The prospects of true innovation have lured companies of all sizes into the stem cell space. The strategies being implemented by research groups are diverse and colourful, yet the regulatory terrain remains rough and the risks prohibitive, explains Asher Mullard.

2009 started out looking like it would be a good year for stem cells. Only days after President Barack Obama was inaugurated, the US FDA gave Geron the green light to inject embryonic stem cell (eSC)-derived cells into patients with spinal cord injuries, paving the way for the US's first ever clinical trial with these promising cellular shape shifters. And as US researchers enjoyed a post-Bush era of permissive, funded eSC research, labs worldwide continued to advance scientific understanding of stem cells, in all their forms, at a rapid pace.

Companies ranging from academic start-ups to the world's largest pharma player have crowded into the stem cell space. Not only are groups working with different cell types and different indications, they are also taking diverse approaches to commercialisation. Some have focused on developing dynamic therapeutics, others seek nearer term opportunities in new tools for drug screening and drug discovery; several are working on both options.

Success rates, similarly, have varied. Scientists have made impressive advances on the bench – improving culture conditions, simplifying techniques and increasing the efficiency of production – and in preclinical models of disease. Yet clinical trial results have been mixed, suggesting there is still a way to go before stem-cell-based drugs will be widely available. Moreover, the regulatory terrain remains far from flat; Geron's eSC trial, while announced with much fanfare, was quietly put on hold shortly before its expected start date in August 2009, and is now expected to be delayed until late-2010 at the earliest.

The field, it seems, remains as malleable as the cells that it is based upon. And yet, while the changing scientific and regulatory landscape provides considerable challenges and hurdles, it also serves as a hotbed of activity.

on trial

Broadly speaking, there are three types of stem cells: eSCs, adult stem cells and induced pluripotent stem cells (iPSCs). eSCs, the ultimate shape-shifters, are like clean slates that can become practically any type of cell, a property called pluripotency. Adult stem cells, a more mature cell type that can be harvested from donors and patients alike, have some flexibility but can only give rise to specific subsets of cells. And iPSCs, the newest member of the trio, are mature inflexible cells that have been reprogrammed to a state of pluripotency using techniques that are becoming increasingly effective and versatile.

As yet, adult stem cell-based products have progressed the furthest in clinical trials, often in untreatable disease. Osiris Therapeutics, with its therapy Prochymal, has led the charge. Prochymal is made from mesenchymal stem cells that are isolated from healthy donors, cultured in a dish and then injected into patients. The cells are thought to provide therapeutic benefit through various mechanisms and are being considered for numerous indications. In graft versus host disease (GvHD), for example, they are thought to down-regulate inflammation and co-ordinate the release of tissue-specific growth factors.

At the beginning of 2009, Osiris announced that a meeting with the FDA had cleared the path for the first ever submission of a BLA with the agency for a stem cell product. Subsequent announcements over the course of the year, however, tempered the excitement. The company first halted a Phase III trial of the drug in patients with Crohn's disease, citing a trial design flaw, and then announced that two Phase III trials in patients with GvHD had failed.

In the GvHD trials, some 450 patients with either newly diagnosed or steroid-refractory GvHD disease were treated with Prochymal or with placebo. Neither trial met its primary endpoint – the proportion of patients who survived to a pre-specified time point. Osiris argues that the drug could still hold promise in patients suffering from liver GvHD, and the firm's president and CEO, Dr Randy Mills, maintains that Prochymal "will likely be the first [stem cell therapy] to go through the FDA's biologic license application review process". Yet at the time of writing, Osiris's stock price had fallen by around 75% since the start of 2009.

Martin McGlynn, CEO of StemCells, points out that Osiris's news was bad for the stem cell field as a whole. "A rising tide lifts all the boats, a receding one brings all the boats back down," he said.

Other products continue to offer hope, however. Later-stage trials that are already under way include, for instance, Cardio3 Biosciences' adult stem cell-derived cardiomyoctes – C-Cure – which are in a Phase II/III trial for heart failure in Europe and Siberia.

Also, a host of other strategies aiming to dose patients with cell types that have been lost during the course of disease or that have healing capacities are set to start soon. StemCells, for example, showed that foetal-derived neuronal stem cells – a halfway intermediate between adult stem cells and eSCs – were safe in a Phase I trial of patients with Batten disease, a rare paediatric neurodegenerative disorder. Future trials with these cells, which are thought to provide an enzyme that is lacked by patients with the fatal disorder, are planned.

Moreover, NeuralStem and ReNeuron have both received the go ahead, in the US and the UK, respectively, to use their own foetal-derived stem cells in Phase I trials of other neurological disorders.

embryonic alternatives

eSCs, once shunned by many because of ethical concerns, are now starting to enter the clinical trial arena as well. And, for Dr Jane Lebkowski, chief scientific officer at Geron, they are likely to be more economically viable than adult stem cells.

"The propagation of [adult stem cells] is usually fairly limited," says Dr Lebkowski. "With Osiris, they're claiming they can get in the order of 1,000 to 10,000 doses, which isn't very much, and then they have to go and requalify their starting material," she says. And patient-derived adult stem cells, which on the one hand are less likely to be rejected and offer promise as personalised therapeutics, would be even more costly.

"I just think that the eSC, because of the scaling factor, can be much more economic to produce," Dr Lebkowski says. Geron, consequently, is focusing its efforts on these less mature, more pliable, cells. The company's recently delayed lead programme in this area involves injecting eSC-derived oligodendrocyte progenitor cells into patients with spinal cord injuries. Oligodendrocytes produce axon-protecting myelin and factors that enhance neuronal survival, and so it is hoped that they can reverse the demyelination that accompanies spinal cord injury and thereby improve recovery. Although the trial was put on hold after preclinical data showed that these cells were linked with cysts, a preclinical study is already under way to assess whether these are benign. The trials could be re-initiated in the third quarter of 2010, says Geron.

Pfizer, the biggest pharmaceutical company to test these waters, is also looking carefully at eSC-based therapeutics. Its UK-based regenerative medicine unit was launched in 2008 with $100 million in funding, spread over three to five years, to develop stem cells into therapeutics. Collaborating with researchers at University College London (UCL), its lead programme involves developing eSC-derived retinal pigmented epithelium for patients with wet age-related macular degeneration. It hopes to start clinical trials within the next two years.

Working with Novocell, Pfizer is also examining the potential to use eSCs to generate insulin-producing islet cells for transplantation into diabetes patients.

For Dr Ruth McKernan, chief scientific officer of Pfizer Regenerative Medicine, researchers are eventually likely to discover that adult stem cells and eSCs, as well as iPSCs, each have their pros and cons making them suitable for different diseases. "Our focus is on whichever is the best cell for the therapeutic purpose," she says. This could, in the future, mean iPSCs as well.

tomorrow's toxicity screens

eSCs and IPSCs are also being touted by many as a potential solution to problematic, and costly, drug attrition rates. Only around 10% of the compounds that are tested in Phase I trials are ever registered, and clinical safety and toxicology concerns have been estimated to account for 30% of the failures. If problems can be flagged up earlier, so the theory goes, attrition rates can be reduced.

Once again, the opportunity has attracted companies both large and small. The multinational GE Healthcare, for instance, recently hired leading stem cell scientist Dr Stephen Minger to head up its stem cell based drug screening programme.

Working with techniques and protocols that have been licensed from Geron, GE Healthcare wants to turn eSCs into cells that have been impractical to use but that could improve screening, such as human hepatocytes and cardiomyoctes. GE Healthcare is "agnostic" in regards to what type of cells it will grow, notes Dr Minger, and "will generate what the community needs".

Wary perhaps of the obstacles in bringing new drugs to market, and eager to make the most of their expertise, smaller stem cell therapeutic companies are exploring screening options as well.

Fate Therapeutics, for instance, is predominantly focused on discovering drugs that modulate the fate of a patient's own adult stem cells, but is also looking for a few companies to join its Catalyst consortium, a group of partners who will work together to develop iPSCs for drug discovery.

"The platform for drug discovery is shared amongst the group – once those technologies are provided to the pharmaceutical companies that are members of Catalyst and they begin to do drug discovery, all the drug discovery remains proprietary to that pharma company," said Scott Wolchko, Fate's chief financial officer.

Dr McKernan has her reservations about how well these strategies will fare. For one thing, Pfizer and all other big companies have already developed assays to screen out hazardous molecules. While these screens certainly have flaws, she explains, it is unclear how much better stem cell derived assays would be and, therefore, whether the cost is worthwhile. Moreover, stem cells may not be sufficient for efficient screening; the best screening procedures might also require cells to be organised into particular 3D architectures or even make up full organs.

"The amount of money that the pharma industry is putting into [developing stem cells for screening] may be more than what it is worth in the long run," Dr McKernan says. Nevertheless, Pfizer has been developing stem cells for in-house screening purposes for more than 10 years.

making better models

Those who are exploring a third avenue for the mini metamorphs hope that iPSCs can be used to generate useful models of diseases that, as yet, remain elusive.

In 2009, for example, scientists at the University of Wisconsin-Madison used iPSC technology to turn the skin cells of a patient with spinal muscular atrophy (SMA), a genetic neurodegenerative disorder, into the motor neurons that are affected in the disease. Animal models of SMA are inadequate and there are, perhaps consequently, no approved drugs for the fatal disease. With advances in iPSCs, groups could conceivably grow motor neurons that have the same genetic profile as defective disease tissues.

Once the phenotypes of these cells are fully characterised, the cells can then be screened with libraries of compounds to identify candidates that induce relevant changes. Other diseases that have similarly been difficult to model before, but for which iPSCs offer particular promise, include Parkinson's disease and amyotrophic lateral sclerosis (ALS).

iPierian, a US-based biotech firm created in 2009 through the merger of iZumi Bio and Pierian, has taken this strategy. The company is developing iPSC-based models of diseases, including ALS and SMA. iPierian has set its goals high: it wants to have discovered small molecules with therapeutic potential by early-2010, and to get the first of these into the clinic within five years.

show me the money

Stem cells, clearly, offer a myriad of potential and possibility. One report published earlier this year by Burrill & Co listed more than 200 companies that are operating, in some capacity, in the growing field. Yet, despite the activity at the levels of both bench and clinic, investors remain reluctant to back the science, says the merchant bank's CEO Steven Burrill. "I think the capital available for stem cell development is one of the most limiting factors in the whole field."

With scientists debating the best way forward and companies jostling for pole position, investors face uncertain prospects. Not only must they consider the scientific and regulatory uncertainties – which have proven to be significant over the past year – there is also reimbursement ambiguity (who will pay for these potentially costly therapeutics?), financial insecurity (how do they get their money back with a reasonable return?) and execution risk (can it be done?). "This is high on the risk curve, with all of those risks stacked up," Mr Burrill says.

And although stem cells as screens and tools for drug discovery offer fewer obstacles and present an opportunity for nearer term gains, the risks remain unacceptably high. "We've probably looked at every [stem cell] deal in the world, and haven't invested in any of them," says Mr Burrill.

But he remains optimistic. "The challenge now seems painfully slow as we slug our way through the science and the regulatory systems around the world to really understand what we've got and how to enable it to work," says Mr Burrill. "But if you go on a decade I think we will be in an era where regenerative medicine has taken its place in our armamentarium of disease treatment."

Asher Mullard is Scrip's senior science reporter.