Stem Cells To Go

ViaCell's goal is to mass-produce them from umbilical cord blood

Each time Marc D. Beer crosses the atrium at ViaCell Inc. (VIAC ), he finds himself looking up. There, on the upper floors of the biotech company he runs in Cambridge, Mass., lie 70,000 square feet of glistening new labs. In August, ViaCell will start using the space to study a potentially rich source of life-saving stem cells: blood from newborn babies' umbilical cords. Yet the "wet paint" signs taped to the walls and the plastic lining the floor say something about the science as well as the facility -- it's new, and not yet ready for business. "There's a lot we don't know about the value of these cells," says CEO Beer.

Doctors, patients, and quite a few investors are counting on ViaCell to unlock the therapeutic promise of umbilical cord stem cells. These have been used, on a small scale, to treat more than 30 different diseases. Now ViaCell would like to make such cells available on a much larger scale. Backed by a $20 million partnership with biotech giant Amgen Inc. (AMGN ), it has launched clinical trials to test whether doctors could use its specially-prepared cells in transplant procedures, instead of bone marrow. And a big boost could come from Washington, which is weighing laws to fund a national storage system for cord blood, currently in short supply.

If its research pans out, ViaCell may end up in the sweet spot of stem-cell therapies. Umbilical cord blood contains the same kind of therapeutic stem cells found in bone marrow, which is often transplanted into patients suffering from blood-based diseases such as leukemia. Umbilical cord cells behave like their counterparts in marrow, transforming into healthy white blood cells. And compared with bone marrow, umbilical cord cells are relatively easy to match with patients who need them. That's because younger cord cells are less likely to trigger immune-system responses that cause some patients to reject transplanted marrow cells. In fact, only half of patients who need bone marrow can find a match from an unrelated donor. Experts estimate umbilical cord blood could boost that match rate to 80%.


Researchers are particularly excited by data suggesting that cord cells may possess some of the near-magical flexibility of stem cells harvested from human embryos. It appears, for example, that umbilical stem cells can mature into neural cells and heart muscle. And because they are obtained from tissue discarded after a baby is born, umbilical cells are free of the political controversy surrounding embryonic cells.

The drawback with umbilical stem cells is scant supply. A single umbilical cord produces only enough blood to fit in a coffee cup. That may provide ample stem cells for a child, but it's not nearly enough to treat an average-size adult. So ViaCell licensed two of Amgen's "growth factors" -- proteins that prompt cells to multiply -- and the two companies are working together to try to turn that coffee cup into a pitcher of cells.

Producing umbilical cord stem cells on an industrial scale is one of the most sought-after goals in stem-cell research. And it has become more urgent as research sheds light on the cells' multiple talents. At Duke University, for example, scientists were stunned when they studied the brain of a young girl who had died of a rare enzyme disorder. Earlier, she had received a transplant of umbilical cord blood from a boy. The researchers found that many of the transplanted cells -- carrying the telltale XY chromosome -- had passed the normally impenetrable blood-brain barrier and differentiated into brain cells.


The discovery someday could yield umbilical cell treatments for disorders such as Alzheimer's and Parkinson's, which are often thought to be beyond the reach of adult stem-cell therapies. "If this is a way to get healthy cells into the brain, it would be much more effective than anything we do now," says Dr. Joanne Kurtzberg, director of Duke's pediatric blood and marrow transplant program.

In the arena of blood disorders, the flood of results has left little room for skepticism. Keone Penn, 19, a culinary school student from Atlanta, is one of a handful of patients with sickle cell anemia who have received transplants of umbilical cord blood. Sickle cell is an often fatal disease in which misshapen blood cells get stuck in arteries, causing clots, strokes, and other complications. Prior to the transplant, which Penn had when he was 12, he endured frequent blood transfusions and often doubted he would survive past 30. Now his doctors have pronounced him cured. Cord stem-cell therapy "works miracles," says Penn. "It saves lives."

Despite such success stories, some scientists continue to doubt that ViaCell will come through with cells that work. After all, attempts by other companies and academic researchers to propagate umbilical cord cells have failed -- largely because the concoctions used to stimulate growth also prompted the immature cells to differentiate into specific types of cells. Once a stem cell decides what it's going to be when it grows up, it loses its ability to transform itself into all the types of therapeutic cells that are actually needed. Because hopes have been dashed in the past, Beer and his colleagues initially had trouble gaining Amgen's confidence. "We knew about the failures," says Scott J. Foraker, vice-president of licensing for Amgen, who adds that it took several months of discussions before the company felt comfortable placing a bet. "With ViaCell's knowhow, we thought there was a chance these guys could be victorious."

Nobody questions that ViaCell is in for a long slog. When the company went public on Jan. 21, investors bid the stock up 68%, to $11.75, making it one of the few successful biotech initial public offerings in recent memory. Yet the company lost $34.2 million last year on revenues of $38.3 million -- most of those sales from a separate cord blood-banking unit. Since its high, ViaCell's stock has fallen 28%, to $8.45. Beer says animal trials of his company's cells have been promising, but the real test begins with trials for effectiveness in humans -- possibly as early as next year. "We believe," he says. "Now we have to prove."

ViaCell hopes to get a boost from Capitol Hill. On May 24, the House of Representatives passed a bill that proposes a federally funded system for storing umbilical cord blood. The bill got little attention because on the same day, the House also passed legislation that aims to free up federal funds for embryonic stem-cell research -- touching off a storm of controversy and a veto threat from President George W. Bush. Amid the din, Beer was quietly cheering the umbilical cord bill. "It's a great validation," the CEO says. "It's a shame no one heard about it." If positive news on cord stem cells continues, doctors, patients, and investors will be all ears.

By Arlene Weintraub in Cambridge, Mass.

    Before it's here, it's on the Bloomberg Terminal.