At Risk: A Golden Opportunity in Biotech

Limits on federal funding have already eroded U.S. research efforts

For decades, the U.S. has been the world leader in biotechnology. It conducts more than 90% of the world's biomedical research, and U.S. federal and private spending on life sciences exceeds that of the rest of the world put together. But on Aug. 9, President Bush limited federal funding for stem cell research to cell lines already in existence. And on Aug. 27, a consequence of that decision became clear: The National Institutes of Health (NIH) announced that 48 of the 64 human embryonic stem cell lines eligible for U.S. funding reside in labs outside American borders.

That shows how far the U.S. has fallen behind in this promising area of biotechnology. While the U.S. continues to debate the ethical implications, Britain, Scandinavia, and the Netherlands can lay claim to some of the top talent, a track record of public and private support, and a more liberal regulatory framework.

The U.S. once held the lead in stem cell research, when scientists at the University of Wisconsin became the first to isolate human embryonic stem cells in 1998. Sweden now has 24 of the world's existing stem cell lines, compared with 20 in the U.S. And other countries, in both Europe and Asia, are revving up their own stem cell programs.

But these nations will be hard-pressed to duplicate what could be done with unrestricted federal funding in the U.S. Their research budgets are tiny compared with the $18.8 billion that the NIH will spend to fund biomedical research this year.

Meanwhile, major scientific problems remain unresolved: It will be at least a decade before any practical use is found for stem cells, the basic building blocks that are the progenitors of all other cells. And no one is sure how embryonic stem cells can be developed into specific tissues. But ultimately, these cells could hold the key for treatments for Parkinson's, stroke, diabetes, and a range of other deadly diseases.

The U.S. is not out of the running, of course. The limited funding approved by President Bush could produce interesting results, although it is unclear whether existing stem cell lines are adequate for the experiments that researchers want to do. And private research in the U.S. is largely unregulated and will continue. On Aug. 24, for example, the Howard Hughes Medical Institute said it will fund the procurement of human embryos left over from fertility clinics for Harvard University scientists to use to make new stem cell lines. Harvard scientists say they will distribute the lines free to all comers. Private companies such as Geron Corp., the leading biotech company involved in stem cell research, are also free to do as they please as long as they don't take federal funding.

TOO TINY. But private enterprises may be reluctant to share patented stem cell lines. Besides, Geron and the few other companies involved in this research are far too tiny to lead the charge. And few large companies are interested in joining the mission at this early, risky stage. "I can't tell you how many times I've given presentations to Big Pharma companies, but nothing really happens," says Dr. Evan Y. Snyder, a neurologist at Harvard Medical School and a leading stem cell researcher.

The leaders of stem cell research are increasingly found in Europe, with Britain in front. As the home of both the world's first test-tube baby and Dolly the sheep--the first mammal cloned from an adult--Britain has an established reputation in embryology and fertility. British researchers pioneered much of the early work on mouse embryonic stem cells two decades ago. And in January, Britain became the first country to introduce legislation allowing research on embryonic stem cells derived from both surplus and cloned embryos. The latter, known as therapeutic cloning, "has put Britain on the moral and policy cutting edge." says Arlene Judith Klotzko, a British lawyer and bioethicist and the author of The Cloning Sourcebook.

It's not just Parliament that's supportive. Britain's Wellcome Trust, the world's largest medical charity, with an annual budget of $1.3 billion, is considering funding a British government plan to create a bank of human embryonic stem cell lines sometime next year.

Even Geron is moving research to Britain. Two years ago, Geron, which controls the rights to five stem cell lines in the U.S., bought Roslin Biomed in Scotland, a spin-off of the Roslin Institute, which cloned Dolly. There are now some 20 Roslin scientists working on Geron-funded stem cell research. "We had always intended to invest more [in the future] in response to the very receptive environment in Britain and the fact that public money might be available," says Geron Chief Financial Officer David Greenwood.

In the rest of Europe, biotech investors in the $44 billion venture-capital industry are scouting opportunities. Both Scandinavia and Britain have thriving venture-capital communities. In Sweden, venture capitalists backed one of the country's first stem cell companies, NeuroNova, in 1998. After raising $7 million in venture capital in 1999, Britain's ReNeuron Holdings PLC became the first European stem cell company to go public. Based in Guildford, ReNeuron, which uses embryonic stem cells from the tissue of aborted fetuses to repair damaged brain cells, raised close to $30 million in an initial public offering.

RUMORS. Public funding sources anticipate a surge in grant applications for embryonic stem cell research. "We are definitely going to be putting more money into this area, but it's still too early to say how much," says Chris Higgins, director of the Medical Research Council's clinical science center at London's Imperial College School of Medicine. The MRC, which is funding former University of California at San Francisco scientist Roger Pedersen at Cambridge, has a program to recruit the best and brightest international scientists, offering two-year grants of more than $2 million, plus research expenses.

The program has rumors swirling in the international scientific community about prominent U.S. researchers moving to the more hospitable shores of Britain. "As an academic scientist, if you want to improve methods of deriving embryonic cells, then Britain is better," says Dr. Robin Lovell-Badge, head of developmental genetics at the National Institute for Medical Research, Britain's equivalent of the NIH.

Britain is clearly supportive. Its Biotechnology & Biological Sciences Research Council has spent close to $28 million on embryonic stem cell research since 1989, the vast majority on mice. Now that the research is legal on human embryos for therapeutic and not just reproductive purposes, that amount is likely to increase rapidly, says Alf Game, head of genetics and biochemistry at the research council.

Still, few scientists in Britain and elsewhere want to see their U.S. peers shut out. If federally funded research drops off in the U.S., companies there "would be handicapped, as there wouldn't be the normal collaboration between the private and public sectors that has been responsible for so many important scientific advances," says Dr. Martin Edwards, CEO of ReNeuron. For stem cell researchers, those advances are far more important than any national pride of place. Should the U.S. "stop funding this research, it will seriously and adversely affect prospects for human health for the next 100 years," says William A. Haseltine, CEO of Human Genome Sciences Inc. in Rockville, Md., and a renowned biotech researcher. If so, the U.S. will have lost more than its leadership position.

By Kerry Capell in London, with Catherine Arnst in New York, Arlene Weintraub in Los Angeles, and bureau reports

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