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Tales of the Tape: U.S. Struggles To Compete In Stem Cells
By Greg Groeller
Dow Jones News Service
05 July 2005
NEW YORK (Dow Jones)--Earlier this year, 10 patients suffering from congestive cardiac failure received injections of fetal-derived stem cells directly into their hearts at a hospital in Ecuador.
Thirty days later, the pumping capacity of the patients' hearts had improved an average of 41%, increasing the distance they could walk nonstop by an average of 72%, according to the Institute for Regenerative Medicine, a Barbados-based company that funded the study.
The study's senior investigator was a prominent American cardiologist, but otherwise it was conducted solely overseas. The reason: Other nations' governments are more supportive of stem cell research, and the political climate surrounding the issue is less heated than in U.S., said Barnett Suskind, an American who is chief executive of the Institute.
"All of the science that is yet to be discovered is not happening in the U.S.," Suskind said. "We are talking billions of dollars of research that will happen elsewhere because the world is demanding it."
Comments like Suskind's have been the subject of much hand-wringing in the U.S. biotech industry, academia and investment community. As companies in nations such as South Korea, Singapore and Australia make major advances in stem cell research, fears have grown in the U.S. that scientists and investment capital will flee overseas, causing the nation to lose its edge as the world's dominant biotechnology force.
While no solid data exist to support these fears, strong anecdotal evidence has spurred some states to fill in the funding gap created when President Bush halted federal dollars in 2001 for new cell lines discovered through embryonic stem cell research.
These moves have increased hopes that such a drain of resources can be slowed - or even halted - before the U.S. falls woefully behind other nations in a field that many believe holds the key to curing some of world's most serious diseases.
Californians, for instance, voted last year to provide $3 billion over 10 years to support embryonic stem cell research. Other states are following suit, albeit on a smaller scale. New Jersey, for instance, plans to build a $380 million stem cell institute. And Wisconsin recently approved a university-based stem cell research center of its own.
"We are still early enough in this field that I don't think the lack of federal funding puts us behind anyone significantly," said Ren Benjamin, a biotech analyst for Rodman & Renshaw. "We as a country are very resourceful. If the federal government doesn't give us $100 million, then someone else will."
Embryonic stem cells are controversial because they must be taken from weeks-old human embryos - a practice that some find morally and religiously offensive. But embryonic stem cells are also the most potent and adaptable, with the potential to grow into virtually any human body tissue. Research is also being conducted on adult stem cells, as well as cells taken from umbilical cords, but scientists generally agree that they are less adaptable.
Bush's funding ban only extended to newly discovered lines - or colonies - of embryonic stem cells. Lines discovered before 2001 are still supported by federal dollars, but some scientists complain that the quality of many of the older lines is so poor that their research potential is hindered.
In the U.S., dozens of small companies have been established, though only a handful are publicly held and virtually none are profitable. Those traded on the public market include Geron Corp. (GERN), Stemcells Inc. (STEM), Aastrom Biosciences Inc. (ASTM) and ViaCell Inc. (VIAC). Only Geron is focused on embryonic stem cells. Stemcells and Aastrom research adult stem cells, while Viacell mainly concentrates on cells from umbilical cords.
Geron is currently testing its research on animals, but the company predicts that its first clinical trial on humans will focus on the treatment of spinal cord injuries.
Steve Brozak, president of Westfield Bakerink Brozak, an investment firm, said Geron is a leader in the embryonic stem cell field because the company got its start years earlier than most and has amassed an impressive array of intellectual property.
Still, Brozak doesn't subscribe to the theory that state financing will make up for a lack of support at the federal level. Investment capital that should have gone to U.S. companies has instead gone overseas because of the current political environment, he said.
"In the U.S., we've heard this big sucking sound that is essentially a drain of capital," Brozak said. "Show me an industry that has flourished when you have outright hostile behavior by the federal government."
Brozak applauds California's efforts to fund research, but worries that there is no coherent plan for spending it. Other critics point out that none of the $3 billion has been spent; the funding plan is currently being challenged in court by an anti-abortion group.
Still, a growing chorus of experts think that states - which are increasingly vying to create biotech "centers of excellence" - will step up with taxpayer funds to fill the gap left by Bush's ban.
"This competition will ensure that states will do whatever it takes to ensure that stem cell research is funded," said David Webster, president of Webster Consulting Group, which works with the biotech industry.
That may be, but some critics say that states better hurry. With new embryonic stem cell lines increasingly being discovered and researched overseas, time may be short.
"As a result of the lack of federal funding, we've allowed the global competition to intensify," said Scott Morrison, director of U.S. life sciences at Ernst & Young. "I think we've lost some talent and some of the momentum associated with being the market leader in biotech globally."
(Greg Groeller covers the pharmaceutical and biotech industries for Dow Jones Newswires.)
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