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Apr 15, 2007 (Vol. 27, No. 8)

Company Update: Banking on Human Embryonic Stem Cells

Advanced Cell Technology Looks to Transform Basic Research into Regenerative Medicine

  • Anyone who has followed progress in human stem cell research recognizes that funding from private and public entities will be crucial for advancement. Thanks to a high-profile publicity and education campaign, California voters approved Proposition 71, the $3-billion California Stem Cell Research and Cures Initiative, in a statewide ballot in late 2004. On February 14, 2007, the California Institute for Regenerative Medicine (CIRM), which was charged with overseeing stem cell research funding, awarded the first wave of 72 grants, totaling $45 million, to researchers at 20 universities and nonprofit research laboratories throughout California.

    The initial Scientific Excellence through Exploration and Development (SEED) grants were awarded to investigators working on very early-stage human embryonic stem cell (hESC) research. SEED funds may only be used by the grantee. Future awards, which will be more substantial, will include comprehensive research grants to support mature, ongoing studies on hESCs, and shared research laboratory grants to support core centers focusing on hESC work that falls outside of Federal guidelines.

    Grantees of comprehensive and shared research awards may subcontract work to private and public for-profit companies. Under current law, for-profit organizations may serve as contractors on CIRM funding grants but only up to 50% of the grant total and may not be listed as the principal investigator on grant applications.

    California’s stem cell initiative is in some respects a model for other states. For example, by funding proof-of-principle research, SEED grants will help provide basic discoveries for further development for years to come.

    The fruits of basic research, however, are at best uncertain, and funding agencies have perhaps become too comfortable with lines of investigation that have little chance of translating to practical, applied technology to enhance human health in the relatively short-term.

    Another related shortcoming of the CIRM funding model is its exclusion of for-profit institutions, some of which possess critical and proven last-mile technology with potentially enormous short- and medium-term benefit. In this respect CIRM might consider the highly successful Small Business Administration granting model, which treats corporate and academic applicants more or less equally.

  • hESC Funding

    Advanced Cell Technology ( has been active in the hESC field since the first isolation of an hESC line in 1998. “Given the rapid developments in human embryonic stem cell work over the last several years, Advanced Cell Technology is in the best position to transform basic research into tangible, practical techniques in regenerative medicine,” asserts chairman and CEO William M. Caldwell, IV. “To succeed, the California initiative must allocate a sizable portion of their funding to the translation of science into therapies. That is what the voters expected when they approved funding for stem cell research.”

    Federal government guidelines have imposed severe restrictions on hESC experimentation. The NIH has limited the number of available cell lines it will fund to 71 individual blastocysts discovered by scientists in the U.S., Australia, India, Israel, and Sweden. The U.S. government as well as many Americans object on moral and religious grounds to stem cell research that involves the purposeful destruction of human embryos. Recently, President Bush vetoed a bill that would have increased the number of cell lines permitted by Federal funding to approximately 400. State governments and private funding sources are free to use whatever cell lines they believe will be the most promising.

    “While CIRM and similar programs in New York, New Jersey, Massachusetts, and other states will help jump-start the stem cell industry, the way they do so is quite inefficient,” Caldwell says. “Each state funding source has or will develop its own bureaucracy, rules, regulations, and restrictions, in many cases duplicating the infrastructure of a neighboring state. Moreover stem cell research is not bound by state lines. Funding entities need to encourage collaboration between research groups, regardless of their state of domicile. And perhaps most importantly, they need to recognize the tremendous advancements made by for-profit companies.”

    For these reasons, Caldwell believes that the proper funding source for hESC research should be centralized, preferably at the NIH. In July, 2006, in a paper published in Nature, Advanced Cell said it had perfected a technique that created stem cell lines from single cells taken from a very early-stage embryo. The cell-harvesting method, which does not harm the embryo in any way, has been the basis for several years of preimplantation genetic diagnosis (PGD). This test is routinely performed on embryos used for in vitro fertilization. More than two thousand healthy children are alive today in the U.S. after undergoing PGD at the embryonic stage. “We believe that our cell harvesting technique eliminates moral concerns about embryo destruction,” notes Caldwell.

    Despite the uncertain nature of government funding for stem cell research, the prevailing trends are encouraging. Even with severe federal restrictions, companies with advanced hESC technologies are doing their best to work around granting limitations. In 2006, Advanced Cell received a $200,000 grant from the NIH for an ongoing stem cell project with the Burnham Institute of Medical Research. This research will focus on stem cell lines for treating diseases of the heart, skin, and vascular system.

    The approach leverages Advanced Cell’s expertise in stem cell biology and phage display along with Burnham’s expertise in developmental biology involving the use of phage-displayed ligands to probe for chemical signals that cause hESCs to differentiate. Phage display exploits the ability to create libraries of proteins on the surfaces of bacteria-infecting viruses.

    The two organizations recently identified a family of cell-targeting peptides that bind early-differentiating hESCs. Researchers use these cell-targeted peptides to track the developmental fate of cells, which will allow identification of precursors of important specialized cells.

  • Signaling Cascade

    Most cells, especially those undergoing differentiation, communicate through extracellular proteins. During embryogenesis, a cascade of signaling molecules is initiated between and among cells, which instructs cells on their future course of differentiation. Much of this signaling occurs through growth factors, peptide hormones, and cytokines, most likely directed by proteins on the cell surface and extracellular matrix. If hESCs are to become a practical therapeutic reality, determining which cellular initiators are responsible will be a necessary discovery.

    Advanced Cell’s method begins with embryonic stem cells that differentiate spontaneously into embryoid bodies that can further develop into specific tissues. After harvesting RNA encoding for all possible ligands from the embryoid bodies, complimentary cDNA sequences using reverse transcriptase are constructed. These genes are inserted into bacteriophage genomes at locations where they will be expressed as viral surface proteins.

    Viruses produced in this manner are expected to bind with embryoid bodies specifically, depending on the type of differentiation the cells undergo. Since only one foreign surface protein is expressed per virus, it is possible to grow relatively large numbers of phages specific to any type of differentiating embryoid body.

    Some members of the phage display library will bind to embryoid bodies, and some will internalize. Regardless of how cells and viruses associate, the number of phages remaining after washing will be small, perhaps 100 out of an original population of 10,000. This phage population represents, in essence, the transcriptome of cell differentiation. These may be iteratively regrown in bacteria and through a recursive process, reduced to a small number of ligands or proteins that may be tested for activity against embryoid bodies derived from other cell lines.

    Proteins identified from the phage display libraries as active toward cells undergoing specific types of differentiation might be used at some point to identify and isolate hESCs of the proper type and stage of differentiation for implantation to produce healthy tissues.

    Without such a tool embryoid bodies would differentiate indiscriminately into all tissues. Another application of this work would be to identify secondary molecules that induce or promote desired forms of hESC differentiation.


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