medicine’ session at BIO on Monday, which featured a panel of specialists: G. Steven Burrill, CEO, Burrill & Company, Aaron Rowe, Reporter, Wired News, Paul Grayson, CEO, Fate Therapeutics, Ian Ratcliffe, CEO, Stemgent, and Richard Gregory, Senior VP Head of Research, Genzyme. Members of the audience included biotech professionals, media, and even some patients who were eager to hear about the progress of iPSC therapies. iPSCs are ‘induced Pluripotent Stem Cells’ which are mature adult cells which have been ‘reprogrammed,’ in contrast to embryonic stem cells (for a full description see Stem Cells 101 on Fate Therapeutics’ website).
The panel discussed the fact that although stem cell research is gaining a lot of attention recently, therapies involving cell treatments have been around for years, bone marrow transplants as a prime example. Nevertheless, Burrill pointed out that venture capital is still mostly on the sidelines when it comes to stem cell funding. Reasons? Burrill said that a big issue is the perceived risk of getting stem cell therapies through the FDA along with the fact that startup companies are often preoccupied with the science and don’t develop a viable business model early. Someone in the audience commented that the challenges facing stem cell companies currently may be similar to those faced by other non-small molecule therapies such as Biologics, which didn’t ‘take off’ until a blockbuster drug hit the market. The panel consensus was that most of the research is actually being done in academia, with Stemgent’s Ratcliffe commenting that most of their customers come from this sector.
After the session, I spoke with Fate Therapeutics CEO Paul Grayson, and we discussed their unique strategies for overcoming these perceived challenges. Fate received generous VC funding early from ARCH, Polaris, and Venrock, likely due to the fact that their founders and management are a veritable ‘who’s who’ in stem cell research and technologies. In addition, they maintain close ties with academic institutions such as Children?s Hospital Boston, Harvard Stem Cell Institute, Massachusetts General Hospital, The Scripps Research Institute (TSRI), Stanford University, University of Washington and the Whitehead Institute. Fate continues to ‘think outside of the box’ when it comes to creating a workable business model, and has recently partnered with Stemgent, also based in San Diego, to create an unprecedented interdisciplinary agreement called ‘Catalyst‘ which represents a new paradigm in which pharma, early stage biotech, and academia will work together to create the research tools which will be directly used to develop therapeutics. In exchange for annual funding from pharmaceutical companies (Grayson says they are targeting up to 5 companies for a total of $50M), Fate and Stemgent will create tools which will be accessible only to member companies. Dr. Sheng Ding, founder of both Fate and Stemgent, is an Associate Professor at TSRI, bringing cutting edge research from academia to the collaboration.
Grayson says that the Catalyst collaboration has been helped by the translational medicine movement, in which academic scientists focus on the applicability of their research to public needs. In the BIO iPSC Panel, it was estimated that around 100 stem cell companies currently exist, and Grayson estimates that only 20 will be still standing after two years. With the looming uncertainties in risk and regulatory issues, it may be likely that such interdisciplinary collaborations will be needed to help stem cell companies and technologies to succeed.
On a regional note, I’m working on featuring Fate at one of our upcoming San Diego Biotechnology Network events, as they are exemplary of our vision to bring different sectors and disciplines together to stimulate growth in our region as well as in biotechnology in general. Stay tuned!