Stem Cell Sciences: Stem Cell Technologies: The End of the Beginning




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Video title: Stem Cell Sciences: Stem Cell Technologies: The End of the Beginning
Released on: January 01, 2008. © PharmaVentures Ltd
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In this exclusive interview, Fintan Walton talks to Peter Mountford, formerly CEO of Stem Cell Sciences, about the current state of stem cell technologies and their potential healthcare and research applications. The company is now at the ‘end of the beginning stage’, and has the capability to mass produce stem cells, with which it hopes to provide a range of products and services. The impact of emerging stem cell technologies on ethical concerns is discussed, as well as the likely commercialisation process of the technology. Peter also outlines the challenge in gaining funding for stem cell research, particularly from venture capital firms.
Aim and purpose of Stem Cell Sciences
Fintan Walton:
Hello and welcome to PharmaVentures Business Review here in Brisbane. On this show I have Peter Mountford, who is the CEO and Founder of Stem Cell Sciences, welcome to the show.
Peter Mountford:
Thank you.
Fintan Walton:
You are an early player in the Stem Cell Sciences remit because your company was formed back in 1994 and over the last 13-years a lot has happened in the whole arena of stem cells and today it's a hot area both in the scientific level but also in a regulatory level as well, so could you just tell us what is Stem Cell Sciences is about? What sort of company is it and what's your aim? What's your purpose?
Peter Mountford:
Yes, well Stem Cell Sciences was really established to build on the blue sky potential of stem cells which is to use them in drug discovery and also in therapeutics also on a wide range in research uses. Those applications really demand high efficiency growth of stem cells in the laboratory to be able to produce again stem cells on mass in a reproducible and robust manner until you can do that really you can't enter those blue sky opportunities and realize what is the excitement about stem cells. And so our model has been to access the top academic groups around the world who understand stem cell biology to teach us how to grow stem cells properly and now we've found ourselves currently after 13-years really at the end of the beginning stage which has been the research and development of systems to grow stem cells truly robustly and at large scale as is needed by industry and would be needed for cell therapies in the future.
Fintan Walton:
So in an effect like in lot of the sciences it's getting the enablement?
Peter Mountford:
Absolutely.
Fintan Walton:
It's enabling the capability to produce mass produce these cells which is where you are focused on and have you got to that stage?
Peter Mountford:
Yes indeed, we've recently commissioned a new facility in Cambridge, UK using the state of the art robotics an automation for large scale cell productions and having spent the time on the bench with small scale we've found that the first eight cell types that we transferred on to the platform have worked beautiful and so the scale up has been no challenge at all and it's progressing very well and of course that's now attracting a great deal more interest to the Cambridge facility.
Big pharma scanning stem cell research
Fintan Walton:
So the key thing here obviously with stem cells is that as you already indicated is one that it's a research tool and possibly a discovery tool for new entities that have therapeutic use hopefully and on the other hand you have the cells for therapeutic use I suppose when we deal with the pharmaceutical industry, the pharmaceutical industry tends to understand the former better than the latter for them to move into the concept of stem cells itself as a therapy is a big leap for them do you find that?
Peter Mountford:
Look it is a big leap but I've been quite surprised with often tough comments from pharmaceutical company people who have said well for the time being we put the cell therapy option on the back burner and for me I wouldn't think that they would even have a quite in their mind that this.
Fintan Walton:
About controls?
Peter Mountford:
Yes exactly and I thought it was just too early, but certainly big pharma is scanning the stem cell space and has been for quite some time with the luxury of being able to come in when they want to and acquire what they want of course, but I think the first step is that is to see that the pharma industry is now recognizing that technology is actually ready to move and the sorts of deals that we've done with the Merck's [PharmaDeals ID = 26568] and Pfizer's over the years. Pfizer really an early look-see deal but Merck now acknowledging more directly the technology on the large platform and so they are moving into the space now.
Fintan Walton:
So they are moving in for the drug discovery?
Peter Mountford:
That's right, yes.
Fintan Walton:
Component of it that's where they feel comfortable, so you are effectively supplying stem cells to these companies from different sources?
Peter Mountford:
That's right most of our business is in collaborative research and licensing deals with big pharma or major biotech companies and that's been our business really since foundation in '94 so there has been activity but it's being exploratory activity and what you see activity where as now we find that the pharmaceutical industry is actually searching for the technologies that they want and seeking to acquire them and bring them in and learn about how to use those through collaborative interactions.
Fintan Walton:
So you are earning you are getting revenues obviously from the sale of stem cells as well as licensing of stem cells?
Peter Mountford:
Licensing, milestones, sales you typically don't enjoy royalties from providing a discovery technology but you do get your milestones and your upfront fees and in fact discover a new chemical entity there will be a milestone depending on the company that you are working with of course.
Purpose of US operation
Fintan Walton:
The other feature of your own company Stem Cell Sciences is that it's when we look at your activities clearly Australia but also as you said you are based in the UK and you've also got activities in Japan and I think you are looking for opening up offices in California is that correct?
Peter Mountford:
We already have our office and business team active already in the USA.
Fintan Walton:
So what is the purpose of the US operation?
Peter Mountford:
US is primarily for business development, we don't have any laboratories we have some early stage interaction with academia but it's primarily business development. In the UK we have two facilities and Japan and in Australia each of those facilities and opportunities that's being developed to access technology and to build the platform so what's of positions that we are looking to create now really to use the technology, so if you like other academic groups or the experts and using the particular cell for cell therapy indication they might put support into a different location for that, but the global footprint has been all about accessing technology.
Stem Cell Sciences's two part business model
Fintan Walton:
Right and the other key thing to all of this is how you position yourself from a business model point of view because you clearly got two parts to your business model, one is a long-term high risk development of the use of the stem cells for therapy the other one is a you know revenue today type model, is that likely are those two components likely to stay together or they are likely to split apart?
Peter Mountford:
It's likely that components of the business activity will be spun out at different stages ultimately the different components of the business aligned up to provide back revenue and the infrastructure and technology to continue to grow and develop the core competency in growing cells, so that's our business is to grow cells and use cells and then to spin out the different opportunities, for example our media alliance with Millipore [PharmaDeals ID = 25588] is all about accessing the academic market with large a large market with small volumes and we can't do that obviously as a small biotech, so we work with Millipore to take that over and eventually that package will be packaged up and sold off. Separately working with the pharmaceutical industry that's the smaller number of clients and we work directly and so and that is really one of our engines that activity is not just the revenue but discovery of small molecules which again let us grow stem cells in a better way and an example of that was the recent in licensing of (indiscernable) which is a small molecule which greatly improves immunoassay growth and it's application and utility is far simplified through the use of this molecule. So small molecules and stem cells is where the engine of the company sits and that's very much in Cambridge.
The impact of emerging stem cell technologies on ethical concerns
Fintan Walton:
Right, so the other thing we can't avoid when we talk about stem cells is the feature called regulatory social views on that and those are particularly strong in the United States how much of a change is do you think would be required and what is really to be successful here or do you see that as not being an issue?
Peter Mountford:
Look it has been an issue but really the limiting factor has been technology. The big industries entry into the space is not limited by the politics of the US as the principal limitation it's the technology the technology hasn't been ready and hasn't been suitably attractive, but now with the platform in tissue, stem cell and embryonic of course still more sensitive coming forward the large industry has advanced their thinking and develop new company positions and so forth, so this is being managed and it's not a critical issue.
Fintan Walton:
So I suppose the technology can overcome some of the ethical issues, in other words you don't have to depend on embryonic cells for as a source of stem cells?
Peter Mountford:
Indeed well there is tissue stem cells and of course the more recent work in producing embryonic stem cells from adult cells simply by the addition of genes is extremely exciting technology the prospect of making embryonic stem cells from anybody and everybody whenever you wish without the controversy of embryonic cells, so this is only happening in the mass at the moment but it's really quite foreseeable that it will happen in human and that will be a great value and that will be another reduction in the concerns of different organizations and individuals.
Fintan Walton:
And then looking at the use of stem cells for therapeutic use and looking at the revenue models for that because I suppose one of the things that pharmaceutical companies are much more used to working with small molecules where there is the drug is manufactured and then shipped out and you know other people deal with it, but I suppose stem cells is different because it's actually part of a therapeutic closely alliance with surgical procedures and so forth, does that mean that the adopters the likely adopters for stem cells are likely to be those companies that are close to that, I am talking about the companies that tend to be closer to working closer with clinicians particularly in surgical procedures?
Peter Mountford:
Segmentation companies and so forth.
Fintan Walton:
Yes, exactly.
Peter Mountford:
Yes certainly the guys that push these products out into different hospitals around the world it is likely to require a partner but I think really what is likely to happen is that there would be so product produced at mass which can be distributed to different destinations in sitting freezers and (indiscernable) a right use and so the distribution issue, manufacture or distribution issue is really quite similar. The use of the product of course well probably require training and interaction with experts on the culture of the cells, preparation of the cells, and transfer of the cells and I think this is likely to originate at centers of excellence for particular therapeutic indications and these will become training centers for different hospitals and different doctors will visit and learn and take that technology back and so that's how I currently think it's likely to evolve.
Fintan Walton:
Yes, so in other words there will only be a few places in the world where these procedures will be initially all these procedures will actually take place?
Peter Mountford:
Certainly and those involved in initial clinical trials are likely to be those starting points and different, you know different hospitals and different medical teaching laboratories around the world have expertise already and are likely to be at the forefront of using and educating as the products come further down the path.
Accessing specific technologies to develop business
Fintan Walton:
And when you talk about accessing the technology and the expertise within universities what specific technologies are you looking for to help develop your own business?
Peter Mountford:
It's really two stages and that's beginning and end almost. In the beginning it's got to be to grow stem cells properly and that's enormously challenging this is not a simple issue to address and it's to grow stem cells in fully defined media so there is nothing which is different between each batch it's fully reproducible and predictable and the product is consistent and this is difficult to achieve but it's now being achieved for a number of cell types around the world. So this technology has come into the company we are now scaling that and that's a business development issue to work with pharmaceutical and biotechnology industry, at the other end we are similarly looking to access academics or our expert in using cells for different therapeutic our animal models and similarly this is an enormous investment overtime where they've been using the cells what they have derived either from cadaver tissue or from animals and so they've tested small volumes of cells they are very familiar with transferring these cells and their potential and clearly in some instance clinical benefits, so now they are looking to access cells on a reproducible basis and they can do better and more controlled experiments, clinical research and hopefully push forward to real therapeutics.
The challenge in gaining funding for stem cell research
Fintan Walton:
Right and it comes back down to this another issue which is funding for this sort of research because you are one of the few companies that has successfully raised money in the stem cell science area, you did a placement and flotation in the UK on AIM and you are now listed here in the ASX as well, so when it comes to funding and convincing venture capital and others to invest in stem cell science area is that still an issue, because that appears to be the issue?
Peter Mountford:
Absolutely, I mean it's fortunate that there is such an enormous amount of government funding going into the space. To the point where it in California they are even suggesting they will fund clinical trials, so that's great and of course in the biotechnology business funds are always difficult to come by I don't think the stem cell industry is particularly different and hard but it' is fundamentally different in respect to accessing venture capital there really is no venture capital in the stem cell space at the moment there was a full start back in the early 1990, '94, '95 but since then there hasn't been venture capital in this area. With big industry moving in and business models that can be seen to have outcomes in a reasonable period of time may be we will see the venture industry just start to move and there is signs of that but they are very cautious of course.
Fintan Walton:
So that means that the development and the progress of this approach is going to be largely dependent on both government and not for profit organizations funding that and taking it forward?
Peter Mountford:
It has been to date yes but I think with big industry now moving to take positions on the cells and take in some instances exclusive positions to technology and will see that nervousness develop in the industry where they can see their technologies accessible and usable. We have Pfizer speaking regularly about their use of our platform to screen many 100's of 1000's of compound, so they know it's now accessible and being used and there will be a nervous energy and finally the goliath will move and hopefully venture will follow.
Fintan Walton:
Yes, I mean again they are accessing it because they can approach traditional drug discovery through that?
Peter Mountford:
Yes.
Fintan Walton:
But I suppose the biggest, still the biggest hurdle psychologically for them or even maybe commercially for them is this leap into adopting cell therapies as an approach for their own business model?
Peter Mountford:
I think that sometime of I think we focus really on the drug discovery and development side of it and we see pharmaceutical industry interested across the board in better toxicology screening systems so typically liver and cardiac cells they are interested in still a challenge and not there yet and then we have a band of indications specific interest which is looking for Alzheimer's or Parkinson's disease and for our company we are particularly interested in a very small band of assays that we hopefully we will be able to develop to enable drug discovery in areas which are not accessible at the moment they are simply no assays to enable or to discover drugs in certain indications such as complex genetics disease, so in that area we might be out of partner and see little more of the upside with pharma, but for the time being I don't think pharma is really pushing seriously towards cell therapy although they are investing through their venture arms in some start ups.
Fintan Walton:
And would you ever consider under your own business model of going out and trying to identify your own molecules and developing into taking drugs that you can discover from your stem cell activities take those forward?
Peter Mountford:
There are activities ongoing in the company our principle interest is to access these molecules for ex-vivo used, grow stem cells, but we do have the opportunity to develop intellectual property and value around those molecules for in vivo used for pharmaceutical use and recently we were awarded a terrific grant by the European Union Framework 6 a collaborative grant bringing together small molecules, chemistry, automation and so forth to screen small molecules on our neuro platform which is the one Merck is currently bringing in house. And so we, what we discovered there we will own and how we add value to that we will wait and see but obviously we are not going to be developing pharmaceuticals right through to the market but we look to add value for sure.
Stem Cell Sciences's vision for next five years
Fintan Walton:
Okay, and finally to do this to get involved in the stem cell science activity what's your vision? What do you see happening let's say over the next five-years?
Peter Mountford:
I think what we'll see is that with robust stem cell culture readily accessible and consistent media products this will first infiltrate into academic labs in a big way and so to become standardized, large industry will start to use it in a standardized platform and stem cells biology will become just like recombinant proteins towards new industry and you'll have standard platforms for production of cells. And as you have the pharma industry producing small molecules now the Amgen's and Genentech's producing your protein based therapeutics you'll then have a group of companies that are specializing in the manufacture of cells that are utilized across the (indiscernable) of research and possibly some therapeutics as well.
Fintan Walton:
And then some big pharmaceutical companies will come along by them?
Peter Mountford:
Inevitably I think there will be big pharma moving into the space but I really like to think that the Genentech type model which is collaboration with big industry and then independent operation focusing on their specialties is really a better way to go and pharma can't be everything for all things and there is a need to specialize.
Fintan Walton:
Yes, well certainly it is a lot of good models around. Peter, thanks very much for coming on the show and for us to learn more about Stem Cell Sciences. Thank you very much indeed.
Peter Mountford:
You're welcome, thank you for having me.
Fintan Walton
Dr Walton is the Founder and CEO of PharmaTelevision. After completing his doctoral research on the genetics of cell proliferation at the University of Michigan (US) and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Peter Mountford
CEO of Stem Cell Sciences
Dr Peter Mountford at the time of recording the interview is Chief Executive Officer of Stem Cell Sciences, having stepped down as CEO in November 2007. A co-founder of the company, Dr Mountford was appointed CEO in 1999 and was instrumental in its development and globalization. He has a PhD in cellular and molecular biology from the University of Melbourne, and completed a post-doctoral research fellowship, sponsored by the Royal Society of London at the University of Edinburgh. Dr Mountford is a Director of all the companies within the Stem Cell Sciences Group, as well as of the private company Secure Sciences.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialization.
Stem Cell Sciences
Stem Cell Sciences (SCS) is an international research and development company specializing in the provision of stem cells and stem cell technologies for research and for the clinic. The company has been active since 1994, principally focused on technologies to grow, differentiate and purify embryonic and neural stem cells. The company has business and scientific operations in Edinburgh and Cambridge (UK), Melbourne (Australia), Kobe (Japan) and California (USA).