STEM Scoops up SCS

In the first of what many are predicting will be a rash of vulture-like acquisitions, Stem Cells, Inc (NADSAQ:STEM) has gone basement-level bargain shopping for brand-name goods and has surfaced with a deal.

As much as STEM's McGlynn loves to find a deal, I love being right. I suspect we were both a little lucky. I won't say I predicted this but in my Jan 2 Industry HiLites post I wrote the following:

Stem Cell Sciences plc, which is listed in Australia and the United Kingdom announced that it had received a GPB200,000 ($A426,348) loan to use for working capital. In return, the third-party lender has been granted an exclusive period to conduct further due diligence in relation to Stem Cell Science's business and assets. Stem Cell Sciences said it was not in talks with any third parties that might lead to an offer for the issued share capital of the company....

Wading now into deep speculation, this tickles the senses like a move Stem Cells Inc might make (I have no information upon which to base this except their past actions) though the SCS assets would not seem to fit with STEM's portfolio. In that respect, this would seem like more of a natural acquisition by Pfizer which did a 5-year deal with SCS in November. I suspect we shall soon see...

As we know, STEM has been kicking a lot of tires over the past couple years looking for the right deal at the right time. The agreement to sweep up Stem Cell Sciences plc (AIM: STEM, ASX: STC) when they were down and out certainly seems to have the kind of value you would expect from acquisitions in these tough times.

STEM is buying the "operating subsidiaries and certain related assets of Stem Cell Sciences ("SCS") for 2,650,000 shares of StemCells common stock and approximately $715,000 of waived loan entitlements."

According to exchange filings today, this deal entails the "Trading Subsidiaries of the Company and certain ancillary agreements, assets, properties and rights for a maximum total consideration of approximately US$4,849,000. "

The closing price for StemCells shares traded on Nasdaq on 27 February 2009 (being the last practicable date prior to publication of the circular) was $1.56 per share.

According to an update in the Wall Street Journal, "shareholders representing 30% of Stem Cell Sciences have backed the deal. "

Under the terms of the asset purchase agreement, StemCells will acquire substantially all of the operating assets and liabilities of SCS, including its research and development operations in Cambridge, UK and near Melbourne, Australia, and substantially all its intellectual property portfolio. It is expected that most of SCS' approximately 20 full-time current staff will remain
with StemCells upon completion of the transaction.

The transaction is expected to close within two months, after which SCS expects to wind down its operations and distribute proceeds from the sale of the acquisition shares, less its transaction and wind-down expenses, to its stockholders.

President and CEO of StemCells, Inc., Martin McGlynn, is quoted as saying:

"The industrial logic of this acquisition is compelling.

StemCells has established itself as a world leader in tissue-derived stem and progenitor cells for therapeutic uses, while Stem Cell Sciences has focused on non-therapeutic applications for embryonic and tissue derived stem cells, such as cell-based assays for drug discovery and screening. This proposed acquisition will combine three distinct stem cell platforms, adult, embryonic and iPS cells, for both therapeutic and drug discovery applications, and will position StemCells to diversify and pursue near-term commercialization opportunities while continuing to develop our cell-based therapeutic products."

I certainly agree with Marty that the value is compelling. I stand by my original observation that I don't see a great fit as STEM is currently positioned but it may well be that this signals a strategic shift in STEM's direction and focus.

We do know that STEM was looking for value and, if possible, a revenue stream that would lighten the burn rate of therapeutic product development. Not only does this acquisition significantly strengthen STEM's IP position in a wide-range of platforms, it potentially positions the company to enjoy a revenue stream that it doesn't need to survive but certainly helps alleviate the bottom burn.

It is possible, of course, that this was part of a much grander overall vision for the company that is only know becoming obvious to us but I suspect not. I suspect STEM is being opportunistic and building value where it can find it. And there's nothing wrong with that!

One of my first blogs here was a discussion of the impending pefect M&A storm brewing in the cell therapy sector. I'm certainly not claiming that post was the result of any original thought or earth-shattering observation but it does remind us that we saw this coming and this is likely just the beginning of a re-shaping of the cell therapy industry.

The good news is that SCS was bought rather than let twist in the wind letting good assets, IP, and people drift off in the storm. The sector is better off for this value being captured and reinvented in a more viable business model. Let's hope we're lucky enough to see the same for other companies in similar straits.

Cell Therapy Industry HiLites 2009-01-02

Happy new year everyone.

2009 feels like it has the potential to be the somewhat overlooked precursor to the 2010 milestone - not that that's bad just perhaps a "building" year rather than a champagne-popper. Whatever it turns out to be I wish you all a happy and prosperous year.

Based on how slow this week was, I fear next week. I predict a killer backlog of pent-up news on its way. In any event, here's what trickled out this week...

Last week Medistem announced it had filed an IND for use of their new endometrial regenerative cells (ERC) for treatment of critical limb ischemia.

ACT & CHA Biotech have rethought the name for their new joint venture (formerly announced as "Allied Cell Technology" the acronym for which is also 'ACT') - opting instead for the more distinct but lengthy, "Stem Cell & Regenerative Medicine International".

Stem Cell Sciences plc, which is listed in Australia and the United Kingdom announced that it had received a GPB200,000 ($A426,348) loan to use for working capital. In return, the third-party lender has been granted an exclusive period to conduct further due diligence in relation to Stem Cell Science's business and assets. Stem Cell Sciences said it was not in talks with any third parties that might lead to an offer for the issued share capital of the company. Stem Cell Sciences, whose shares have been suspended from quotation since November 26 pending a review of the company's financial position and strategic options, last traded at 15 cents.

Wading now into deep speculation, this tickles the senses like a move Stem Cells Inc might make (I have no information upon which to base this except their past actions) though the SCS assets would not seem to fit with STEM's portfolio. In that respect, this would seem like more of a natural acquisition by Pfizer which did a 5-year deal with SCS in November. I suspect we shall soon see...

Just to make things a little more curious, SCS later announced publication in Cell of a pioneering technique for creating authentic ES cells from rats. They believe the publication to be the first in which germ-line transmission from rat ES cells has been definitively demonstrated. It uses technology licensed exclusively to SCS from the University of Edinburgh and developed by Professor Austin Smith and his team, now at Cambridge University.

Alright this isn't a business item but it has business ramifications and I've discussed this issue in my blog a number of times. "Definite and measurable neurological and ophthalmological improvement." That was the clinical observation of ophthalmologist, Dr. Jack Guggino, in comparing 5-year old Xavier's post stem cell treatment exam results with those of a pre-treatment baseline exam. Xavier, diagnosed at age 2 with optic nerve hypoplasia, was flown to China for a controversial stem cell treatment from the sort of clinic that is drawing much criticism from the global scientific community. These clinics are criticized for, among other things, lack of transparency, formal clinical trials, peer-reviewed publications, and patient follow-up to track long-term clinical results. Recent criticism has suggested results are exaggerated and risks downplayed. Nevertheless, if Xavier were my child what would I do? Ok perhaps it would take something terminal and I'm not saying I would, I'm just sayin'...

Just to polish off the year with a little more successful fundraising news, International Stem Cell Corporation (OTCBB:ISCO) announced it has received the first $1 million tranche of an anticipated private equity financing of up to $5 million to be funded over the next several months. The total amount of the financing is intended to allow the Company to retire its existing secured debt and fund operations of the Company as it moves forward with planned pre-clinical trials in the first quarter of 2009.

Watch for a blog coming soon adding up my totals for how much was raised this year by companies in the space.

In a curious case of the company vs the newspaper, the Seattle Times reported on Dec. 24 that CellCyte Genetics had shut down and was unable to pay rent on its Bothell headquarters citing the company's delayed SEC filing. The company, whose shares trade over-the-counter and in the Frankfurt Stock Exchange, saw its value soar past $400 million last year but since plummeted in the midst of questionable activity currently under investigation and the subject of litigation. CellCyte's shares plummeted in January after The Seattle Times published stories describing the stock-promotion efforts and inconsistencies in the résumé of CellCyte Chief Executive Gary Reys. Clearly the Times and CellCyte are not on talking terms because on Dec. 29 Cell Cyte issued a press release saying the Times had it all wrong citing an Aug. 14 press release in which the Company reported progress in its bioreactor business segment and generally described its development plan to commercialize its bioreactor product line. CellCyte reiterated its intent to execute this development plan in 2009.

The company's Form 10-Q, filed Dec. 22, states:
"As of September 30, 2008, the Company had a working capital deficit of $897,402, and an accumulated deficit of $9,890,982 incurred through September 30, 2008. The Company has no revenues. Management forecasts operations during the coming year will need approximately $2,500,000 in additional working capital, which is expected to come from issuance of convertible notes and private placements of stock."

The filing laid out detailed plans for the company over the next 12 months but also stated the following: "As of September 30, 2008, we had cash in the amount of $5,734 and a working capital deficit of $897,402. Our planned expenditures over the next 12 months are expected to amount to approximately $2,500,000 and will exceed our cash reserves and working capital. We presently do not have sufficient cash to fund our operations and have curtailed significantly all activities. We anticipate that we will require additional financing in order to pursue our plan of operations for the next 12 months. There can be no assurance that we will obtain any additional financing in the amounts required or on terms favorable to us. If we are unable to obtain additional financing, we may have to abandon our business activities and plan of operations."

The Seattle Times may be guilty of a little prognostic reporting here but it certainly does seem like CellCyte will have to pull a wee little rabbit out of the hat to keep things going. Having said that, I've certainly heard the premature predictions of the imminent demise of many a cell therapy company before only to watch them 'pull a phoenix'. I like it when that happens.

I don't pretend to fully understand the Cytori patent portfolio and after the legal wrangling settled who ended up with what for what but Cytori announed the issuance of U.S. patent # 7,470,537 (the ‘537 patent) covering adipose-derived stem and progenitor cells to the University of California. The patent application containing these claims is jointly owned by the University of California and the University of Pittsburgh. The composition of matter patent is licensed to Cytori through its agreement with the University of California. The cells covered by the issued claims are believed to encompass a clinically important subpopulation of cells within adipose tissue.

BIO says one in four of the 370 publicly traded U.S. biotech companies have less than six months of cash on hand. But it's not just industry that's impacted by the economic crunch. The global financial crisis may do what opponents of California’s $3 billion state-sponsored stem cell research experiment could not: dry up funding. To keep the money flowing, later this month CIRM will weigh a contingency financing plan that could include bond anticipation notes and a private placement with major philanthropic backers.

And that brings me to my challenge to you all. I know money is tight but it is even more important in times like this that we remember to support the non-profits that support life as we know it for so many. This is true in your local community, on a global scale and it is also true in the industry in which you work. The non-profit organizations that provide critical support to the cell therapy industry need your financial support and your volunteer contributions. This week I announced that I've committed the Cell Therapy Group to supporting ISCT by way of a 2009 corporate membership. Please consider doing the same.

And that, my dear readers, polishes off 2008 and the first couple days of 2009. That's the cell therapy industry the way I saw it over the holiday season.

As Robert A. Preti is fond of saying... "Be careful out there".

Cell Therapy Industry HiLites 2008-12-19

Ok so it's almost not Friday anymore even by my Pacific Time Zone but I promised to try to do this every Friday and so here I am. I will not be doing a HiLites next Friday however. I'm taking a break for the holidays.

For the week before Christmas this was one busy week!

I'll start this week's HiLites with a bit of a focus on Bioheart, Inc. (Nasdaq:BHRT). The company has been busy this week reinventing itself - just how much remains to be seen. As followers of the industry will recall, Bioheart had a disappointing IPO earlier in the year but was able to raise ~$1.8M in a private placement in October. This, I suspect, is not much more than survival money as they are financing a 330-patient phase II/III trial in US and Europe.

So the company's announcement this week came as no surprise that it intends intends o spin out or sell off its interest in several non-core technology platforms including:
- Biopace -- A biological pacemaker.
- MyoValve -- A cell seeding method for repairing and building biological heart valves.
- EndoCell -- A system for bedside preparation of adipose tissue for delivery of endothelial progenitor cells to the adventitia of coronary arteries for prevention of restenosis following
balloon angioplasty, stenting or atherectomy.
- AortaCel -- Cell compositions and delivery systems for repairing aortic aneurysms or for reinforcing the neck area in aortas repaired with an endovascular stent graft.

In addition, Bioheart is seeking a strategic partner for the development of its bi-ventricular pacemaker technology, called MyoStim, which utilizes a patented electrical stimulation software program and an additional pacemaker lead to enhance cell transplantation.

Understandably Bioheart is doing this in order to intensify its strategic focus on the treatment of patients suffering from heart failure. Interestingly, however, in their press release Bioheart made no mention of their cell therapy saying rather that Company is strategically focused on commercializing patented technologies for reducing and repairing heart muscle damage caused by heart attacks as well as marketing advanced heart failure monitoring devices including the Bioheart 3370 Heart Failure Monitor and the Bioheart-Monebo CardioBelt(tm) ECG Acquisition Device.

Then yesterday Bioheart announced it had had signed a deal with Life Technologies Corporation (Nasdaq:LIFE) (the new combined Invitrogen-Applied Biosystems entity) which provided Life the global distribution to Bioheart's myoblast cell-based research products to life science researchers. The deal is intended to "expand the number of therapeutic applications under development with this type of cell" but again no mention of Bioheart's own trial or product.

All of which leads to at least a couple questions we hope Bioheart will soon answer. Firstly, is the company positioning itself away from its lead product MyoCell®? Secondly, the deal with Life Technologies was described as a "distribution and OEM agreeement" but while there was discussion about the distribution aspects of the deal, there was no description of the OEM part. Given that neither company has any notable capacity or expertise in producing clinical-grade cells will this only encompass research-grade cells or are there other plans here not being discussed?

I'll move on to other news of the week.

In a move that will certainly enhance his legacy on his way out the door, Alan Lewis announced that Novocell, Inc. has entered into a non-exclusive drug discovery collaboration with Pfizer which gives Pfizer access to Novocell’s proprietary pancreatic progenitor cells derived from human embryonic stem (hES) cells. This appears to be an open-platform type of agreement (limited for now to 2 years). Novocell will receive an upfront payment, research funding, additional amounts payable upon the achievement of certain technical milestones, and payments relating to the sale by Pfizer of any exclusive therapeutic discovered as a result of the collaboration.

Novocell has shown it can coax human embryonic stem cells to become fully functioning pancreatic beta cells that secrete insulin in mice but about 15 percent of the animals got teratomas, a type of tumor. This, the company will have to learn to prevent or at least control before it gets approval to go to human clinical trials. For now, as Xconomy's Luke Timmerman says, "Novocell can take some comfort knowing that some of the deepest pockets in the pharmaceutical industry are shelling out at least a little spare change to help it crack daunting challenges like that."

BioLife Solutions Inc. (OTCBB: BLFS) announced that it has completed an initial series of small animal safety studies. The studies evaluated injections of HypoThermosol, CryoStor, or control phosphate buffered saline (PBS) into healthy rodents. The study was designed to mimic human clinical applications where stem cells isolated from cord or peripheral blood are re-suspended in a carrier solution and administered intravenously to treat patients suffering from a variety of diseases and disorders including leukemia, anemia, lymphoma, myeloma, and other cancers.
The results of these studies demonstrate- the Company claims - that infusion of HypoThermosol and CryoStor present no safety risk within the parameters of this two-stage evaluation in a rodent model. Data to be published and/or presented soon.

Avita Medical Ltd (ASX: AVH) says the French Ministry of Health is funding a 200 patient medico-economics study on the impact of Recell on burn wound healing. Avita said that the first patients were enrolled and had been treated in the study which was part of a French program “to advance the implementation of innovative technologies”. Avita said the primary goal was to demonstrate the medical effectiveness and economic benefits of the Recell technology to the hospital and health care system in the treatment of burns and wounds.

Recell, already commercially available in Australia, is a single-use medical device for harvesting autologous skin cells. Developed as an 'off the shelf' kit, ReCell enables a thin split thickness biopsy, taken at the time of procedure, to be processed into an immediate cell population for delivery onto the wound surface. Once processed, the cell suspension is available for immediate use and can cover a wound up to 80 times the area of the donor biopsy. ReCell enables the delivery of keratinocytes, melanocytes, fibroblasts and Langerhans cells harvested from the epidermal-dermal junction for application onto a wound surface in order to promote effective wound healing.

Pluristem Therapeutics Inc. (NasdaqCM:PSTI) (DAX:PJT) filed a European Investigational Medicinal Product Dossier (IMPD) to begin clinical trials of its placental-derived adherent stromal cell product, PLX - PAD, an allogeneic cell therapy, for critical limb ischemia. The company filed the IMPD application with the Paul Ehrlich Institute (PEI), the German competent authority in the European Union (EU). An IMPD is a harmonized procedure for the authorization to perform a clinical study in any one of the EU Member States. An IMPD is requested whenever the performance of a clinical study in any one of the EU Member States is intended, and it is similar to an Investigational New Drug (IND) Application that would be filed for the performance of a clinical study in the United States. Assuming approval of the IMPD by this authority, Pluristem said it plans to initiate the dose ranging clinical trial during the second quarter of 2009 at two sites in Berlin, Germany

Amgen lobbied this week for personalized medicine by presenting to the FDA the argument that one of its drugs should be used by just a subgroup of patients with colorectal cancer who appear to be most likely to benefit from it.

NeuralStem filed an IND to use its neural stem cell technology in a trial for Lou Gehrig’s disease in what it described as the first ALS trial using stem cells.

Progenitor Cell Therapy has brought in a new CFO with over 21 years of experience in the life sciences industry and fundraising. This will undoubtedly help them raise the funds needed for their continued US and European expansion plans.

StemCells, Inc (NASDAQ: STEM), which already has a trial underway for Batten disease, just received FDA approval to start a trial for Pelizaeus-Merzbacher Disease (PMD), also fatal brain disorder that affects mainly young children. The mechanism of the potential Batten disease therapy is to establish healthy neural cells that can help a patient’s own cells clear out some toxic garbage that builds up in the disease, the mechanism for PMD is to boost myelinization of neurons. StemCells uses cells originally derived from fetal tissue.

Although this news will be old to some I discovered this week Arteriocyte's announcement from November 10 that it had been awarded the DARPA Blood Pharming award to the tune of $1,950,000 which presumably it has to share with collaborators at Johns Hopkins University, The Ohio State University and INSERM, Paris. While this seems like a sizeably juicy award, the US Military's Defense Advanced Research Projects Agency (DARPA) has issued a tall order. DARPA wants a self-contained device small enough (≤47 ft3) to go into the military field and create at least 100 units of universal blood (i.e., can be transfused into anyone regardless of blood type) per week for eight weeks. The key ingredient to Arteriocyte's proposal and the company's Nanofiber Based System (NANEX) technology is umbilical cord blood stem cells.

While technically not a cell therapy play, both these players are notable enough in the cell-as-tools sector that we thought it worth noting that VistaGen Therapeutics has signed a deal with Wisconsin Alumni Research Foundation (WARF) to license WARF's human embryonic stem cell patents for the development and commercialization of stem cell-based research tools.

Winning this week's award for the press release with no news, is the annoucement from Advanced Cell Technology, Inc.(Other OTC: ACTC.PK) that "its technology platform, which utilizes a single cell biopsy that does not destroy the embryo, is well positioned to receive Federal funding under the new administration led by President-Elect Barrack Obama."

They made up for it the next day, however, by releasing news of new funding. Demonstrating, once again, their tenacious survivability, ACT announced it had licensed a "non-core technology" to one of its creditors, Ireland-based Transition Holdings, Inc, for $2.5 million - comprised of the extinguishment of $1.5 million of debt and an additional funding commitment of $1 million. The Company expects to apply the proceeds it receives in the future towards its retinal pigment epithelium (RPE) cells program.

Cytori has now launched a a 30-person clinical trial using adipose (fat) stem cells for chronic radiation induced injury.

Life Technologies announced its CIRM award will be used to develop human stem cell models of neurodegenerative diseases to advance drug development. The company intends to use human embryonic stem cells to develop new models of Lou Gehrig's Disease and other neurodegenerative diseases.

Inno Bio Diagnostics Sdn Bhd (IBD), which specialises in cell-based diagnostics and regenerative medicine, is investing RM4.58 million (~$1.3M) to set up a cell therapy centre at the Universiti Kebangsaan Malaysia Medical Centre (UKMMC) in Kuala Lumpur, Malaysia. IBD, a wholly-owned subsidiary of Inno Bio Ventures Sdn Bhd, aims to create and develop business opportunities in stem cell technology in the area of cell-based diagnostics and therapy. The cell therapy centre, which is expected to start operations next year, will be jointly managed by IBD and UKMMC to develop human hepatocyte-like cells from stem cells that are derived from embryonic, bone marrow, mesenchymal and adipose tissues. The human hepatocyte-like cells can be used for in vitro assays for screening and testing potential drugs for the pharmaceutical and nutraceutical industries. According to Ahmad Zaharudin, the company is projecting a revenue of RM15 million to be generated from the product, knowledge transfer and licensing of technology as outcome of the partnership.

Genzyme Corporation announced that the U.S. Food and Drug Administration has granted marketing approval for Mozobil(TM) (plerixafor injection), a drug intended to be used in combination with granulocyte-colony stimulating factor (G-CSF) to mobilize hematopoietic stem cells to the bloodstream for collection and subsequent autologous transplantation in patients with non-Hodgkin's lymphoma (NHL) and multiple myeloma (MM). The product has also been granted orphan drug designation. Genzyme has submitted an application in Europe for approval of Mozobil and expects approval of the product in the second half of 2009. Genzyme recently filed applications in Australia and Brazil, and additional global applications in up to 60 countries are planned. Mozobil has received orphan drug designation in Mexico which allows the product to be commercialized in the country upon U.S. approval. Genzyme believes that Mozobil may have broad application outside the current indication. Early preclinical and clinical investigations are already underway to explore additional therapeutic indications for Mozobil, including mobilization of hematopoietic stem cells in allogeneic stem cell transplants and tumor sensitization in oncology/hematology treatments such as adult myeloid leukemia.

And finally... it looks like there's a showdown shaping up in Colorado. As disucssed previously on this blog, in July FDA CBER's Mary Malarkey sent a warning letter to Dr. Christopher J. Centeno, Medical Director of Regenerative Sciences, Inc (RSI), doing business as Regenexx. On a recent visit to the Regenexx website, we see that they state the following:

"The Food & Drug Administration's (FDA) role is to regulate the sale and distribution of drugs, devices, biologics and combination products, but not how these products are used by physicians. The FDA does not approve surgical procedures. RSI conducts all surgical procedures within the State of Colorado. There are no interstate aspects to the procedures conducted by RSI that invoke FDA jurisdiction under the Public Health Service Act (PHSA), which requires an interstate nexus. Our surgical procedure involve the use of autologous stem cell therapies (ACTs) consisting of products or treatments incorporating the in vivo use of a patient's own stem cells, following, in certain circumstances, ex vivo manipulation or processing, for the prevention, or treatment of disease. The surgical procedures conducted by RSI including surgery and bone marrow transplants are not performed as part of any research intended for FDA approval of a product that is under the jurisdiction of the FDA. Therefore, the stem cell procedures conducted by RSI are not under the jurisdiction of the FDA. Rather, the procedures conducted by RSI are considered the "practice of medicine," and is left up to individual surgeons' judgment and experience and oversight by the Colorado Board of Medicine." [emphasis added]


And that ends the way I saw the cell therapy industry this week.... More HiLites to come in 2009! Happy holidays to one and all.

--Lee

Cell Therapy HiLites 2008-11-21

This is a week in which 2 of GEN's top 7 News of the Week stories were about regenerative medicine and they weren't even the two big financing events. Not bad.

Good news for Tissue Genesis Inc and their Commercialization Consortium partners Bioheart and VetStem. Effective immediately, the Tissue Genesis Cell Isolation System will be available to the European marketplace.

In a piece about biotech survival, Luke Timmerman, now of Xconomy.com, reports that according to an October report by Eun Yang, an analyst with Jeffries & Co., "about half of the 248 unprofitable biotechs that are publicly traded have less than a year’s worth of cash on hand".

Dr. Michael D. West announced an open letter to President-Elect Obama signed by 22 scientists and economists (including 19 Nobel laureates), urging the new Administration to make regenerative medicine, specifically, the cure of human disease, a national priority, similar in scope to the Kennedy Administration’s commitment to land a man on the moon within that decade.

Aldagen announced positive phase 1/2 results for ALD-301 (an autologous, bone marrow-derived stem cell population expressing high levels of ALDH) for critical limb ischemia.

The story everyone loved this week was the new trachea built from autologous stem cells and effectively transplanted in Spain. Chalk one up for more proof-of-principle but more consternation on the "business models" side of things. Researchers and surgeons from Britain, Italy and Spain collaborated to grow tissue from Ms Castillo’s own bone marrow stem cells, using them to fashion the new bronchus – a branch of the windpipe. Details of the transplant, performed by Paolo Macchiarini, at the Hospital Clinic of Barcelona, are published online in The Lancet and discussed in accompanying commentary. First a section of trachea was taken from a donor and stripped of cells that could cause an immune reaction, leaving a grey trunk of connective tissue. Stem cells were then taken from Ms Castillo’s bone marrow and grown in Professor Birchall’s laboratory to cover the 7cm graft. It was then “seeded” with the new cells using a process developed in Milan. Finally the trachea, covered in cartilage and lined with epithelial cells, was cut to shape and fitted. The researchers said that the surgery could help some patients in Britain but admitted that the procedure was too expensive to be widely available. They are seeking EU funding and commercial sponsors for trials to create and transplant a larynx, an operation that could be more cost-effective.

The two stories I loved the most this week were finance-related.

Last week Stem Cells Inc. announced its intention to raise $20M gross and this week it closed the deal netting $18.5 million from institutional investors.

Not to be outdone, Tengion raised $21 million in a second close of its Series C adding Safeguard Scientific to its heady roster of investors.

What money does exist for investing in cell therapies appears to be increasingly focused on a handful of companies that have demonstrated a somewhat mysterious capability to ease money from investors. Stem Cells, Inc and Tengion are two of the best along with MolMed in Italy which netted around $76M in an IPO earlier this year. Osiris has also done well on the public markets but also through the undying commitment of Peter Friedli and timely deal-making. Notable mention should also go to Aldagen (despite them having to recently pull a planned ~$80M IPO), Novocell, Geron, and Dendreon who all have done well in the past with investors.

This trend for capital congregation is nothing new. It certainly supports popular notions that either investors all think the same or they are lemming-like in their movements. It certainly does not bode well for the plethora of companies out there that are on the brink of burnout despite having seemingly strong management and data but do not seem to have that same type of investor-attracting charisma as the likes of Weissman/McGlynn, Nichtberger, Bordignon, Mills, Lewis, Okarma, or Gold.

At the end of the day, a company's success almost always comes down to its rainmaker. This is not a "if-you-build-it-they-will-come" type of industry. Great science, technical prowess, manufacturing experience, or even business acumen will not get companies over the threshold without that someone with that somewhat magic prowess to relieve investors of their money. Many cell therapy companies are now learning that lesson.

In the interim, from a mere objective point-of-view I could argue it's not a bad thing that investors focus precious resources on a few companies' products, get them approved, and get some fresh upticks in the "precedent" column for cell therapies and the new therapeutics and business models they represent. Like lawyers - and perhaps its because there are so many law degrees in the halls of VC firms - nothing makes them more comfortable than precendent.

That's just the way I saw cell therapy this week...